Why short-term sales don’t always mean long-term success – Nielsen

It is not something that anyone likes. It’s human nature. And the fast-paced nature of our lives today, amplified by the speed that digital connectivity facilitates, only heightens the pressure to move faster—in all facets of our daily lives. This is also true for business. Connectivity and digital technology, as well as high-speed communications, inherently speed up the pace at which we work. Marketing is no exception. Yet depending on a brand’s goals, it might be time to make some adjustments.

Brands have hundreds of options to choose from when they think about their marketing technology, and they’ve leaned into these options heavily in recent years. For a long time, conversion-focused advertising has been the industry’s favorite. That digital focus grew even more when the pandemic hit and mass media campaigns were cut back by brands.

Digital growth-focused strategies, regardless of COVID-19, drive sales for this quarter. Importantly, a focus on near-term sales—and the ability to measure the impact of conversion marketing—serves to grow investments in these strategies. And marketers are quick to confirm that they’re steadily increasing their financial spending across conversion-oriented channels at much greater rates than more traditional channels, such as linear TV and radio. Our 2021 Annual Marketing Report revealed that marketers polled intended to allocate their highest spend to search engines, social media and mobile video.

Brands should have a holistic and balanced marketing strategy that maps to their business goals. However, conversion-oriented strategies won’t work when customers are the key goals of a business. This strategy is also in direct contradiction to many academic studies that show upper-funnel market strategies are the most effective way to grow. Our most recent report shows that marketers polled rank customer acquisition and brand awareness as top priorities. This is in direct opposition to their higher spending.

The downside of our accelerated lifestyles is that it’s easier (and quicker) to drive sales than build out campaigns aimed at mass reach that will take longer to yield positive results. It is difficult to measure long-term sales. Many marketers rate the effectiveness of traditional mass media as lower than that of digital.

Our recent Trust in Advertising survey found that people trust more traditional media forms than those made of digital. Our most recent marketing report noted that brand marketers often face challenges measuring their return on investments in TV, radio, and print media. However, our SME experience database shows that a 1 point increase in brand metrics (such as awareness or consideration) drives an average 1% sales growth. This means that a $100 million increase in brand sales would result in an additional $1 million. 

The effectiveness of sales activations is also enhanced by upper-funnel activities. For example, SME recently measured how effective a financial services company’s marketing efforts were at driving sales across approximately 20 markets. Brand awareness and market consideration varied between markets. SME discovered that there was a strong correlation (0.73) between marketing efficiency and brand metrics in the upper funnel. Therefore, equity may be worthwhile for brands to create not only direct benefits for sales but also indirect benefits from optimizing activation processes.

Establishing relationships with your customers is essential and providing meaningful engagements to nurture them are not undervalued. Digital channels can be a crucial tool for strengthening relationships with consumers in an age of increasing choice and decreasing loyalty. For true brand growth and long-term business viability, however, marketers need to balance their conversion-efforts with initiatives that put their value proposition in front of consumers that aren’t yet familiar with them.

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