“After the crisis short term thinking exploded”
Why do we focus so much on the short term after the financial crisis while this period actually drew the attention at the importance of sustainable thinking?
Peter Field: “Marketers are under pressure. They have to achieve goal after goal. It seems as if all our attention is focused on the next quarter as a consequence of the lesser results during the crisis. It is safe to say that short term thinking exploded after the crisis. And the digital revolution even strengthens this effect. Marketers use dashboards to follow up sales live. When their eye catches a red light, they have the natural reflex to react, while sometimes it is not in the least necessary.”
Which effect does this have on the quality of marketing?
Peter Field: “Digital activation tools create sales peaks, but the effect quickly slackens if this is the only thing you do. In the end, you create a standstill. Short term thinking is only focused on volume and this undermines the profit margin. The fastest way to create volume is to give discounts. In the United States this happens all the time. Marketers think this is the future. But this is sales, not marketing. We have to make this clear to the new generation of marketers.”
“Marketers use dashboards to follow up sales live. When their eye catches a red light, they have the natural reflex to react to it, while sometimes it is not in the least necessary.”
Peter Field, marketing expert
Then why is branding on the long term so important for next quarter’s sales figures?
Peter Field: “A strong brand leads both to revenue growth on the long term and to higher profit margins because a strong brand generates pricing power. Once you have built a strong brand, it becomes easier to achieve sales targets on the short term without having to adopt a permanent discount policy.
Since sales activation becomes ever more easy, branding becomes ever more important. Both marketing instruments strengthen each other. A budget with 0 per cent activation usually leads to an efficiency loss of 20 per cent. Conversely, 100 per cent activation seems to be even more destructive. You do not only lose 56 per cent effectivity, your brand weakens too.
It takes about two years before you have rebuilt the brand. This is a mistake made by many companies. The optimal ratio is 60 per cent branding, 40 per cent activation.”
Which role do the media play in branding?
Peter Field: “In a world of algorithms, a strong brand remains important, because robots and algorithms do not feel emotions. When a consumer dictates his shopping list to Alexa, Amazon’s virtual assistant, a company prefers its brand to be named instead of a generic product. Ben & Jerry’s for instance rather not wants you to say ‘ice cream’. Therefore, a strong brand is crucial. And companies also went through a digitisation process, for example for their supply chain. This is smart and efficient. Unfortunately, they think that their communication needs to be exclusively digital as well, which is a capital mistake. Traditional media are still the most powerful way to build a brand. Brands grow on the long term by using mass media and not through tight digital targeting. I am convinced that branding is also possible using digital channels, but I have not seen any examples of this yet. Digital communication is almost always about sales activation.”
“Brands grow on the long term by using mass media and not through tight digital targeting.”
Peter Field, marketing expert
Who is Peter Field?
Peter Field is a British marketing & advertising consultant and expert in the field of effectiveness of advertising. His writings include Media in Focus: marketing effectiveness in the digital age and Effectiveness in context.