The Importance of Branding and Creativity: The Actual Short-, Medium-, and Long-Term Effects of Advertising

Corporate executives and marketers understand that strengthening a brand leads to future business results, and place importance on strategies for long-term brand building. However, in reality, many marketing initiatives tend to focus on a short-term perspective.

In addition, we often hear that advertising creatives have become more and more similar in recent years. The same expressions are always repeated... Similar creatives gradually become unattractive.

In this article, I would like to introduce the importance of branding and creativity in advertising.

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What would happen a year from now if we stopped branding advertising?
- Visualizing the short-term, medium- to long-term effects of advertising -

We will introduce, with examples, a method to visualize not only the short-term but also the medium- to long-term sales effects of advertising, and to predict future declines in sales if branding advertising is discontinued.

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The current situation of long-term branding and short-term sales promotion

Research conducted over 10 years by marketing experts and authors Peter Binet and Les Field^{On September 1, XNUMX,} According to the study, the optimal investment balance between long-term branding and short-term promotion is approximately 60% (branding) / 40% (promotion).

Branding advertising aims to grow your business by maintaining and strengthening your brand in the long term, so the effectiveness of your branding strategy is measured over a period of years. On the other hand, sales promotion aims to encourage direct, short-term actions, and the effectiveness is measured over a period of days, weeks, or even hours.

"The 2010s was the decade when many advertisers deviated from the 60%/40% rule and instead focused their marketing budgets on short-term promotional advertising activities," write Binet and Field.

There are two factors that appear to have encouraged short-termism at the expense of, in some sense, long-term brand building.

The first is the digitalization of advertising.
Since the 2010s, online advertising platforms such as Facebook, Instagram, Twitter, and TikTok have appeared and spread rapidly. Since it is easy to see the effects of impressions, clicks, and conversions on digital media, many advertisers have started to invest their advertising budget in digital media.

The second is to utilize an attribution model that is limited to digital (online advertising).
Since online advertising can confirm immediate results based on user behavior log data, many marketers have been continuously optimizing to obtain short-term results. Companies also feel pressured to prove the value of their marketing activities, so they have tended to focus on attribution models centered on digital media, where the effects are easier to measure.
(If you want to know more about attribution analysis,This columnSee also

Impact on advertising creative and risk to branding

This focus on short-term results can also impact creative output: a focus on short-term results often deprioritizes creative that provokes an emotional, emotional response in favor of creative that appeals to an immediate response with price-driven or rational messaging.

Creatives with rational messaging may be the most effective in the short term, but they tend to have less residual effect or impact on brand awareness because they are quickly forgotten by target consumers after conversion or purchase.

On the other hand, creative that evokes an emotional response may not produce short-term results, but repeated exposure will build up affection and sentiment towards the brand, which can lead to improved results in the long term.

The long-term effects of "sales promotion (acquisition advertising)" and "branding advertising"

Diagram above^{On September 2, XNUMX,} As such, sales promotion (acquisition advertising) may produce a short-term surge in results, but the long-term cumulative effect will be minimal.

When evaluating advertising campaigns over a period of less than six months, we can see that sales promotions with rational messages (acquisition advertising) are more effective, whereas when evaluating over a longer period of time beyond six months, we can see the cumulative long-term impact that branding advertising has on results.

These results highlight the importance of brand building and the need for continued investment in it.

Examples of strategic change for global brands

Especially in recent years, due to the impact of COVID-19, many companies have become strict about ROI and tend to promote short-term sales. However, there is no need to overinvest in short-term sales promotion at the expense of the long-term business results that brand building brings.

Several brands globally are realizing this and are changing their strategies.

During Gap's third quarter 2019 earnings call, the CFO said the company had relied too heavily on discount-focused marketing of Old Navy as opposed to branding.

Among so-called digital native companies, Airbnb cut its marketing budget by 2021% (equivalent to approximately 1 billion yen) throughout the first quarter of 28. This was mainly due to a significant reduction in investment in sales promotion marketing and an increased focus on brand building and PR activities. Reflecting this change in strategy, Airbnb announced in February 250 that it will be "Made Possible by Hosts" We have launched a large-scale branding campaign on television and other media.

Summary

Ultimately, the key is to have a creative campaign that builds brand loyalty and engagement, combined with sales promotion that delivers immediate results. The challenge is finding the ideal balance between investing in both.

However, securing a budget for brand building is not easy. It is necessary to set clear indicators and evaluation criteria that show the contribution of advertising measures aimed at brand building to business results.

Including medium- to long-term brand value (brand equity),XICA's proprietary Marketing Mix Modeling (MMM) analysisThis allows for visualization. In addition to evaluating the contribution of all marketing initiatives to business results in the short, medium, and long term, it also includes a simulation function for optimal budget allocation based on goals (e.g., achieving sales or conversion rates) and conditions (e.g., a fixed budget for a specific initiative).

*1) Les Binet & Peter Field (2017). Media in Focus: Marketing Effectiveness in the digital era
*2) Les Binet & Peter Field (2013). The Long and the Short of It: Balancing: Balancing Short and Long-Term Marketing Strategies
IPA Databank (Survey of 1980 advertising campaigns from 2010 to 996)

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XICA Co., Ltd. Marketing Team