Created by Optix Solutions in Exeter, Devon
Brand building for the future
Shifting focus from immediate ROI to long-term success
Introduction
Many businesses overinvest in short term “activation” marketing at the expense of building long term brand equity, and this is potentially holding back their growth. Marketers, and those who set their budgets, have moved away from old ideas about improving brand perception in favour of direct response campaigns and a need to prove immediate ROI from all marketing activity.
The transition to digital marketing has revolutionised the way we measure success, offering unprecedented insights compared to traditional methods. This trackability has brought significant advantages, enabling marketers to quantify outcomes with precision.
However, it has also fostered an overemphasis on targeting those at the bottom of the funnel, pushing campaigns to extract every possible conversion. While effective in the short-term, this approach risks overlooking the broader, strategic advantages of nurturing long-term brand relationships. It’s crucial to balance immediate conversion tactics with efforts aimed at building sustained brand value.
Short-term thinking can lead businesses to constantly compete like-for-like with competitors, chasing those who are looking to buy right now. Instead, businesses could benefit from setting their brand apart and being bolder with marketing activity to build up reputation and become top-of-mind for their audience.
In recent years, a significant pivot towards privacy has emerged. Consumers are increasingly wary of the volume of data marketers gather about them. In response, major changes are unfolding. Google is mandating advertisers to adopt consent mode, and the era of third-party cookies is coming to an end. We need to embrace a future where there’s less reliance on extensive user data tracking and more focus on cultivating brand equity. Investing in long-term brand building is essential as it offers a sustainable path to connect with our audience in a privacy-first world.
As marketers, we need to look past this month’s results and position ourselves to reap ongoing rewards for our organisations or clients. Here we take a look at why it’s really worth putting effort into playing the long game.
Thomas Haynes, Director of Strategy
Optix Solutions
The Long and Short of it
Published in 2013, "The Long and Short of It" by Les Binet and Peter Field presented a compelling case for balancing long-term brand-building with short-term sales activation in marketing strategies. Their analysis, based on extensive data from the IPA’s marketing effectiveness database, highlighted that optimal growth is achieved through a 60:40 investment ratio between brand building and activation. Brand building is shown to create broad brand awareness and emotional connections, laying the foundation for long-term market share growth and pricing power. In contrast, sales activation focuses on generating immediate sales, often with targeted, direct response channels.
By focusing most of their time and budget on “activation” activity, marketers were achieving short term spikes in sales but not getting the long term growth they wanted. Binet and Field showed that by using brand building and activation activity in combination, marketers could achieve more in the long term.
The difference between brand building and activation marketing activity.
Sales Activation and Brand Building sales uplift over time. Source: Marketing Week
‘The Long and Short of It’ had a huge impact on the way marketing managers approached their plans, emphasising the importance of investing in brand awareness to ensure sustainable growth. Binet and Field's work shifted the conversation, urging marketers to think beyond immediate metrics and consider the long-term health of their brands. It remains a crucial read for marketing managers aiming to develop strategies that balance short-term gains with long-term brand equity, illustrating that the most successful brands are those that master the art of blending these two approaches effectively.
Moving beyond ROI: how to track marketing effectiveness not efficiency
Almost 50% of marketers report that ROI is the metric that their CEO cares about most. But while it is understandable to want to see the impact of marketing activity, it is important to note that ROI is a financial metric which measures efficiency, not growth.
Moving beyond ROI to truly gauge marketing effectiveness means embracing a broader perspective than simply measuring efficiency. While ROI continues to be a valuable metric, it often skews focus towards short-term gains at the expense of long-term brand health and growth. This is a narrow focus that can lead to underinvestment in brand-building activities, which Binet and Field showed are crucial for sustained success.
To accurately assess marketing effectiveness, it's essential to incorporate a wider set of metrics that reflect both immediate outcomes and the long-term health of the brand. Key metrics include brand awareness, penetration, and market share growth. These indicators provide a more holistic view of marketing efforts, enabling informed decisions that balance short-term efficiencies with strategic long-term goals.
By adopting this broader approach to measurement, marketers can track the real impact of their strategies more effectively. This ensures that marketing efforts contribute not only to immediate sales but also to the enduring strength and vitality of the brand. This shift in perspective is crucial for marketing managers aiming to build and maintain successful, resilient brands in an increasingly competitive landscape.
Source: Marketing Week
How small to medium brands can maximise investment in brand awareness
Investment in brand awareness is frequently believed to be the domain of large brands with substantial budgets, with SMEs sceptical about its relevance to their business. However, building brand equity is not exclusive to big spenders; it's about smart, strategic investment, regardless of budget size.
For SMEs, the focus should be on leveraging any unique strengths and finding cost-effective channels that allow for meaningful engagement with their target audience. Digital platforms offer unparalleled opportunities for this, enabling smaller brands to punch above their weight by narrowing in on a very specific audience which will help reduce wastage. It also offers the potential for highly targeted content to drive engagement.
A strong brand identity and a distinctive brand voice are pivotal in enabling SMEs to build long-term brand equity, even on a limited budget. These elements serve as the foundation for distinguishing a brand in a crowded market, offering a way to connect with audiences on a deeper level.
Remember, if you can’t easily describe what makes you different from your competitors you can’t expect your potential customers to be able to. Kantar research shows that meaningfully different brands grow three times faster than their more generic competitors.
Combining a strong brand identity and a unique brand voice ensures that every piece of content, every marketing campaign, and every customer interaction reinforces the essence of the brand. Fundamentally, it's all about creating a memorable impression that not only attracts customers but also builds loyalty and trust over time, for the long-term. For SMEs, distinctiveness and consistency are cost-effective tools for differentiation and can be more impactful than sporadic, high-budget campaigns which drive short-term gains. By investing in these core aspects of their brand, SMEs can effectively carve out a unique space in their industry, fostering long-term brand equity and customer relationships that thrive on recognition and reliability.
Case Study: Lidl Surprises
Lidl's journey in the UK market is a testament to the power of strategic brand building activities in enhancing market share, especially in the highly competitive supermarket sector. Initially perceived as a budget retailer with a limited selection, Lidl shifted this perception through a series of clever marketing strategies that emphasised quality, variety and value, ultimately redefining its brand identity.
The cornerstone of Lidl's approach was a focused campaign that highlighted both the quality and the affordability of its products at the same time. The "Lidl Surprises" campaign used real customer reactions to the quality of Lidl's products at the price point offered, challenging preconceived notions about the brand. This campaign was pivotal in changing consumer perceptions, showcasing Lidl as a retailer that did not compromise on quality to keep costs down.
As Mark Ritson notes in his very engaging video on Lidl’s success, the Lidl Surprises campaign led to an impressive increase in market share and drove £2.7bn in incremental sales between 2014 and 2017.
But Lidl's brand building efforts in the UK not only increased its market share, they also fundamentally changed how consumers view the brand. Lidl has changed customer perception; no longer viewed as a budget supermarket, but rather a shopping ‘destination’ that offers shoppers a winning combination of quality, variety and value. This transformation showcases the effectiveness of strategic brand building activities that don’t just attract more customers, but has fundamentally changed market dynamics.
How to spread your marketing budget for optimum results
In ‘The Long and Short of It’ Binet and Field identified a 60/40 split between brand building and activation budget as the best setup for success. In 2019 they published ‘Effectiveness in Context’ which built on this foundation and updated it to provide a more nuanced picture, using data gathered in the intervening years.
‘Effectiveness in Context’ presented ways in which marketers could adjust the basic 60/40 rule in order to provide the ideal budget split for their particular brand and industry. For example, a new startup disrupting a stale industry will have very different marketing goals to a well-established brand with a large market share. For maximum effectiveness, this should obviously be reflected in their marketing strategy and budget allocation.
Using this, marketers can find a data backed budget split based on the market category, business model, brand life stage and size. As with all marketing “rules” this is just a starting point and a way to consider what might work best in any given situation.
Marketing Budget Calculator
To make it easier to find the best starting point for your brand to activation budget split we have put together a marketing budget calculator. As well as identifying the best brand vs activation split this will also give you a suggested annual marketing investment based on a percentage of your turnover.
Here are the steps to follow:
Visit our Marketing Budget Calculator page.
Use the link at the bottom of the page to access the budget calculator template in Google Sheets.
Click the ‘make a copy’ button to create your own copy of the spreadsheet which you can edit.
Enter your previous year’s total business revenue in the revenue box (if you don’t know this just leave it at £1m)
Select your growth aspiration from the option in the drop down
Select the most relevant industry category from the industry drop down
Select your brand size from the drop down. This should be your size in comparison to your main competitors.
Select how your product or service cost compares to those of your competitors from the drop down.
Once you have completed these steps the document will give you two figures:
How much of your revenue you should invest in marketing, based on your turnover and growth aspiration
The optimal way to split that budget between brand building activity and activation activity.
Perspective – Alastair Banks, Optix Solutions Founding Partner
"Being a marketing manager means more than chasing the quick wins. It's tempting to focus on what's right in front of us—those direct response campaigns that boost numbers overnight. But here's the thing; real success comes from playing the long game. It's about looking ahead, thinking about where you want your brand to be years down the line, not just at the next quarterly review. Let's be brave and push for strategies that build lasting connections with our audience. Sure, it won’t pay off instantly, but when it does, it's not just a win; it's setting a foundation that can carry our brand forward for years. So, let's lean into that long-term thinking. After all, the brands that last are the ones that dare to look beyond the immediate."
About Optix Solutions
Founded by a small group of University of Exeter students in 1999, Optix Solutions has been living and breathing the world of digital for 25 years, growing to a team of 20+ members offering best in class digital strategy, marketing and creative solutions.
We’re proud to work with ambitious businesses who are ready to take their next stride towards online domination with bold storytelling, creativity and digital expertise. We work with a huge range of clients including the NHS Devon Partnership Trust, Michael Spiers, Isles of Scilly Travel, The Drum, The Met Office and the University of Exeter.
We’re a Google partner, a The Drum recommended agency and a winner of Campaign Magazine’s Best Places to work 2023.
We work strategically as an extension of our client’s teams. For each project, we assemble a bespoke blend of market-leading expertise across our strategists, digital marketers and creatives who work to understand and define our clients’ key objectives and deliver on them.
Thank you
A huge thank you to Thomas from Optix Solutions for putting this really useful whitepaper together for the Building Brands Community.
Optix have been big contributors since I started Building Brands, and we’ll always appreciate their invaluable contributions and help.
I hope this has been useful and that you’re perhaps looking at things a little differently? If youd like to speak to Optix Solutions about this or any other area of digital marketing, then they would be delighted to hear from you. You can email them at info@optixsolutions.co.uk or call them on 01392 667766