Digital channels are increasingly providing us with data about our customers and it may be tempting to change the focus from long-term branding to short-term sales activation. Studies show that branded products that focus only on short-term sales have lower growth and higher market share falls. Nevertheless, many companies make this mistake over and over again. What is the solution?
Short term vs. Long-term marketing: a balance sheet case
Most companies want immediate results. They'll see sales figures rise tomorrow, not in six months. Therefore, performance marketing is often prioritised: paid searches, social media ads, retreats and campaigns that have directly measurable results. Do not misunderstanding, this is important, but the problem arises when this tactics replace long-term branding.
It's impossible to talk about branding without mentioning Byron Sharp -- and yes, you've probably heard this before. In the Book ”How Brands Grow”, he indicates that the brand growth occurs through:
- Mental availability – To be top-of-mind to consumers when a need arises.
- Physical availability – To be easily accessible in the channels in which customers act.
When companies become too narrow in their marketing, they gradually lose both of these characteristics. They stop attracting new customers, and existing customers start forgetting them.
Nike stopped talking to new customers – and paid the price for it
Nike made this particular mistake last year. They changed their strategy to focus on direct-to-consumer (DTC) through their own channels and down-prioritized wide branding. They also cut out many physical retail partners. In the short term, it seemed reasonable: more direct sales and lower costs.
But then the reality came. When customers no longer found Nike products in the stores they used to trade, they chose competitors instead. Nor had Nike invested in creating demand for new customers, but only focused on exploiting existing customer bases. After a few years this began to be noticed. Market shares decreased and share price declined.
Nike is far from alone about having made this mistake. Many companies, large and small, are too dependent on performance marketing and forget to build the brand in the long term.
How should the budget be properly distributed?
To avoid this fall, market participants need to find a balance between branding and sales activation.
As follows The Long and Short of It, a recognised study of: Les Binet and Peter Field, is the optimal budgetary allocation for growth;:
- 60 % for brand construction – broad marketing, storytelling and emotional communication to build mental accessibility.
- 40 % for sales activation – targeted campaigns and performance marketing to convert existing demand.
This balance sheet ensures that you both build the brand’s position in the market and achieve immediate sales. Merchanting creates demand, while selling it converts it. If too much of the budget goes to sales activation, the brand will lose visibility over time, and competition will be more about price and short-term incentives. On the other hand, if everything goes to branding, you can risk not maximizing the sales opportunities that exist here and now.
The construction of brands and sales activation are not contradictions — they are two sides of the same coin. The 60/40 rule is not about either or, but about balance.
The most successful brands are not those who think only in the next quarter — they are also based on being relevant in the coming years. When you plan your marketing strategy, ask yourself, are we only looking for quick gains, or are we building a brand that lasts?
Is your brand rusted for long-term growth?
If you are aware of the challenges of low branding knowledge, high dependence on paid channels or increasing costs of customer procurement – it is time to reconsider your market strategy.
At INEVO we help companies find the right balance between branding and sales activation, so you can both create demand and convert it effectively.
Contact us today to learn more about how a data-driven and strategic approach can help you build a strong brand, reduce advertising costs and ensure increased profitability over time.