More than a decade after Les Binet and Peter Field published The Long and the Short of It, the book which transformed industry leaders’ thinking on the marketing mix, the debate over how to balance short- and long-term activations most effectively continues to rage.
A new analysis by Binet and Will Davis, the chief data officer at Medialab, an independent media agency, has upped the urgency to meld the mix. Examining data from the Institute of Practitioners in Advertising (IPA), the pair determined that marketing teams that over-emphasise ROI and efficiency are doing themselves and their firms a disservice. Marketing budget is six times more important than ROI or efficiency in driving profit and growth, according to the analysis.
When it comes to marketing, high ROI does not necessarily mean high growth. Business leaders, therefore, would do well to reconsider how they measure marketing performance. Adobe’s latest The State of Marketing Performance report suggests their current efforts may be misguided.
In their 2013 book, Binet and Fields recommend devoting 60% of the marketing budget to long-term, brand initiatives and 40% to short-term, performance activities. But the majority (57%) of the modern marketing budget goes to performance marketing, according to the Adobe survey of more than 300 marketing leaders worldwide. That share is growing, too. Since last year, 23% of marketing teams have allocated even more budget to performance marketing – that is, to short-term activities that will prop up executives‘efforts to continually measure their impact.
Despite the budget-allocation trends, only 19% of senior marketers say their approach is led by performance. What’s more, although more than two in five (42%) say their strategy is guided by brand, performance and customer considerations, 80% seek to balance long-term, brand equity and short-term performance more effectively.
The odds are stacked against them, however. Organisational practices increasingly incentivise short-term performance over long-term value. Take performance reviews: 32% of senior marketers face budget or performance reviews either weekly or monthly and some (4%) are evaluated in real time. It’s impossible to demonstrate the ROI of brand-building efforts over such brief periods, as these initiatives take many months, or even years, to prove their impact. Even the 50% of marketers who are evaluated quarterly may struggle to show the effectiveness of their brand-building activities in these timeframes.
That’s a problem, because most executives demand concrete results from their marketing teams frequently and thereby encourage short-termism. They want to ensure the function is aligned with the strategic goals of the business. And they want their marketing leaders to be commercially minded and laser-focused on results. Six in 10 CEOs want their marketing chiefs to drive bottom-line growth, not just manage brand perception, according to a report by Deloitte.
As the most important factor in determining marketing budgets is C-suite priorities, according to the Adobe survey, senior marketers may be tempted to boost performance marketing, which can be measured more easily with standard metrics such as ROI.
But many senior marketers, even in performance-led teams, admit that they struggle to prove ROI – 45% compared with 54% in brand-led teams and only 39% in CX-led teams. Performance-led teams also receive insights too slowly for their liking and are only slightly more successful in determining attribution than their peers in brand-led teams. These challenges are as old as marketing itself and it seems that performance-led teams are not significantly more capable than brand-led teams of overcoming them.
Still, many C-level leaders want to ensure the function is on track; they want something to measure. And short-term, performance activations allow for just the type of metrics that are ripe for frequent evaluation. As the Adobe report points out, the C-suite’s focus on short-term performance and ROI, along with its outsized influence on budgets, means that decisions on marketing spending are often made on the basis of incomplete information.
So the marketing mix is off at companies across the globe and fixing it requires not just changes in mindset and approach but changes in organisational processes, too. Until these are addressed, the mix will likely fall further out of balance.
More than a decade after Les Binet and Peter Field published The Long and the Short of It, the book which transformed industry leaders’ thinking on the marketing mix, the debate over how to balance short- and long-term activations most effectively continues to rage.
A new analysis by Binet and Will Davis, the chief data officer at Medialab, an independent media agency, has upped the urgency to meld the mix. Examining data from the Institute of Practitioners in Advertising (IPA), the pair determined that marketing teams that over-emphasise ROI and efficiency are doing themselves and their firms a disservice. Marketing budget is six times more important than ROI or efficiency in driving profit and growth, according to the analysis.
When it comes to marketing, high ROI does not necessarily mean high growth. Business leaders, therefore, would do well to reconsider how they measure marketing performance. Adobe’s latest The State of Marketing Performance report suggests their current efforts may be misguided.
In their 2013 book, Binet and Fields recommend devoting 60% of the marketing budget to long-term, brand initiatives and 40% to short-term, performance activities. But the majority (57%) of the modern marketing budget goes to performance marketing, according to the Adobe survey of more than 300 marketing leaders worldwide. That share is growing, too. Since last year, 23% of marketing teams have allocated even more budget to performance marketing – that is, to short-term activities that will prop up executives‘efforts to continually measure their impact.
Despite the budget-allocation trends, only 19% of senior marketers say their approach is led by performance. What’s more, although more than two in five (42%) say their strategy is guided by brand, performance and customer considerations, 80% seek to balance long-term, brand equity and short-term performance more effectively.
The odds are stacked against them, however. Organisational practices increasingly incentivise short-term performance over long-term value. Take performance reviews: 32% of senior marketers face budget or performance reviews either weekly or monthly and some (4%) are evaluated in real time. It’s impossible to demonstrate the ROI of brand-building efforts over such brief periods, as these initiatives take many months, or even years, to prove their impact. Even the 50% of marketers who are evaluated quarterly may struggle to show the effectiveness of their brand-building activities in these timeframes.
That’s a problem, because most executives demand concrete results from their marketing teams frequently and thereby encourage short-termism. They want to ensure the function is aligned with the strategic goals of the business. And they want their marketing leaders to be commercially minded and laser-focused on results. Six in 10 CEOs want their marketing chiefs to drive bottom-line growth, not just manage brand perception, according to a report by Deloitte.
As the most important factor in determining marketing budgets is C-suite priorities, according to the Adobe survey, senior marketers may be tempted to boost performance marketing, which can be measured more easily with standard metrics such as ROI.
But many senior marketers, even in performance-led teams, admit that they struggle to prove ROI – 45% compared with 54% in brand-led teams and only 39% in CX-led teams. Performance-led teams also receive insights too slowly for their liking and are only slightly more successful in determining attribution than their peers in brand-led teams. These challenges are as old as marketing itself and it seems that performance-led teams are not significantly more capable than brand-led teams of overcoming them.
Still, many C-level leaders want to ensure the function is on track; they want something to measure. And short-term, performance activations allow for just the type of metrics that are ripe for frequent evaluation. As the Adobe report points out, the C-suite’s focus on short-term performance and ROI, along with its outsized influence on budgets, means that decisions on marketing spending are often made on the basis of incomplete information.
So the marketing mix is off at companies across the globe and fixing it requires not just changes in mindset and approach but changes in organisational processes, too. Until these are addressed, the mix will likely fall further out of balance.
