With marketers under extreme pressure to hit revenue targets, upper-funnel marketing efforts have taken a backseat. Yet the need to drive awareness has never been more important for brands, as consumers have greater access and choice and less exposure to logos on shelves and storefronts. Nielsen’s latest report makes the case for adopting a balanced marketing strategy that combines the right message and channel mix to create long-term growth.
The sales impact of lower-funnel marketing strategies materializes quicker but Nielsen’s analysis suggests that brand-building efforts are a lever to drive sales. In measuring how effective a financial services company’s marketing efforts were at driving sales across about 20 markets, Nielsen found that the correlation between the upper-funnel brand metrics and marketing efficiency was significantly strong—0.73. Building brand equity, then, not only benefits direct sales but also improves the efficacy of your activation efforts.
Marketing accounts for 10 percent to 35 percent of a brand’s equity, according to Nielsen. Given equity comes also from visibility, taking non-marketing sources of equity, such as regular product usage and seeing a product on the shelf, for granted is a mistake. For one, fewer shoppers are driving to stores, eliminating the chance that they’ll see logos. Plus, consumers have access to an infinite selection of brands online, making it difficult for single brands to stand out. Lastly, COVID-19 supply disruptions have affected product availability, forcing consumers to try alternatives.
This last point is evidenced by differences in brand retention and trial rates across traditional and digital channels. For example, data from Nielsen Commspoint found that in the US consumer packaged goods market, shoppers say that 4.3 percent of their brick-and-mortar purchases involve a brand they hadn’t bought before. For online purchases, this figure increases to 12.2 percent. That metric drops from 83 percent of brick-and-mortar CPG purchases to 72 percent of online CPG purchases.
Nielsen cautions against assuming you can directly apply benchmarks around which channel is best for equity building for your brand. Channel effectiveness across campaigns can be very diverse, as Nielsen found when measuring the impact of marketing by message strategy for an electronics brand and an auto brand in the short and long term. Upper-funnel messaging on the auto brand was 5 percent less effective than total media in driving short-term sales and 18 percent more effective than total media in driving long-term sales. To deploy the most effective messaging and measure your share of voice within each message strategy, brands can cut their competitive ad data by upper- and lower-funnel creatives.
Looking at the same comparison through the lens of specific channels, Nielsen found that with upper-funnel messaging, video and offline media are very efficient in driving short- and long-term sales. With lower-funnel messaging, non-video and online media are more efficient in driving short-term sales than they are in driving long-term sales.
If optimizing for just one objective was a viable option, Nielsen notes, there wouldn’t be instances where brands such as Gap and TripAdvisor admitted they made missteps in forsaking brand building in the name of a heightened focus on activation.
To optimize for both short- and long-term objectives, brands should consider optimizing their marketing mix for total sales if they’ve already measured short- and long-term return on investment. If a brand lacks the total sales impact, marketers can perform sequential optimization, later weigh those stimulation results together to create a hybrid plan and set targets for what that plan will achieve.
If the Institute of Practitioners in Advertising’s 2013 research is any indication, long-term efforts are true long-term business drivers. The firm suggests that the optimal balance between long- and short-term efforts is 60-40.
The bottom line: Marketers should consider what the minimum business requirements are in the short term and whether their business has the flexibility to wait for longer-term outcomes.