After the pandemic put advertising budgets on life support earlier this year, spending is beginning to pick up again.
But while companies may want to focus on luring back customers as quickly as possible, a new Nielsen report warns that such short-term thinking may do lasting harm — and that it’s essential to balance activation with a long-term focus on brand awareness.
“The pause in spend likely had an adverse effect on brand awareness for many companies,” the report says. “It’s atypical for brand awareness to drop to zero — even when brands go dark for long periods — but brand awareness does decay, which is why it’s normal to see very well-known brands maintain robust ad campaigns even during normal market conditions. Their sole goal is to combat decay. So it’s likely that much of the uptick in U.S. advertising that occurred in August was focused on awareness rather than activation.”
Nielsen believes this approach should continue. “On average, it takes three to five years to recover equity lost because of halted advertising, and long-term revenue can take a 2% hit for every quarter a brand stops advertising.”
Nielsen adds that companies which “frugally” maintained their marketing efforts during the crisis protected as much as 9% of total sales annually.
“Playing the long game is critical,” Nielsen says. “The long-term impact of marketing is 88% higher than the short-term impact.”
The report links brand awareness to interest — and, therefore, to revenue. “Nielsen sales forecast data shows that there is a nearly linear relationship between interest and sales (e.g., a 10% increase in interest will lead to a 10% increase in sales).”
“Given the upended nature of the world in 2020, it’s not surprising to see brands pulling back, hedging their spending and focusing on sure bets, like digitally delivered discounts and direct-mailed promotions to current customers,” the report continues. “Those activation-oriented tactics are important, but they don’t work in isolation [and] might not work in situations where companies paused brand awareness efforts.”
The article also cautions against simply spending in areas that drive the greatest brand lift. “Data from Nielsen Total Media Resonance shows that the channel with the greatest spend drives the greatest lift 70% of the time,” the report says. “So a brand should expect its biggest channel to drive the greatest brand lift, but that doesn’t mean additional spend there will automatically drive incremental lift. It likely won’t.”
Nielsen finds the channel with the greatest lift has the greatest marginal efficiency only 24% of the time. “And according to Total Media Resonance analyses, increasing investment in your largest channel is actually an ineffective choice for growing brand health in 96% of cases.”
While brand awareness is important, it’s important for marketers to be aware of the way economic forces and social activism are shaping consumers’ attitudes. Earlier this year, Nielsen’s “Adapting to a New Normal” webinar reported that more than four in 10 consumers preferred to buy from brands that use advertising to explain how they’re helping customers and employees. “Given the depressed economy and resultant job losses,” Nielsen warns, “pitching financially constrained consumers with activation-geared marketing efforts... could even turn consumers off for good.”
While “sales-activation strategies may drive short-term gains,” the report says, “Nielsen Marketing Mixed Modeling analyses show that about half of the sales impact from marketing comes long after an initial campaign launch, highlighting the powerful force that brand building has on bottom-line sales.”