Thursday, July 2, 2009

Do our Marketing Metrics Undermine Long-Term Brand Value?

Several weeks ago, I wrote a rather long diatribe about the marketing world's obsession with short-term sales metrics (Restoring Marketing and Finance Balance: How Marketing Can Save the (Corporate) World). My fear is that brands are increasingly being viewed not as sources for long-term competitive advantage and value but instead as short-term assets to be exploited for immediate quarterly profits.

Given my fear, it was exciting to read Ad Age's article "Unilever, Walmart, P&G Buck the Short-Term Trend." The piece hints at how marketing and business leaders are complicit in encouraging the markets' and C-suites' fixation on short-term results. If we want to advocate for more attention to the long-term value of brands, then we should consider whether the data and reports we furnish encourage the desired long-range thinking.

Clearly in this economy marketers cannot afford to ignore today's sales as a primary KPI, but as I wrote in my earlier blog post, "The short- and long-term are not mutually exclusive, but they become so if we willingly concentrate on one to the detriment of the other. And if marketers won't champion the importance of long-term brand vitality, then no one else within the business will."

Companies that deliver persistent above-market results view brands as "a long-term operational commitment or way of working, not a short-term initiative." So it should come as no surprise to marketers who instead view brand spending in the same way they do the cost of pens--something that produces usefulness only in the short term--that their brands end up being as disposable as those pens.

The Ad Age article is a great read and hints at important cultural shifts necessary to keep marketers' (and investors') focus on the long term. For example, "Walmart stopped feeding financial markets a steady diet of short-term metrics -- monthly sales figures -- in part to help it focus on the future." And Paul Polman, Unilever's new CEO, scrapped earnings guidance, which "he embraced as a longer-term strategy that will give the company financial flexibility to maintain marketing support as needed regardless of quarterly financial pressures."

There's a very smart lesson here for marketers: If your bosses are always demanding short-term results, maybe it's time to consider whether the data you're feeding them encourages this myopia. Do your reports focus significantly (or exclusively) on sales, shipments, and other current metrics, or do they also address Net Promoter Score, awareness, consideration, and other measures of long-term brand health?

In the end, long-term brand consideration can only come if it is reflected within the culture of the organization. The ways to shift from short- to long-term thinking are as diverse and varied as are companies, so the key is to find the right appeal for your own unique enterprise.

Stephen Quinn, Walmart U.S. chief marketing officer, saw an organization with little care for brands but still found a way to encourage long-term brand consideration: "Brand thinking was not really part of this culture, but it's a great fit with a culture that wants to be around for generations to come."

If we want our brands to be around for generations to come, then we have to focus on measuring the results that deliver on that lofty goal. Studying last month's sales to today's consumers furnishes little insight into the likelihood the brand will be around and delivering value to those consumers' children.

1 comment:

Apogee Marketing Partners said...

I do think that the metrics we use in our presentation of our marketing initiatives will determine how upper management will respond to future plans. A balanced score card will help to alleviate this by ensuring that we are measuring the right variables. External and internal, long-term and short-term metrics are very important to the success of any business.