Why short-term sales don’t always mean long-term success – Nielsen

No one likes to wait. It’s human nature. And the fast-paced nature of our lives today, amplified by the speed that digital connectivity facilitates, only heightens the pressure to move faster—in all facets of our daily lives. The same is true in business: Connectivity, digital technology and high-speed communication inherently accelerates the pace of how we work. And this is particularly true in marketing. Yet depending on a brand’s goals, it might be time to make some adjustments.

Brands have hundreds of options to choose from when they think about their marketing technology, and they’ve leaned into these options heavily in recent years. In fact, conversion-focused marketing has been the industry darling for some time now. And when the pandemic arrived and brands pulled back on mass media campaigns, that digital focus sharpened even more.

COVID-19 aside, digital growth-focused strategies drive sales in this quarter, not the next. Importantly, a focus on near-term sales—and the ability to measure the impact of conversion marketing—serves to grow investments in these strategies. And marketers are quick to confirm that they’re steadily increasing their financial spending across conversion-oriented channels at much greater rates than more traditional channels, such as linear TV and radio. According to our 2021 Annual Marketing report, marketers surveyed planned to earmark their largest spend increases to social media, search, online/mobile video and email.

Importantly, all brands should develop holistic, well-balanced marketing strategies that map to specific business objectives and outcomes. But when brand awareness and customer acquisition are key business goals, conversion-dominated strategies are going to deliver limited results. These strategies also stand in opposition to numerous academic studies that claim upper-funnel marketing is the best path to growth. Notably, the marketers surveyed for our most recent marketing report rank brand awareness and customer acquisition as their top priorities, which stands in opposition to where their increased spending is headed.

The downside of our accelerated lifestyles is that it’s easier (and quicker) to drive sales than build out campaigns aimed at mass reach that will take longer to yield positive results. Measuring long-term sales is also different and many marketers rank the effectiveness of traditional mass media lower than digital channels.

From a consumer perspective, our recent Trust in Advertising study found that consumers have more trust in many forms of traditional media than digital options. And while our most recent marketing report notes that many brand marketers cited challenges in measuring the return of their investments in traditional media like TV, radio and print, Nielsen experience base shows that on average, a 1-point gain in brand metrics, such as awareness and consideration, drives a 1% increase in sales. So if a brand generates $100 million in annual sales, that 1-point gain would equal an additional $1 million in sales. 

Upper-funnel efforts also generate an array of ancillary benefits that can drive the efficiency of sales activations. For example, Nielsen recently measured how effective a financial services company’s marketing efforts were at driving sales across approximately 20 markets. At the onset, brand awareness and consideration for the brand varied across the different markets. At the end of the study, Nielsen found that the correlation between the upper funnel brand metrics and marketing efficiency was exceptionally strong (0.73). Accordingly, brands may find it worthwhile to build equity not only for the direct benefits to sales, but also for the indirect benefit coming from improving the efficiency of activation efforts.

There is no short-selling the importance of establishing relationships with consumers and nurturing them with meaningful, personal engagements. In a world of growing choice and fleeting loyalty, brands need strategies to fortify their relationships with existing consumers, and digital channels are critical for those endeavors. For true brand growth and long-term business viability, however, marketers need to balance their conversion-efforts with initiatives that put their value proposition in front of consumers that aren’t yet familiar with them.

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