Why it pays to think about what kind of marketer you are…and what your brand actually needs

Perhaps one of the most important distinctions in business is between effectiveness and efficiency. Effectiveness is about hitting targets in absolute terms (sales, profit, brand awareness growth…). Efficiency is, as the name suggests, how efficient you are relative to what you spend (ROI is an efficiency metric for example).

While we can all agree that both factors are important in marketing, there is fundamental tension between the two when it comes to timings and budgets. A straw-man argument might be thus:

  • Those who mainly care about efficiency are Activators who work for short-term return. To achieve a greater return the focus is on targeting those consumers most likely to buy us. The greater the personalisation, in terms of channels and communications, the better. The ultimate Activators´ desire is to target ready-to-buy consumers, at the moment they are in “buy” mode – for instance, when they do a Google search
  • On the other hand, if you mainly care about effectiveness, you are a Builder. Builders are all about expanding the brand´s reach in terms of channels and communications. They follow the philosophy that getting your brand in front of as many people as possible is the best way to maximise trial and repeat purchase.

Which is better to build a profitable brand?

Research* by Les Binet and Peter Field acknowledges the value of both approaches, but suggests the optimal strategy for long-term success is somewhere around 60% towards Builder strategies and 40% towards Activator strategies.

The bias in favour of Builders is somewhat counter-intuitive in an era where online advertising has completely transformed the Activator toolkit in terms of online ads and search-based advertising. The fact that tips the scales is that growth comes from acquiring new consumers rather than improving conversion on existing customers – a fact proven time and time again by research (see my previous stories in this vein). For instance, Amazon has a very easy-to-use interface (efficient in the short term), but also advertises on TV as a way of reaching those consumers who currently don’t use their services (effective in the long term).

In today’s modern world, we have more tools available for facilitating conversion and better one-on-one communications than ever, but because of that, paradoxically more of our thinking should focus on Building and targeting new consumers, not the other way around.

History has shown over and over that building brands is hard work because you need to reach far beyond current consumers, even if it’s at the expense of short-term efficiency. And when access is easier, the stronger brand will win by an even clearer margin. Whether it’s Netflix, Amazon, Harry Potter…  globalisation and ease of access allows blockbusters to become even more dominant. The easier consumers can buy us the more we need to think of long-term brand building and acquisition of new consumers.

 

 

Author: Juan Park

Email: Juan@wineintelligence.com

 

 

 

*The Short and the Long of It by Les Binet and Peter Field.

 

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