Direct-response performance anxiety

The deadly question every entrepreneur and manager asks when thinking about marketing:

Should I focus on brand building (long-term strategy) or prefer only immediate sales activation (short-term strategy)?

What should we focus on between these two fires? And in what proportion? Putting all our focus on one strategy or on a mix between short and long term?

To hear current marketing gurus particularly in vogue among small businesses and professionals, the answer would seem obvious:

You need to focus only on sales. Now, now, the rest doesn't matter! Working on branding is useless and stupid, typical of incompetent academics full of big words! You need to do "Direct Response Marketing and that's it!"

But is this really the case?

Of course not. As obvious as it sounds, so many people believe these easy and unscientific recipes. And that's a shame.

How science sees it

Fortunately, marketing is a soft science, so there is a body of literature on these and other matters. On the subject of short and long-term strategy, you can, for example, enjoy a body of research(, based on examining thousands of campaigns over many years (more than 15 years and 15,000 studies), which allowed researchers Field and Binet to conclude on what the ideal approach is, but also where marketers are heading.

Let's start with the (sad) confirmations.

Marketers, not only in Italy, are increasingly focused on the short term. They spend money on immediate activation rather than on long-term brand building.

Field and Binet show, however, that in the long run this short-term approach is counterproductive, to say the least. Because it dampens the overall impact of the marketing mix. Too much time spent reaping the low-hanging fruit (immediate sales activation) means less time to grow the tree (brand building). But by focusing too much on harvesting, the tree eventually stops growing.

the end?
Standing out in the noise, the purpose of branding

The magic 60/40 formula

So what is the ideal budget breakdown discovered in this research?

60 vs. 40.

  • 60% of resources and man-hours in marketing must be invested in brand building.
  • 40% for sales activation.

And how should the two strategies intersect?

Let's start with the basics to get to the answer.As we know, brand building dominates long-term growth and involves the creation of memory structures that make consumers explicitly want to choose a certain brand over a competitor. Brand building also decreases price sensitivity. Hence, over time, it has a strong impact on profitability.Sales activation, on the other hand, brings short-term sales increases and is triggered by more or less quality behavioral cues that make consumers want to buy now. Promotional messages, seasonal or other occasion-related messages, and minor news about new products are the main messages used. They are focused on a simple response. They have little effect on growth, pricing power and profitability.

We insist on the phrase "more or less quality," because while it is true that the "short-term" strategy can bring short-term spikes in sales, this depends on how it is implemented and the mastery of the tools.

More and more often, in fact, we see amateur marketers and improvised trainers simply applying the magic beans for inexperienced people that we call "Cialdinate," that is, the capèstra implementation of the techniques of Social Proof, foot in the door, scarcity heuristics and urgency.
Evidently, these techniques yield mediocre results, and always on low-spending targets. Which is paradoxical, given that these people call themselves experts in "high ticketing."

In synergy, depending on the markets

But branding and activation must work in synergy, enhancing each other. Brand communication creates lasting memories that increase the base level of demand, and sales activation activates these memories, efficiently converting them into sales. The net result is a sustainable revenue stream with high margins and high ROMI (return-on-marketing-investment).This optimal synergy also changes depending on market variables and majority usage in the communication channel. For example, in the online/offline division the balance follows:

  • Offline brands: 55% branding, 45% short-term sales
  • Online brands: 74% branding, 26% short sales

Online you have the luxury of doing "more branding" than offline, because the medium itself makes sales activation easier. Which, if you think about it, is obvious: on the Internet you are always one click away from a purchase.

Since sales activation is relatively easy for very large brands, they need not allocate such a large share of their budget to it. As market share increases, the optimal balance shifts even more in favor of brand building. Hence the little understood effect whereby big brands "seem" to invest everything in brand communication. In truth, they are simply weighting their investments better, adjusting them to brand equity.Finally, when the market category is in a downward phase of general customer interest, there should be a slight shift toward sales activation relative to the ideal mix: at this stage it is indeed more complicated to build strong emotional memories toward a brand, lacking the manure of passion for the category in which it operates.

Online? The proportion changes


You should not be. It's just a matter of "understanding" these dynamics in depth without limiting yourself to widespread magic recipes that are too good to be true. It's about doing the real business of being a marketer without looking for subterfuge and short-breath shortcuts.

Because, as Field and Binet teach us, they are suicidal.

That is why, unlike the gurus who say all it takes is a course to learn marketing, we strive to make people aware of these dynamics, making them understand the complexity of the subject with examples, market surveys and research such as those reported in this article. Publications in which we find ourselves and whose veracity we confirm, seeing the effects and results every day with our clients.

This is why relying on a marketing agency is crucial to stay in the market as long as possible by increasing profits, margins and return on investment at the same time. This way you avoid applying the wrong mix and making potentially deadly mistakes. il buon marketing sull’edizione rivista e corretta di uno dei bestseller italiani sull’argomento: Digital Deep Marketing