Nielsen: Short-Term Failure to Build Brand Awareness Can Hurt Long-Term Sales
As a rule of thumb, according to Imran Hirani, VP of Strategic Accounts at Nielsen, 60 percent of an organization’s marketing efforts should be focused on brand-building (upper funnel) and 40 percent on conversion (lower funnel). Yet, especially during the COVID-19 pandemic, brands concentrated on trying to convert prospects into buyers rather than on creating brand awareness among potential prospects and buyers. And that “short-termism,” as he calls it, can inflict long-term damage on a company.
The author of a recent white paper for Nielsen, “Take Command of Your Brand: Long-Term Growth Requires a Balanced Marketing Strategy,” Hirani notes that a one-point increase in upper-funnel metrics such as brand awareness and consideration translates on average to a one percent lift in sales. “You can’t buy what you don’t know exists, and you won’t buy what you have no interest in,” he says. “If you haven’t done the work to build awareness and prime the consumer, it’s going to be awfully difficult to convert them.”
There have long been three primary sources of brand awareness, Hirani says: distribution, regular brand usage and marketing. Distribution is having your products on store shelves or your name on storefronts; brand usage entails seemingly minor elements such as an auto brand’s logo on a steering wheel and a retailer’s name on a credit card that continually reinforce brand awareness on a subconscious level. During the pandemic, as people ventured out less, those first two sources lost much of their impact. But marketing can fill in the gaps. “Use marketing to make up for the loss in the other two channels,” he advises, because that’s the source that marketers can control.
Among the key indicators that a brand’s upper funnel needs renewed investment: “You’ll start to see that your long-term sales prospects are not growing. You’ll also start to see reduced effectiveness in your lower-funnel efforts—that’s a big red flag because it’s saying that you failed to create a significantly broad-enough base,” Hirani says.
That reduced effectiveness of previously successful conversion tactics can help you overcome one of the biggest stumbling blocks to bolstering investment in brand-awareness marketing: internal resistance. Sales departments, executives and investors can be so focused on immediate sales that they hesitate to divert resources from conversion to brand building. “You have to really emphasize the perils of not investing in the upper funnel,” Hirani says. Showing the long-term effects on revenue of this short-sightedness can—and should—persuade them to adjust the balance of their brand awareness/sales conversion investments.
When rebalancing your marketing investments, keep an eye on your competitors’ efforts. While focusing 60 percent of marketing efforts on the upper funnel, as mentioned above, is a solid guideline, “what’s most important is making sure you’re not getting too far afield from the competition,” Hirani says. If your key competitors are amping up their brand awareness efforts with splashy ads, partnerships, tie-ins and the like, you might want to consider adding more resources into brand building as well, so as not to become overshadowed.
Another thing to keep in mind: “When you think about how you optimize your marketing mix, it looks different when you’re optimizing for sales versus the upper funnel,” Hirani warns. Avoid assuming that what worked for the lower funnel will also perform well for the upper funnel. “Sometimes there’s a correlation, but overall there’s tremendous variability in how effective channels are for upper funnel versus lower funnel. Balance is needed not just from a messaging perspective but also from a channel perspective.”