Hands-up if you work in Sales Promotion?
Martin Hayward, SVP global digital strategy and futures, Aimia
As readers of Marketing this question will always have elicited a few raised hands from those working at the more tactical end of the marketing journey, but something is happening to the world of marketing that could make it increasingly difficult for most of us to keep our hands by our sides.
Slowly but surely, the marketing industry is in danger of becoming increasingly short-term.
The recession and economic downturns around the world have inevitably contributed to a focus on driving shorter term sales, but arguably the biggest driver of the drift towards short-termism has been the growing impact of digital.
In Canada alone, the IAB Canada‘s annual internet advertising spend report found Canadian brands spent $3.5 billion on digital advertising last year. Digital ad spend grew 14% over 2012, much more than the 9% the IAB predicted and digital now makes up 31% of overall advertising spend in Canada.
At its simplest, digital can be broken into two themes, more data and more channels. More data means that theoretically, and hopefully with the consumers consent, it will become ever easier for businesses to truly understand their customers in many dimensions. Customer data has the potential to be an altogether richer asset, bringing what people have bought together with their movements, location, social circles, media consumption, interests and even purchase intentions.
More channels mean that we will have the potential to reach consumers through their various digital devices at any time, any place, anywhere.
These two together should be heralding a golden age of customer relationships as marketers finally have the ability to both understand their customers’ needs in great detail, and have the tools to get targeted message to them exactly when and how they would prefer it.
Somehow though, this golden age still seems a little way off. The ‘always-on’, real-time nature of digital has tended to be adopted as a set of tools to deliver offers and deals which, although better targeted than historically, have accelerated a drift in total marketing spend away from longer-term brand building towards sales promotion activity.
In the U.S., eMarketer analysis suggests that of total digital marketing spend, less than 30% could be considered brand building in some categories. To counter this short-termism however, we are also seeing an increase in Loyalty spend. In a recent Aimia survey of 71 CMO’s, it was found that spending on loyalty is now about the same as spending on digital elements like online ads. Collectively, these combined are outstripping what is spent on traditional marketing, because of targeting, effectiveness, and measurability.
So thankfully, we are not on the slippery slope towards short-termism, towards a deal and offer based culture where margins are perpetually squeezed and value is hard to protect.
Perhaps, ironically, it is also digital that is allowing loyalty programs to build long-term relationships with customers when used as insight and channels of communication to build for the longer term.
If we ensure that we use technology to do things for and with our consumers, not to them, then the temptation to over-message and get swept along in a flurry of short termism will be easier to resist.
In many ways, loyalty needs to act as the antidote to short-termism, engaging customers in a longer term perspective and a rewarding relationship that makes a lot of the tactical noise from competitors less relevant. It has been proven many times that anyone can bribe a customer to change their behaviour in the short term, but only truly customer centric companies can create mutually rewarding relationships over the longer term.
For those that don’t use the vast amounts of customer data available to them as well as new digital tools to build real relationships, the future is more likely to develop into a dangerous cycle of discounts driving promiscuity and price elasticity. Sales promotion can, when used carefully, be an important part of the marketing mix, but few brands will survive for long without a strategy to also build deep relationships with customers and deliver long-term loyalty.
