Mindshare Video: The Return to Long Term

For the past few years, many companies have been trading long-term success for short-term gains.  However, we’re now in the midst of a backlash as longevity is making a comeback.  Research from IPA shows that the average number of very large business effects -- like profit and market share -- per ad campaign dropped by nearly 20% in the last few years, thanks to a big increase in the percentage of short-term campaigns launched by marketers.

It is understandable why brands would favor a short-term approach.  Not only is it easier to observe and measure, but CMOs and brand managers are increasingly pressured by quarterly sales goals.  But immediate results aren’t always a good thing.  This short-term outlook inhibits innovation and makes the economy less competitive, impacting the stock market.  This means that more companies are staying private -- according to the Wall Street Journal, the number of U.S. publicly traded companies has dropped by almost 50% since the 1990s.  Startups are also taking longer to IPO, with the National Venture Capital Association showing that the median amount of time increased from 3.1 years in 2000 to 8.2 years in 2017.

As the issues with short-termism become more apparent, some are shifting to a more long-term strategies.  For example, the Long-Term Stock Exchange is a model backed by Silicon Valley venture capitalists that operates using “tenure voting.”  That means shareholders who have their stocks for a longer period of time get more votes.

In another example: Netflix anticipates it will spend $2 billion on marketing this year, after spending $1.3 billion in 2017.  While this may seem like a huge increase in spend, this will support the more than 700 pieces of original content that will be released.  Netflix decided to start producing said original content because while it may require a big up-front investment, the long-term benefits of owning their own programs versus solely relying on licensing from others outweigh the short-term costs.

For marketers, it is important to ensure that you’re setting the right KPIs for long-term growth  and balancing brand building and sales activations in your creative and media strategy.  Are you thinking long-term?  Don’t be so quick to change course if the impact is not immediate, because wrath is never something you want in business.

For more episodes and information on the latest in adaptive marketing, visit MindshareInTheLoop.com.

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