In these times of dynamic consumer and retail change and companies’ focus on quarterly earnings, decision makers are increasingly prioritising short-term marketing and promotional tactics. Recent research from the IPA and ISBA shows that marketers are focusing on short-term tactics over long-term strategy, which is impacting efforts to improve marketing effectiveness.
This prioritisation is further reinforced by traditional investment modelling techniques, current Marketing Mix Modelling methodology is mostly project-based and geared towards short-term timeframes and effects. This means that promotional spend and marketing activities that realise an immediate return tend to win out when it comes to the allocation of budgets.
According to the report ‘The long and the short of it’ by Les Binet and Peter Field, on average marketers should invest 60% of their budgets in long-term brand building and 40% in short-term sales activation to achieve the best return on marketing investment. It is clear that this empirically driven advice is not being acted on and this is driving long-term investment inefficiency.
Singular Intelligence believes that this short-termism across business decisions and modelling techniques leads to uninformed and incorrect investment allocation – promotional effects are exaggerated; pricing changes are underestimated, and the value of consistent brand building media investment is dramatically under called.
In the absence of effective measurement, marketers have previously resorted to stating that the long-term effect of campaign activity is two to three times the size of the short-term impact – but this is clearly an oversimplification and gives little guidance to firms regarding the relative efficacy of their various marketing expenditures over the long run.
Recent research has found that the long-term effects of discounting are one-third the magnitude of the short-term effects. The ratio is reversed from other aspects of the mix (in which long-term effects exceed four times the short-term effects), this underscores the importance of accurately modelling both short and long-term value creation.
In our view, the opportunity to develop an AI-driven, always-on modelling platform provides the perfect answer to these current short and long-term sales and marketing analytic issues. Short-term investment effectiveness can be understood, and AI’s predictive capability can be used to optimise tactical sales and marketing activity in real-time. But because the platform is constantly running and learning it can evaluate long-term effects of brand building and promotional discounts on performance and consumers purchase behaviour. This is especially true if a true holistic model is built taking into account brand equity and consumer purchase data.
Singular Intelligence has built a proprietary AI-driven platform that is automated and always-on, the platform can ingest all types of market, brand and consumer data and accurately predicts future performance. The continuously updated and always learning nature of this advanced analytics platform means that for the first-time companies can understand the true short and long-term effects of their investment levers
If you want to take on the challenge ahead with a proven AI strategy, product and service, designed for your business, we would love to talk to you.
Steve Gladwell, Industry Director, Steve@singularintelligence.com
Nick Marr, Commercial Director, Nick@singularintelligence.com
Sarvesh Kumar, CEO, Sarvesh@singularintelligence.com