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The long-term value of brand building

Marketing has become too focused on the immediate – a rebalance of our thinking is needed, writes Shenda Loughnane

Every marketer and business leader knows instinctively that strong brands deliver better business results. According to an IPA/FT survey, 83 per cent of executive business leaders believe in the power of brands to deliver to the bottom line. Instinct aside, there is also a large body of evidence that shows long-term brand building efforts make good business sense.

Yet most marketing today remains stubbornly focused on the short-term. A report from media research company Enders Analysis found that 70 per cent of all growth in UK advertising over the past 15 years has come from direct response campaigns, and the picture is likely to be similar here in Ireland.

Overly focused on digital

Much of the reason for this lies in how media consumption has changed over the past decade. New digital channels have led to a more fragmented media market, with advertisers naturally following audiences. And as brands have increasingly focused on digital channels, we’ve become hooked on the instant results that these digital channels provide, optimising continuously to deliver short-term impact. With the pressure on businesses to deliver faster, instant results and to prove the value of marketing efforts, it is easy to understand the change in focus.

At the same time, reporting cycles have shortened a lot. Whereas in the past we evaluated advertising success over a six to twelve-month period or longer, today we judge success in terms of a week, a month, or, at best, a quarter, changing tactics and messages frequently to ensure we deliver on immediate goals. And budget priorities have followed suit.


However, lots of short-term initiatives don’t ultimately add up to overall long-term brand impact.

Les Binet and Peter Field’s work on marketing effectiveness over a 15-year period clearly illustrates how both short-term activation and long-term brand-building efforts differ in driving overall business results. While short-term activities deliver spikes of performance, the long-term halo on brand building is minimal. Consistent investment in brand building over a sustained period is therefore required to deliver superior long-term business performance.

Listen to episode one of the Inside Marketing podcast, an interview with Shenda Loughnane, group MD of Dentsu Aegis Network and board member of the Institute of Advertising Practitioners in Ireland (IAPI). 

Impact on creative

The more recent focus on the short term also has a knock-on effect on creative investment. If brands are focused on immediate results, creative is often de-prioritised in favour of fast response or price-focused messaging.

Yet advertising creative is one of the most powerful drivers of brand and business success. Research company D2D has established that after brand size, creative is the second biggest factor in advertising profitability, increasing it by a factor of 12, well ahead of tactics such as targeting, seasonality or media channel selection.

In particular, a creative campaign that delivers a strong emotional connection with consumers delivers on brand building goals. Confectionary company Mars has developed a model to understand this impact on revenue; they grade all advertising messages on a scale of one to four. For every 1 per cent of additional investment they put behind a high-scoring advertisement, the greater the impact on revenue returns. They recognise that in a world where consumers can act at the click of a button, developing a lasting connection through the power of your brand has never mattered more to business success.

What we need in the industry is a rebalancing of our thinking and a return to our key principles of strategy and planning.

While continuous investment in brand building creates better long-term business value, this funding does not have to come at the expense of short-term business gains. The synergy between the two is key. We need long-term brand building strategies to attract new customers and then shorter-term strategies to stimulate engaged or existing customers. The challenge is to find the ideal balance of investment across both of these. Binet and Field suggest that balance should be weighted 60-40 in favour of brand building, to deliver optimal results. While that ratio differs across categories, it’s a good starting point for brands.

But securing investment from senior management for brand building initiatives isn’t easy. A recent Institute of Advertising Practitioners in Ireland (IAPI) event suggested that marketers need to get better at communicating the benefits of brand building and elevating the role of marketing at the boardroom table. This means speaking in business terms, rather than marketing jargon, and putting in place clear performance indicators and metrics to demonstrate the financial impact of brand-building efforts. But most of all, its about working in close partnership with the CFO – a case study from Smurfitt Kappa at the IAPI event illustrated this well.

So as an industry, if we want to build long-term business success we need to start investing in brand again, balancing long-term and short-term investment. We need to start using evidence-based research to make decisions on creative and media selection. And most importantly, we need to start putting in place clear financial metrics around our brand building so that we can prove the business value in both the long-term and the short-term.

Shenda Loughnane is group MD of Dentsu Aegis Network and a board member of IAPI, the Institute of Advertising Practitioners in Ireland.

Inside Marketing is a podcast and content series brought to you by Dentsu Aegis Network and Irish Times Media Solutions, exploring the issues and opportunities facing the world of media and marketing, with expert input from senior marketing personnel and thought leaders.
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