Page 103 - The EDIT | Q1 2017

Thoughtleader
a new cadre of long-term investors, particularly in emerging markets. Several companies allow their chief executives to exercise their share options only after retirement, to encourage long-term thinking.
The financial gurus like to call this value generation method the art of ‘compounding’ — the process
by which the value of investment increases due to the earnings on investment (both capital gains and interest,) as time passes.
When asked to name the greatest invention
in human history, Albert Einstein just replied “compound interest.” [Hartgill, 1997] “Compound
Interest is the eighth wonder of the world. He who understands it, earns it... he who doesn’t... pays it.”
If businesses are encouraging shareholders to take the long view, should they not be given a holistic and longer term – or compound – view of the performance of their advertising budgets?
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A Balanced Approach
Careful planning is needed for balancing long and short-term priorities. Like Dove, one can activate
a fame-driven campaign to gain momentum in the short term, while driving brand effect in the long term. Or consider strategies that build brand salience (or ‘mental availability’ in the language of Byron Sharp) of the brand, and reduce non-buyers’ ignorance of it if they are to work successfully over both the short and long terms.
4 For instance, P&G two years ago, tried targeting ads for its Febreze air freshener at pet owners and households with large families. The brand found that sales stagnated during the effort, but they rose when the campaign on Facebook and elsewhere was expanded last year to include anyone over
18. Thus, targeting broader is much more efficient, especially over the long term. And reinstating that a balanced scorecard should be in place to ensure all these elements are well captured.
Corporates are also encouraging Shareholders to take the Long View
5 Be it Paul Polman, the CEO of Unilever, who has stopped publishing full financial results every quarter or business tycoon Warren Buffett, who adamantly refuses to provide earnings guidance to investors and equity analysts, companies are thinking beyond short-termism. Measures like “sustainable living plan” by Polman or Amazon’s continuous investments in technology and customer practices has attracted
References
1. LesBinetandPeterField/TheLongandtheShortofIt
Deepa Menon Insights Director PHD Singapore
2. Marketing Week/P&G adjusts sampling strategy after admitting it was ‘too myopic’/By Leonie Roderick 23 Feb 2017|Advertising Age/P&G Will Keep Hiking Ad Spend Amid Soft Sales/ Jack Neff
3. WARC/Beautifully effective: How Dove turned cultural resonance into ROI/Principal author: Marie Maurer, Ogilvy & Mather
4. The Wall Street Journal/P&G to Scale Back Targeted Facebook Ads
5. Economist/Schumpeter/Taking the long view
THE EDIT ISSUE 05 | Q1 2017