Is your brand too reliant on short-term sales?

by Nigel Hollis | March 20, 2017

The other day Satya Menon, Senior VP of Client Solutions and Consulting, and I were reviewing the topline results from a set of market mix models. While qualitative in nature, the assessment suggests that brands may be increasingly reliant on driving short-term sales to maintain overall volume trends. If this finding proves more widely applicable then it has some scary implications.

Our review was limited to 27 models, mostly for packaged goods brands, and can in no way be considered representative. However, there was one noteworthy finding, base sales – the long term component of sales not explained by short-term causal variables – were declining as a percentage of overall sales in 15 of the cases, often at odds with the overall trend in base sales.

Overall Base Sales Trend 

  Base as % of Total Sales











In only one case did overall base sales increase in absolute and as a proportion of total sales.

What might this finding be telling us? Why is the long-term sales component more likely to shrink as a proportion of the total rather than grow or remain stable? One hypothesis would be that marketing is increasingly focused on driving short-term sales through media weight, activation and price promotion and not focused on building longer-term predisposition.


If so, this means brands are increasingly buying sales by direct investment. To continue to grow overall sales they will have to invest more and more money in marketing and promotion over time. If true, that conclusion would sit very uncomfortably in a world where marketers are constantly being told to do more with less (something which empirical evidence suggests is unlikely anyway).

Could this be a fluke finding? Yes. But that said, there is evidence from other sources to suggest that the power of brands and advertising is in decline. The 2011 IPA Gunn Report which found that while efficiency had improved for creatively-awarded campaigns, for the more representative non-awarded campaigns it had declined. There is evidence to suggest that brand equity is weakening over time. Analysis of the Kantar Millward Brown tracking database finds that the average total unaided awareness declined by over 10 percent for a consistent set of brands between 2010 and 2015.

So what do you think of these findings? Random chance or is there something bigger going on? Do you have data you can add? If so please get in touch but meanwhile please share your thoughts. 


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  1. Nigel, March 29, 2017

    Thanks for the comments.

    Abhijeet, we don't have a enough examples yet but your suggestion is a good one. We intend to collect a wider set of models and see if this pattern holds up and can look at ST verus LT then.

    The IPA recently provided a data point that suggested that 10% of entrants in their 2011 effectiveness awards had focused on short-term and that this rose to 35% in 2015 (if I remember correctly). However, the difference between winners and entrants in terms of size of sales effects fell by half over the same time frame. We cannot assume that short and long-term are independent, decreasing long-term predisposition may well also lead to incremental returns getting smaller.

  2. Chris Ponting, March 27, 2017

    Interesting from Ed C

    My thought would be a combination of two.

    (1) Consumers are increasingly spoiled for choice and are more aware of the difference between a functional product and the brand that surrounds it. Thus they are less loyal to brands, more riven by short-term factors (e.g. price promotion) and base sales are less important proportionally.

    (2) Pretty much every brand overly invests in the short-term - or at least quick, measurable results - because the marketing team need to prove the campaign (and thus their) worth. This is a problem in every industry, from banking to government, with no easy solution.

    Any more insight on this would be very interesting MWB :) 

  3. Abhijeet Ray, March 21, 2017

    Interesting hypothesis here.  

    This actually opens up a whole new area of investigation and I am hoping you gentlemen and go back into your data sets and try and separate 'short-term sales driven' campaigns which are built around long-term brand equity builiding/sustaining pillars(s) vs 'short-term sales driven' campaigns that are devoid of any linkage to long-term brand equity building/sustaining other words heavily tactical and purely bottom line driven.

    Then we can go back and review what you have just said.  If the overall base sales trend is declining quicker in the latter cluster compared to the former, then the hypothesis becomes stronger and becomes fodder for someones Phd thesis!

  4. S M Didarul Hasan, Senior Marketing Manager, Ispahani Group, Bangladesh, March 21, 2017
    Good point. Hopefully I shall write something soon.
  5. Philip Herr, March 20, 2017
    How much less can we feed the dog before it dies?
  6. Ed C, March 20, 2017

    Scary indeed. A few thoughts come to mind:

    1) Less spending on base growth and more spending on short term does appear to be happening. I believe this has been discussed in other posts, where brand managers' futures may not be anticipated at their current company, so why not focus on the short term?

    2) Is the importance of brand equity / base sales declining? Obviously it's still the biggest volume contributor to the total pie, but with so many more brands meeting the minimum requirements for category entry, perhaps activation factors (of price, location, ease of use) are now the differentiating factors? Examples like banks, insurance and tires come to mind.

    3) Do brands know the total ROI of marketing efforts focused on base vs. short term? Obviously short term ROI's are great in the short term, but have we seen ROI models that clearly show spending $X in the short term will yield Y% in the short term, but spending $X on base will yield Z% (>Y%) in the long term / overall? I think our MDF simulators can be a start to that analysis. 

    Fun stuff!

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