| January 21, 2019
Reading an article in The Atlantic made me realize that one of the biggest barriers to successful brand-building is probably our own inherent bias to short-term outcomes. If so, what might we be able to do to offset that bias?
Present bias – or hyperbolic discounting – is a strong bias that causes us to value immediate payoffs more than future ones. As Ben Yagoda notes, it is the bias that leads many of us to undersave for retirement. If we add present bias to all the other pressures that work against investing in a brand’s long-term best interests – short CMO tenure, digital convenience metrics, quarterly returns – then no wonder so many marketers admit they know brand-building is important, but claim they need to prioritize sales now.
Of course, you could argue that all the drivers of short-termism are due to present bias. The desire to switch jobs in favour of a higher salary now. The quick dopamine hit of seeing likes for an ad spike on social media. The demand for profit now rather than better returns over the next ten years. And that is a real quandary when brand building is commonly regarded as a long-term exercise.
Ignore the quick wins of digital-only companies that do not have to grapple with physical distribution and sales, most brands take decades to grow and become successful. More importantly, the true benefit of a strong brand is that it is still around and making money decades from now. But that only happens when the management team is able to take the right decisions, at the right time, and keep investing in the brand, not just driving immediate sales.
This is why I love the example of Subaru in the USA. Here is a brand that started out from nothing, but by identifying people who would value what the brand had to offer and investing in marketing campaigns that resonated with them it has steadily grown market share over three decades while making industry leading profits. Even brands like Lululemon and Capitec have taken a couple of decades to reach their current status. So how do we offset our present bias and ensure that we are building brands for the long-term?
In The Atlantic article Ben Yagoda describes an exercise designed to rid himself of his present bias by staring at a photograph of himself as he might look twenty years from now and one of his daughter as she would look decades later. (Intriguingly, it reminded me of this campaign for NTUC Income in Singapore.) But that is not going to work for CMOs and brand managers who only spend two years in a job.
My belief is that we need to do a better job of identifying short-term indicators of longer-term success, so we can feel good that we moved the needle now and be confident that the longer-term outcome is likely to be a good one. But what do you think? Please share your suggestions.