How full-funnel strategies fuel success in an economic downturn

For marketers, the commercial boost of an instant win is compelling.

It explains, in part, the last decade’s surge towards performance-based marketing – with the promise of concrete clicks, leads and sales as a clear way to prove impact and ROI.

But against the backdrop of a pending recession forecast across Europe and wavering consumer confidence, it’s a ‘one-trick pony’ approach that brands should be wary of.

In fact, recent Nielsen research shows that it’s only by combining these lower-funnel activities with longer-term brand building – upper-funnel activity – that companies can see sustained successes despite financial challenges.

Without a full-funnel strategy in place, those same companies risk losing sales, brand equity and their competitive edge just when they can least afford to do so.

Here’s why.

As marketers fight it out for smaller pots of disposable income, with smaller budgets to do so, it’s easy to see why they’d turn to activities that achieve quicker results, such as sponsored ad campaigns on social channels. A similar paradigm shift took place during the 2008 economic crisis, as new ad tech platforms dangled front- and back-end metrics to beleaguered marketers, allowing them to stretch smaller budgets by closely targeting key demographics. It transformed the marketing landscape, with programmatic display growing from $10bn to $27bn between 2014 and 2017, for example.

Building and maintaining a brand takes more than maintaining sales.

But, more than a decade on, we now know that companies that become too seduced by these short-term results will suffer in the long term. That’s because our research shows a focus on lower-funnel marketing activities, at the expense of broader brand building, erodes brand awareness and consideration over time.

Our 2021 Brand Resonance Report found that increasing awareness and consideration by just one percentage point via upper-funnel marketing drives a 1% increase in future sales. Plus, increasing awareness and consideration by one point can decrease short-term cost per acquisition by the same amount. Another 2021 Nielsen study, commissioned by Google, showed that brands that added upper-funnel marketing efforts to existing mid-funnel campaigns were able to boost ROI by 70%. And those that added upper-funnel tactics to campaigns that covered the mid and lower funnel were able to boost ROI by 13%.

Emotional connection

It’s easy to see why, when you think about it. A brand that purely invests in driving traffic to its website via sponsored ads on social or SEO will find itself losing out to those brands that combine these same techniques with upper-funnel marketing – such as creative TV or out-of-home campaigns – to build emotional connection. Given that consumer loyalty only becomes harder to pin down when they’re facing financial uncertainty, this emotional connection, or brand equity, only increases in importance, too. That’s also why, when measuring the ROI of any marketing efforts, brands need to consider both short-term sales uplifts as well as these more qualitative effects.

Without this, the knock-on effect is that conversion rates at the bottom of the funnel become increasingly difficult to achieve, while at the same time reduced awareness has limited future sales prospects.

Building and maintaining a brand takes more than maintaining sales. That’s because any brand’s existing customer base won’t generate enough incremental revenue to meet most long-term growth goals.

The impact of this is only greater in the midst of an economic downturn, as once again marketers are grappling with stripped budgets or, at the very least, a greater demand from CEOs to justify every pound spent. ROI is only sustainable when marketers create a full-funnel strategy that balances the benefits of both lower- and upper-funnel activities.

There are other reasons for distributing spend more evenly throughout a funnel, particularly when cash is tight. Not only have we seen steady inflation of digital media costs dilute ROI in performance marketing, but saturation in some targeted ad markets has further eroded its effectiveness, with customers reaching ‘ad fatigue’ and brands struggling to secure a competitive advantage. All which has led performance-marketing returns to plateau or even decline in some cases. That isn’t to say this type of activity should be ditched altogether. ROI should be bolstered with complementary upper-funnel activity that helps set brands apart when consumers are scrolling on websites, social platforms or search engine feeds.

Channel strategy

So, what do marketers need to bear in mind when developing a full (and functioning) funnel?

Despite the clear payoffs, it isn’t always a straightforward exercise. That’s largely because each channel tends to ‘specialise’ toward one of these two objectives; either effective at driving short-term sales, or at securing longer-term brand impact. Those that do both are rare, with only 36% of channels performing at an above-average level for both ends of the funnel, according to our research.

This requires brands to develop the right tools to analyse and understand exactly what objectives a channel is delivering on (if any), and how this fits into a full-funnel strategy that balances short-term sales with longer-term brand building. The right tool to assess this impact may vary on a case by case basis, of course, with higher frequency metrics used to judge a short-term tactic, and greater time given to evaluate a longer-term approach. But start with the most relevant objective and map the deliverables of a specific channel against this goal. Where it performs poorly, consider first if a different execution could bring it in line with your strategy. If not, map it against the second objective to check it’s not being underutilised for those aims.

Bear in mind these objectives will change and evolve over time, too. As a looming recession impacts consumer confidence, for example, many brands may be focusing on sales of existing products to loyal customers, rather than launching into new categories with NPD that requires they start from scratch with a new demographic.

But whichever may be the key objective, the important thing to remember is to keep that funnel full. Though short-term wins, be they clicks through to a website or sales via a seasonal promotion, can feel like the solution in a period of economic uncertainty, when they’re pursued at the expense of longer-term brand activity they can do far more harm than good.

Emma Delserieys is vice-president of customer success in Europe for the marketing effectiveness division at Nielsen. 

For more insights into how to promote and protect ROI, download the latest Nielsen report.