While chronic inflation might not occur, companies need to hedge now against a medium- or long-term inflation scenario. Prolonged inflation has not reared its head since the 1970s. For example, one landscaping equipment manufacturer recently signaled challenges to its earnings despite strong revenue growth and three price increases in the past year. Yet even companies that increase prices will still feel the pain of rising costs if they simply take incremental steps. Various chemical companies are charging more for polyethylene, one of the most widely used plastics. Hercules Industries boosted prices by an average of 15% on heating and cooling equipment, mainly due to rising costs for steel. Consumers will now pay more for Pirelli and Yokohama tires and Energizer batteries. Kimberly-Clark recently raised list prices on consumer products in North America, with percentage increases in the mid-to-high single digits. consumer price index well above that at 5.0% through May). Consumer prices were up 3.3% over the same period (with the U.S. Some businesses have started to raise prices in response, with producer prices in the OECD countries up 9% in the 12 months through April 2021. At the same time, demand is surging as economies reopen for business in the wake of falling Covid-19 cases. ![]() Right now, many are struggling with high costs for raw materials, labor, energy, and other inputs, along with supply bottlenecks. It’s easy to see why the approach is so compelling: It enables companies to run highly targeted marketing campaigns that deliver measurable ROI, solving the century-old Wanamaker problem, named after the department store retailer who’s credited with saying about advertising, “Half the money I spend is wasted the trouble is I don’t know which half.A long-forgotten problem, higher inflation, has eroded the finances of many companies. It is defined by the Performance Marketing Association as paying for results from marketing campaigns-like sales, leads, or clicks-conducted through third-party channels such as direct mail providers, search engines, and social media sites. ![]() Over the past 20 years, performance marketing has become the dominant approach companies use to connect with consumers. To achieve performance-accountable brand building and brand-accountable performance marketing, firms need to upgrade their brand metrics in a way that allows the two to work together. Why It Happensīrand-building activities are typically measured using metrics that have no predictive or retrospective connection to financial returns. ![]() Marketers often worry that performance marketing and its focus on short-term sales is crowding out brand-building activities aimed at enhancing customer perceptions of their brand-and sometimes works against brand strategy. In doing so, companies are better able to make decisions that fortify the financial contributions of both and get them working better together. That is then linked to specific financial outcomes-such as revenue, shareholder value, and return on investment-and deployed as a key performance indicator for both brand building and performance marketing. To achieve performance- accountable brand building and brand-accountable performance marketing, firms must create metrics that measure the effects of both types of investments on a single North Star metric: brand equity. And performance marketing typically lacks measures that account for its impact on brand building, focusing only on sales, leads, and clicks. Marketers often worry that performance marketing and its focus on short-term sales is crowding out brand-building activities aimed at enhancing customer perceptions of their brand-and is sometimes working against brand strategy.īrand-building activities are typically measured using metrics that have no predictive or retrospective connection to financial returns.
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