Sustained vs temporary advantage

Alex Steer
Jul 2, 2018
In marketing, as in so much of life, there are two types of advantage:
temporary and sustained. This is obvious when you think about it, but
thinking is hard.
Temporary advantage comes from doing the same thing as your
competitors, but better, for a while. Most industry depends on temporary
advantage. You may temporarily have better robots on your production line,
better debt financing, better refund policies on your products, etc.
Temporary advantage is driven by tactics, which let you grow share by
getting ahead of the competition.
In marketing communications, temporary advantage comes through
optimisation: better targeting of your advertising, better scheduling and
allocation of your spend, faster or sharper algorithms to bid on placements
or search keywords, and so on. Advertising tactics pay back handsomely for
fairly early adopters, until most of their competition have the same
capabilities. Temporary advantage is rewarding because the gains from it
are realised very quickly (when you can suddenly do something others
can’t), and decay quite slowly (as others catch up with you at different
speeds).
Sustained advantage is more expensive and pays off more slowly, but it is
structural. In most sectors, intellectual property is the only source of
sustained advantage: patents, trademarks, and strong brands.
The last two of these sound the same but aren’t: a trademark is the
protection of your identity, a brand is the identity worth protecting. Brand
equity is the value attributable to a brand’s ability to influence purchase in
spite of tactics. It is the sustained advantage created by communications
and customer experience (both broadly defined).
To take a simple example: at today’s prices, you can buy a 420g tin of baked
beans in Tesco for three prices: 32p (Tesco brand), 65p (Branston) or 75p
(Heinz). Assuming that the quality of the beans is much of a muchness (ie
roughly equal numbers of people would reject each in a blind test), it’s
reasonable to say that Branston is carrying about 33p in brand equity, Heinz
about 43p. In other words the value of the Heinz brand is worth 34% more
to its buyers than the whole tin of Tesco beans. Now that’s a sustained
advantage, built over years, paying off over years, but quantifiable.
The obvious question is: is it sustainable? Maybe not. If the Heinz brand
didn’t continue to have distinctiveness in people’s minds – that mix of
recognisability, emotional reassurance and legitimate beliefs that make
people reach for it. or click for it or ask their Amazon Echo for it, despite the
price premium – it would lose that pricing power. However, it would do so
slowly, over years and not weeks. A strong brand is a battery that is slow to
charge, slow to drain.
Much of the drama and debate in marketing at the moment seems to hinge
on whether different groups of people are more interested in temporary or
sustained advantage. There are obviously vested interests here.
Technologists and management consultancies tend to like temporary
advantage because they are complex to realise (mainly involving technology
and data these days) and they decay fast, ensuring repeat business. Creative
agencies tend to like sustained advantage because it requires real insight
and creativity to realise (mainly involving very good design and writing) and
it requires craft, ensuring repeat business.
The rather obvious answer is that you need both. Temporary advantage
generates sudden improvements in revenue or profit, which keeps
shareholders and executives happy. Sustained advantage creates ongoing
revenue and profit and is an insurance policy against future austerity,
allowing you to keep making money even if your product or service is
temporarily uncompetitive.
There’s no magic formula for the right balance but there is a guideline:
ignore any professional services business that tells you that either
temporary or sustained advantage is unimportant. If a consultant or
technologist says that mass communication is dead and only hyper-relevant
brand experiences matter, they are trying to sell you software. If a creative
agency says that tactical communications don’t matter and big ideas are all
that count, they are trying to sell you expensive advertising. You may be
right to buy both, but don’t ignore either.
Written by Alex Steer

45 Followers
Chief Data Officer at Wunderman Thompson. Using data to
make more effective communications. Draws a lot of
diagrams.