New research in support of the principle of Future Demand

Last year I coined the term ‘Future Demand’ in a now much-cited paper for WARC called ‘Rethinking Brand for the Rise of Digital Commerce’.

With all of the skepticism and misunderstanding around ‘brand’, I felt that it would be useful to think of brand building as the creation of ‘Future Demand’ for a company and its products.

That reframing has been embraced by marketers around the world, who see the creation of Future Demand as much more commercially comprehensible than the fluffy idea of ‘brand building’, which is often met with suspicion or derision from senior non-marketing stakeholders.

The central thesis goes that, in any market, there are two types of demand. I call them ‘Existing Demand’ (the people who are ‘in the market’ and ready to buy from a category now or in the very near future), and ‘Future Demand’ (the people who are not in the market and ready to buy now, but who will buy from the category sometime in the future).

The latter group is almost always much larger. Only a small percentage of us is looking to buy from a particular category on any given day. But huge percentages of us will buy from most categories at some point in the next, say, three years.

And when we do come into a category, ready to buy, we are more likely to gravitate toward brands that we are familiar with and feel good about (as opposed to brands we’ve never heard of before, feel negatively about, or just don’t have any real feelings, good or bad, toward).

So marketing can be thought of as having two equally important jobs:

1. Convert Existing Demand – making sure we’re advertising to that relatively small group of consumers who are ready to buy, and capturing as large a share as possible of them for our product.
2. Create Future Demand – advertising to that much larger group of consumers who are not ready to buy now, but will be in future, and making them feel familiar with and positively toward us, so that they gravitate to us when they enter the category.

And, those two jobs require different marketing and advertising approaches:

1. Converting Existing Demand is most efficiently achieved by tightly targeting those ‘in the market’ with rational messaging of product and price information that persuades them to choose our product over others.
2. Creating Future Demand is most efficiently achieved by targeting very broad audiences of ‘all category buyers’ with emotional messaging that is designed to stand out and be enjoyed by consumers, creating positive memories of our brand that will influence future purchase decisions.

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Over the past year it’s been gratifying to see others conducting research that supports the principle of Future Demand, and the need to approach the creation of Future Demand in a different way to how we approach the conversion of Existing Demand.

Perpetua and WARC’s Q4 2021 study “Unlocking insights from the entire shopper journey with Amazon Marketing Cloud”, compares ‘Over The Top’ advertising (video advertising on streaming platforms) with ‘Demand Side Platform’ and ‘Sponsored Product’ advertising (performance marketing and retargeting campaigns that happen on or near the online point of purchase).

Although not a perfect separation of Future Demand and Existing Demand activities, OTT advertising is likely to reach a broader target with more creative and engaging video comms, while DSP and SP advertising is more likely to reach a much more targeted ‘in the market’ consumer, with more rational product and price comms.

In their report, they find that OTT advertising is much more likely to drive sales from ‘new-to-brand purchasers’ – supporting the thesis that, if we want to grow our brand and sales among new, larger audiences, we achieve this much more effectively with Future Demand activity: 

They also found that, while DSP and SP advertising is very effective at driving immediate sales (but decaying in effectiveness virtually immediately), OTT advertising produces the bulk of its sales later on – supporting the thesis that Future Demand activity leaves a lasting impression in consumers’ minds, which they act upon when they come in to the category once they’re ready to buy:

Around the same time, Dr Grace Kite of econometrics company Magic Numbers, studied digital brands who had used search and social advertising, and also TV advertising.

Again, not all TV advertising is necessarily Future Demand activity, but it’s much more likely to be than search and social.

Dr Kite’s evidence supports a thesis central to the principle of Future Demand – which is that there’s a growth ceiling for brands that only use performance marketing. They eventually run out of customers, as they harvest all available Existing Demand (very efficiently) but fail to create any Future Demand. She uses one case to illustrate this – a brand that grew it’s web visits with paid search, reached the inevitable plateau, and then unlocked vastly higher visits when they combined TV with their paid search activity:

She also showed that Existing Demand activity has very short-lived effects, but that the effects of TV advertising (and also outdoor) can be seen for up to two years. This supports the thesis that Future Demand activity indeed does have the effect of planting positive memories that are activated when consumers come into the category later (but that Existing Demand activity has no such effect).:

Lastly, just last month Mark Ritson published recent data from Peter Field and Les Binet, which compares the effectiveness of brands who attempt to do both Existing Demand capture and Future Demand creation in the same campaign execution (which he calls ‘Double-duty campaigns’), with brands that split those two jobs out into different executions (which he calls ‘Non Double-duty campaigns’).

The data shows that Double duty campaigns are not as commercially effective as Non Double-duty campaigns: 

This supports the thesis that it is more effective to approach Existing Demand capture and Future Demand creation separately – that they require different approaches that are not compatible with each other. That, if we want to see the biggest return from our advertising spend, we should have one campaign or executional style to capture Existing Demand, and another to create Future Demand.

What began as a reframing of ‘brand’ is quickly amassing a body of evidence that is both proving, and adding important depth and nuance to, the Future Demand idea and theses. 

As we work toward more sophisticated understanding of and advice around creating Future Demand (and develop a way to track and measure the creation of Future Demand through our brand tracking startup Tracksuit), I would love to hear from others who have data that support (or indeed disprove) this principle.

Please do reach out to me anytime at jh@previously.co

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Note: the idea of ‘Future Demand’, while a useful semantic shift, is not a new concept. Any marketing scientist or effectiveness researcher would likely say that it’s just new language for a concept that they have already recognised, studied and proven. And they’re right – Future Demand stands on the shoulders of effectiveness giants. My role in this case is more as a ‘marketing science communicator’ than a marketing scientist. Science communication (per Wikipedia) “is the practice of informing, educating, raising awareness of science-related topics, and increasing the sense of wonder about scientific discoveries and arguments.” I see an important role in taking the excellent work of marketing scientists and synthesising it into concepts like Future Demand, which everyday marketers can use to advance their understanding of and development of more effective marketing. This is one such attempt.