---
title: "Stop Discussing Dividends; Brands Need Compound Interest"
description: "In the era of stock competition, enterprises face three major challenges: the peak of traffic dividends, rising customer acquisition costs, and weak market demand. When dividends eventually dissipate, brands realize they mistook dividends for capability. Facing the dilemma of wanting growth but finding it harder to achieve, how can brands grasp the capabilities that truly drive growth? Recently, Bain & Company and Kantar jointly hosted the forum 'Embracing Change, Resilient Growth.' Experts including Bain's global expert partner Lu Xiuqiong, Kantar's Greater China CEO and BrandZTM Global Chairman Wang Xing, and other industry leaders discussed brand growth opportunities and marketing strategies in the new landscape."
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published: "2022-12-24"
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---

# Stop Discussing Dividends; Brands Need Compound Interest

> In the era of stock competition, enterprises face three major challenges: the peak of traffic dividends, rising customer acquisition costs, and weak market demand. When dividends eventually dissipate, brands realize they mistook dividends for capability. Facing the dilemma of wanting growth but finding it harder to achieve, how can brands grasp the capabilities that truly drive growth? Recently, Bain & Company and Kantar jointly hosted the forum 'Embracing Change, Resilient Growth.' Experts including Bain's global expert partner Lu Xiuqiong, Kantar's Greater China CEO and BrandZTM Global Chairman Wang Xing, and other industry leaders discussed brand growth opportunities and marketing strategies in the new landscape.

In the era of stock competition, enterprises face three major challenges: the peak of traffic dividends, rising customer acquisition costs, and weak market demand. When dividends eventually dissipate, brands realize they mistook dividends for capability. Facing the dilemma of wanting growth but finding it harder to achieve, how can brands grasp the capabilities that truly drive growth?

Recently, Bain & Company and Kantar jointly hosted the forum 'Embracing Change, Resilient Growth.' Bain's global expert partner Lu Xiuqiong, Kantar's Greater China CEO and BrandZTM Global Chairman Wang Xing, and several industry luminaries discussed 'Brand Growth Opportunities and Marketing Strategies in the New Landscape,' exploring how brand marketing should upgrade to new thinking that spans cycles and achieves long-term growth in an era where traditional marketing tactics are becoming ineffective.

**Brands Must Create New Products and Scenarios to Break Through Bottlenecks**
**Media Changing Consumer Behavior Drives Growth**

Lu Xiuqiong, global expert partner at Bain & Company, believes that every major turbulent period is a critical window for brand building. During extraordinary times, leading brands have stronger risk resilience, and in the recovery phase, they can also recover fastest. Now is the best time for all marketers to return to their original aspirations and rethink the sustained growth of brand value.

Lu Xiuqiong, Global Expert Partner, Bain & Company

**Focus on Three Key Areas**
**Make Three Reductions**

**First, in a market downturn, focus on core business and reduce long-tail products.**

Based on analysis of over 30 leading companies in the consumer goods industry, Bain found that core business typically contributes over 90% of a company's profits. Focusing on core business does not mean staying unchanged; rather, it means finding the true needs of consumers in the current situation. Consumers are not unable to afford; they just cannot find a reason to spend. Therefore, based on the true needs of consumers in different categories, it is essential to **create new products, explore new scenarios, expand new audiences, cultivate new habits, and open new growth opportunities for core business.**

**Second, focus on brand value and reduce reliance on traffic.**

Many companies say they need to store grain for winter during turbulent times. Why do leading brands instead place more emphasis on brand investment? Because consumers become more cautious and spend money on brands that are safer, more certain, and more trustworthy. At the same time, market noise is lower, competition weakens, and brands that dare to over-invest will gain greater market voice, capture larger market share, and increase brand concentration faster. **Without excess share of voice, it is difficult to achieve excess growth in share of market.** The more challenging the environment, the more one must dare to invest counter-cyclically, shifting from passive to active growth—this is key to a brand transcending cycles.

**Third, focus on changing consumer behavior and reduce ineffective advertising.**

Media communication should focus on changing consumer behavior, establishing new perceptions and behaviors through high-frequency exposure of 10+ times. In China's fiercely competitive environment, only a few mature, absolute leading brands with no competitors need only low-frequency media reminders to consolidate their market position. In a highly competitive market where one either advances or retreats, most brands cannot hold their ground merely by maintaining the memory curve. **To drive growth from new products and scenarios, high-frequency exposure and high-quality reach are necessary to effectively change new behaviors.**

**Growth Must Shift from Quantity to Quality**
**Marketing Must Shift from Traffic to Constant**

Lu Xiuqiong stated that advertisers' marketing budgets are generally tightening, yet expectations for achieving growth through breakthroughs in new products, scenarios, audiences, and regions remain urgent. Therefore, for most brands, **the new marketing mindset should shift from being comprehensive and pursuing broad coverage to 'concentrating firepower to change consumer behavior.'**

To achieve true media upgrade, there are three key changes:

**First, change in media planning approach.**

Brands previously planned media with the goal of reaching the broadest audience at the lowest cost, a low-frequency reinforcement memory curve. In today's environment, it is necessary to apply the learning curve principle to drive real consumer behavior change, considering three important factors: reach breadth, reach frequency, and reach quality.

For reach breadth, focus on large-scale reach of target consumers; **for reach frequency, focus on high frequency to drive behavior change; for reach quality, pursue scenario-based immersive high-quality reach to stimulate purchase intention.**

**Second, change in media measurement metrics.**

Common metrics like reach and CPM are essentially process indicators. For advertisers concerned with reach rate, online media's completion rates are generally low—average users swipe away after two seconds—making such reach low-value.

Today's new media thinking should be based on driving consumer behavior change as the standard. **How to use high-frequency, high-quality reach to drive consumers from awareness to curiosity, from inquiry to action, evaluating results by behavior change,** including not only sales outcomes but also full-funnel brand awareness results.

**Third, change in media implementation methods.**

For different marketing objectives, old empiricism and complex models are no longer applicable. It is recommended to use agile testing methods for faster results and lower costs, measuring the effectiveness of different media and the optimal media mix based on consumer behavior change and actual business growth.

Over the past two years, Bain has conducted a series of tracking and tests on numerous international brands and found that **when new products and scenarios are the primary growth goals, focusing on scenario-based media with high coverage, high frequency, and high-quality reach, represented by Focus Media, the resulting sales-driving effects and consumer behavior change effects are significantly better than traditional media mixes.** Consumers' subsequent purchase behavior and choices, as well as actual sales promotion, show higher conversion.

For example, Bain tested different media mixes for a top international beverage brand in four similar cities. The brand previously focused on dining out and social gatherings, but with reduced mobility, it shifted to home scenarios.

Previous media planning emphasized year-round long-term media placement to reach the broadest audience at low cost. The new media planning test concentrated the budget, used high-frequency reach in the short term to establish new scenarios, and focused on media touchpoints closest to home scenarios to achieve large-scale precise reach of home audiences. To find the optimal mix, four agile tests were conducted in four cities, and results showed that **when Focus Media elevator media accounted for 60% and other media 40%, the overall media mix had the highest ROI.**

In times of uncertainty, the certain marketing path is to focus on core products, concentrate media firepower, and drive growth through new product launches, new scenario triggers, expanding new audiences, and cultivating new habits. New-era marketing planning should use driving consumer behavior change as the evaluation standard and derive the optimal media mix through agile testing.

**Traffic Dividends Can Grow Short-Term**
**Brand Compound Interest Ensures Long-Term Strength**

Wang Xing, Kantar's Greater China CEO and BrandZTM Global Chairman, shared that over the past twelve years, the stock price of BrandZTM China Top 100 brands has grown 170%, while the MSCI China Index grew 20%.

Wang Xing, Greater China CEO and BrandZTM Global Chairman, Kantar

Even amid repeated pandemic shocks, with the MSCI China Index falling 32.3%, the China Top 100 brands still grew resiliently by 1.6%. **When traffic dividends disappear, high-quality brands are the core guarantee for transcending cycles.**

**Brand and Performance Synergy: Return to Balance**

Kantar research finds that 70% of all sales are contributed by brand equity, while short-term direct promotional conversions account for only 30%. The mid-to-long-term effects driven by brand equity are severely underestimated.

At the same time, media spending significantly impacts brand salience and market share. Data shows that cutting 50% of advertising spending within a quarter reduces brand salience by 19%; no advertising within a quarter reduces salience by 52%; and no advertising for six months reduces sales by 13%.

Wang Xing pointed out that correctly selecting media and combinations to win higher advertising attention is a key lever for improving marketing ROI. With limited budgets, marketing needs to be refined, diversified, and coordinated online and offline. However, in reality, the ratio of advertising budgets does not match brand influence, and the role of life-space media is greatly underestimated.

Based on analysis of over 1,000 placement cases, Kantar calculated the optimal media mix for mature brands: **the optimal ratio for brand building and traffic harvesting is 5:5. Within brand building, the ratio of online media spending (represented by WeChat, Weibo, Douyin, Xiaohongshu) to offline life-scene media spending (represented by Focus Media) is also 5:5.**

**Double Micro, One Douyin, One Focus**
**Is the Core Paradigm for Current Brand Building**

Wang Xing believes that high-quality communication is the guarantee of brand growth. Media that truly drives brand growth must meet the 'three highs': high coverage, high quality, and high impact.

According to Kantar's '2021 China Urban Residents' Advertising Attention Study,' the internet, elevators, and TV are the three core reach media, covering the widest mainstream urban population. **Internet reach is 95%, elevator reach is 79%, and TV reach is 51%.**

In terms of advertising attention, consumers pay more attention to ads in limited life spaces, such as **elevator and cinema ads, which have the least interference.**

Due to high-frequency exposure, consumers remember the most ads from elevator media, social media, and short videos. **Offline media such as elevators and cinemas drive stronger purchase intent.**

Wang Xing concluded that research shows using online media like WeChat, Weibo, and Douyin to spread voice and create topics with quality content, and offline life-space media like Focus Media for high-frequency reach to tap brand increment and trigger purchase needs through scenarios, 'Double Micro, One Douyin, One Focus' is the most effective paradigm for current brand building.

**The Essential Path for New Product Breakout**
**Large-Scale Precision + High-Frequency Reach**

Tan Xudong, Marketing Director of Mondelez Group, shared at the forum how to concentrate budget on high-frequency audience-focused media to break into new young white-collar demographics. To drive growth, the Oreo brand opened new audiences. Based on consumer research, the 25-35 age group of young white-collar workers showed strong growth, with three demands for snacks: delicious, high appearance, and low burden. Accordingly, Oreo iterated and upgraded its Oreo Thin series. The brand's previous media planning dispersed limited budgets across multiple media, pursuing low-frequency broad reach. The new media planning believed that with limited marketing budgets, it is more effective to concentrate firepower on high-frequency core audiences and core scenarios than low-frequency broad reach to achieve target audience breakout. Oreo compared OTV/OTT media combinations with Focus Media elevator media through agile testing, finding that combinations primarily using Focus Media elevator media had more significant effects on consumer behavior change, with e-commerce action index increasing 2.5 times, sales growth achieving 2.3 times, and better driving purchase behavior among new audiences.

In the on-site discussion, Chen Yi, Managing Director of Kimberly-Clark (China), stated that whether a brand wins in competition depends on whether it understands consumers better. Therefore, efforts should focus on consumer insight mining, starting from product and brand, to communicate more precisely.

Ma Zhenshan, Executive Vice President of Chery Jaguar Land Rover, believed that brand logic and mathematical logic are two parallel lines that cannot be biased. Many brands fall into the misconception that traffic and exposure can bring sales, leading to painful lessons. Xu Jin, COO of Publicis Media, argued that if a large portion of budget is placed purely in sales, the brand's stickiness and market tension will be lacking when facing shocks.

**Summary**

There has never been a brand that can rest on its laurels; competitors will always continue to emerge. As new audiences, scenarios, and products emerge, more and more brands realize that traditional marketing thinking is no longer sufficient. Through research and testing of numerous cases, Bain & Company and Kantar China provide a certain growth path for brands trapped in growth dilemmas:

1. Growth shifts from quantity to quality: **Focus on core business, reduce long-tail products; focus on brand value, reduce traffic dependence; focus on user behavior change, reduce ineffective advertising!**
2. Marketing shifts from traffic to constant: **Concentrate firepower, optimize mix, agile testing, result-oriented, and reconstruct the optimal media mix.**
3. Use the 'Four News' as the core growth method: **Create new products, explore new scenarios, expand new audiences, and cultivate new habits.**
4. High-quality communication is the guarantee of brand growth: **Choose media with 'high coverage, high quality, and high impact.'**

In the environment of consumption recovery, enterprises should focus on what is truly scarce and unchanging, persist in doing more certain, long-term, and sustainable things, and thus form positive value accumulation. Only certain growth can counter uncertain environments and competition.


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