The Concept of Future Demand

Metrics matter to business. They help establish effectiveness and performance benchmarks.

With budgets under scrutiny, there is pressure on marketers to demonstrate immediate results from advertising but also safeguard their brand for the future.

What role does performance marketing play against brand marketing in times of economic uncertainty?

The AANA and ACA recently put on a Marketing Effectiveness Masterclass. We heard from legendary advertising effectiveness guru James Hurman who coined the term future demand. Hurman is a renowned strategist and author who coined the term ‘future demand’ which emphasizes the importance of understanding and anticipating customer needs and desires before they fully materialize.

The theory goes that, in any market, there are two types of demand. ‘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 understandably much larger.

Only a small percentage of us are looking to buy from a particular category on any given day. And if your brand isn’t top of mind, someone else’s will be and that equates to a sale now and or in the future. A much larger percentage of people will buy from most categories at some point in the future.

Hurman says that marketing has two equally important jobs:

1. Convert existing demand
2. Be seen positively in preparation for future demand

And both of these jobs require different advertising approaches. One leans towards performance marketing and the other by emotional creative that connects with potential customers to build a positive brand experience.

Hurman mentions Dr Grace Kite of econometrics company Magic Numbers, who studied digital brands that had used search and social advertising, and also TV advertising. 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.

The keynote from James was followed by a panel featuring AANA members; Telstra CMO Brent Smart – one of the world’s top marketers whose work on NRMA Insurance won the coveted Grand Effie Award in 2021 – plus McDonald’s’ Chief Customer Officer Chris Brown and VMLY&R Chief Strategy Officer Alison Tilling.

Keep your eyes peeled for more marketing effectiveness masterclasses.