Reconnecting brand building with sales activation
Welcome to the Brand Renaissance
During most of my career, I was trained to believe that a strong brand is one of the most precious assets a business could own. But if you’ve worked in marketing during the past decade or so, you’ve probably felt that brands and branding were not viewed as a priority for driving growth strategies. During this time, having worked on both the client and agency side, I know we were all trying to become more ‘digital’ even though nobody really knew what that meant. While each new shiny digital object was a FOMO must have – whatever happened to Vines, Yik Yak and Meerkat? – brands just became well…, so last millennia.
The 2007 financial crisis could be seen as the start of the ‘Dark Ages’ when it comes to brand building. Before then, by and large, we’d enjoyed a golden age. But along with the fall of great financial brands like Lehman Brothers (in Administration) and Bear Stearns Companies, so came the fall in the belief in building brands. Market pressures put greater scrutiny on marketing budgets. CMOs became far more accountable to their CFOs, with a need to demonstrate a direct return of every dollar spent – normally in a very short period of time.
That increased demand for immediate results, along with the proliferation of digital channels to reach consumers, all led to a seismic shift in the expectations CEOs and CFOs had of marketing. Feeding Wall Street’s insatiable appetite for short-term quarterly results meant any activity that didn’t yield near immediate, measurable, short-term results needed to go. We moved into a world of instant gratification and entered the age of bottom-of-the-funnel ’sales activation.’
Short-term gain. Long-term pain.
Don’t get me wrong, there is nothing wrong with capturing in-market buyers with bottom-of-the-funnel ‘performance marketing.’ (By the way, it riles me when people use the term ‘performance marketing’ to describe this particular activity. In my opinion, all marketing, top-to-bottom-of-the-funnel, should deliver performance.) But the problem with solely concentrating your efforts on the bottom-of-the-funnel is it’s a short-term pursuit with ever diminishing returns.
Yes, take the low hanging fruit of those consumers who are already in the market. Yes, give them a nudge by removing an immediate hurdle to buying. A price promotion here or Google Search Ads focused on bottom-of-funnel keywords there. Or, do some search engine optimization to rank for buyer-intent search terms, or use Facebook retargeting to bring a prospect back to an abandoned shopping cart. Any of these ‘sales activation’ tactics could move an in-market, prospective customer, to become a paying customer. In fact, when you know who these prospects are you can go back to them with great efficiency. But as you squeeze that same fruit again and again, the amount of juice diminishes each time until there’s no juice left no matter how hard you squeeze, or what type of sales incentive you offer.
But thankfully, just as civilizations experience rebirth, so do businesses and brands. After years of hyper-targeted, predominantly digital efforts for those people in-market, most of these customers are now barren and it’s time to plant trees that will bear the fruits of future incremental growth. Dare I say ‘performance branding.’
A Brand Renaissance on the horizon.
The Renaissance of the 15th and 16th centuries was a fervent period of European cultural, artistic, political and economic ‘re-birth’ following the Dark and Middle Ages. Some of the greatest thinkers, authors, statesmen, scientists and artists in human history thrived during this era. While global exploration opened up new lands and cultures to European commerce, one of the foundational artistic principles of this time was The Golden Rule. Also known as the divine proportion. It’s a mathematical ratio of 1:1.618, or Pi, with a decimal that stretches to infinity, closely linked to the Fibonacci sequence. Many artists and designers throughout history have adopted this mathematical equation as a means of creating order, symmetry, harmony and balance.
Rebalancing is at the heart of our Brand Renaissance and it has a similar guiding principal: The 95:5 Rule. According to Professor John Dawes of the Ehrenberg-Bass Institute, only 5% of buyers are in-market to make a purchase at any one moment. That means 95% of the buyers that you reach are out-of-market and won’t buy for months, or even years. And, contrary to popular belief, it’s nigh on impossible to pull the buyer in-market because they probably already have what you’re selling and won’t need a newer version any time soon.
Marketers are somewhat delusional if they think they can move buyers in-market because they move themselves based on their needs. For example, if I purchased a new car yesterday, that need is now gone, and there’s nothing anyone can do to generate another immediate sale. As an example, consider the apocryphal story about two ad executives who get into a car. The first exec says, “I saw an ad for Aston Martin and bought this car.” The second exec says, “but Aston Martin hasn’t advertised for years. How is that possible?” It was possible because the first exec had seen the ad when she was 13 years old, and she’d never forgotten it.
So, as marketers what should we do?
Give up and just focus on the 5% who are in-market and ignore the 95% who aren’t? No. We’re entering the Brand Renaissance. A rebirth where marketers should focus on the 95% we have neglected for the past decade with Performance Branding that is emotionally engaging, distinctive and memorable. This in turn builds strong, resilient and preferential brands.
Effective brand marketing increases sales in future buying situations by increasing the probability that the brand comes to mind when the buyer goes in-market. Simply put, the brand that gets remembered is the brand that gets bought. You can’t push buyers down a funnel but you can, to quote Professor Jenni Romaniuk(Ehrenberg-Bass Institute), “catch buyers as they fall.”
The most obvious implication of The 95:5 rule is that the majority of marketing effects are long-term, not short-term. Really smart marketers build the brand long-term and activate it efficiently. Building the brand long-term creates preference for the brand, and then sales activation converts that preference efficiently into cash. You need to do both tasks in concert because each enhances the other.
As Prof. Dawes puts it, “people largely use their memories when buying, rather than searching.” And even the fraction of buyers that do search “strongly prefer brands they’re [already] familiar with.” In other words, if you wait until the buyer goes in-market, it’s already too late. You need to prime the market far in advance.
A foundation for the future.
If your business intends to be around for any period of time, brand building is a must. It is the main driver of long-term brand preference which leads to long-term growth in sales, revenue and profits. Brand building can also reduce price sensitivity, so it can increase margins. Brand building produces a long-term preference for your brands and products. Therefore yielding more profit and shareholder value. Wall Street doesn’t value a company’s stock based on last quarter’s results. It values the business based on longer-term predicted results – a fact worth reminding C-Suite colleagues whose bonuses are based on future stock gains, not just the next quarter’s results.
Brand building and sales activation has a multiplier effect. A strong brand increases the efficiency with which you convert that brand equity into short-term sales. And conversely, brand building makes activation more efficient. You’ll find that if you have a strong brand, short-term metrics will go up for your activation. Ultimately, the reason that companies need to build strong brands is that they make more money both in the long-term and the short-term. See Binet and Field’s legendary graph below.
It has been ten years since Les Binet and Peter Field published The Long and the Short of It espousing the benefits of combining both sales activation and brand building. New evidence shows that while sales-driven ads deliver few long-term effects, brand advertising achieves both. The greatest management thinker of them all, Peter Drucker, explained this 60 years ago. “You have to produce results in the short-term,” he wrote in The Practice of Management “but you also have to produce results in the long-term. And the long-term is not simply the adding up of short-terms.”
Brand campaigns drive sales in the short-term.
Short-term campaigns don’t build brand, because if they’re any good, they focus on product-based activation. In fact, the better they are at shorter activation, the less likely they are to be good at brand building. Whereas the folks at System1 Research have shown the same cannot be said for long-term brand building ads. If things were to stay neat and symmetrical, we would see a similar story where good brand-building ads fail miserably to do the ‘short of it‘ with any kind of consistent success. But they have shown there are many cases where an ad that builds the brand for the long-term also drives short-term sales. The ‘spike.’
This relationship is significant. Not only is it possible for long-term brand building ads to deliver short-term sales activation, but also we can conclude that the better an ad is at brand building, the more likely it becomes that it will also deliver on short-term sales. This could be referred to as, quoting Field and Binet, the ‘asymmetry of long and short effects.’ The ‘short of it,’ for the most part, does little for long-term brand building in most cases. But the ‘long of it’ delivers on both fronts. And the implication for marketers is significant.
To use a phrase, adopted by Prof. Mark Ritson, I’m a marketing ‘Bothist.’ You can apply this way of thinking to differentiation and distinctiveness. Creative and media. Instinct and market research. Targeting and mass-marketing. In-house and external. Digital and traditional. And, of course, sales activation and brand building.
I believe we’re at a point of inflection and change is in the air. Yes, there’s geopolitical uncertainty and ongoing recessionary headwinds. But the market and consumers are forcing marketers to think more favorably towards longer-term brand building, after a dangerous, decade-long, flirtation with short-termism. Perhaps the asymmetries of long and short, will further extend this rebalancing of budgets and activity as we look to deliver short-term sales, through sales activation, and plant seeds for long-term and short-term growth with performance branding.
The Brand Renaissance has begun and now who can remember how to do it?