The Undeniable Case For Investing In Brand

Marketing Unfiltered #6 - The CFO approved brand investment play

Happy Friday and warm welcome to Marketing Unfiltered newsletter #6

Thank you for the replies and feedback on Nick’s ABM brand vs performance article.

This week we have John Lyons (← make sure you connect with John on LinkedIn) first article on creating the undeniable case for investing in brand, yes, that battle many CMOs, CEOs, founders and CFOs are having right now.

The Undeniable Case For Investing In Brand

In the decade since the famous How Brands Grow: What Marketers Don't Know and The Long and the Short of it: Balancing Short and Long-term Marketing Strategies, Byron Sharp, Les Binet, and Peter Field have left one question unanswered:
How do I convince my board to invest in brand?

While the books empirically proved the power of brand and made the case for splitting marketing spend 60/40 to brand marketing, CMOs are still struggling to present the results of these studies to non-marketing colleagues (especially when they’re up against the simplicity of the ‘put this in today, take that out tomorrow’ return on investment train of thought). 

But first, let’s agree on what ‘brand’ actually is. 

  • Jeff Bezos once said "your brand is what people say about you when you're not in the room."

  • Emily Penny, Brand Strategist and founder of Becolourful, says “If you have a name and a promise, you have a brand; a logo is preferable but not essential.”

  • Paul Bailey, Brand Strategy Director at Halo, says that "a brand is shaped through a series of moments which people remember and associate with one another".

Simply, it’s anything that people who would want to buy your product or service can relate to. It separates product from a commodity.

Despite the 60/40 split in favour of brand spend over sales activation being established over a decade ago, the reality is the precise opposite, and 70% of marketers plan to increase sales activation marketing at the expense of brand marketing

Clearly the dopamine impact of short-term results and the gratification of live granular metrics plays a huge part in this decision. 

Sales activation is nothing new: coupons, direct mail, sales promotions have been mainstays of the marketing mix for decades - but the early-mid 1990s ushered in a new era of near-instant performance metrics, live editing of advertising materials, and a focus on efficiency over effectiveness.

Effectiveness vs Efficiency 

Efficiency is defined as the ability to achieve maximum output with minimal input, waste, or effort. It is often measured as the ratio of useful output to total input.

The most efficient marketing is tightly focused on those most likely to convert. Nothing is more efficient than investing zero and getting sales.

Effectiveness, on the other hand, is concerned with achieving desired outcomes or goals, regardless of the resources used.

It is not limited by the reductionism of efficiency.

The most effective marketing creates future sales by sticking in people’s heads while also capturing those in-market and converting to sales.

However, 95% of your perfectly targeted, on-persona sales activation marketing will not drive immediate sales, so we need to look at how we influence those people for when they are ready in the future. 

People do not buy from brands that they don’t know (think about the last time you bought from a brand you didn’t know), so we need to create mental availability and allow consumers to do what they do best: purchase without having to apply active thought.

There is a clear correlation between brand awareness and purchase intent. This double jeopardy law was established in the 1960s and is empirical showing that brands with lower-market-shares have fewer buyers and lower brand loyalty. 

So the bigger, better known brands not only sell to more people, they sell to those people more often.

So, to grow a business we need to optimise Marketing and Advertising to create a mentally available brand and to be physically available in order to sell. 

Binet and Field were able to find an indisputable connection between effective marketing and budget allocation. On average, mature brands who invest 60% on brand-building and 40% on sales activation achieve the best business outcomes.

The famous graph pictured above shows that long-term sales growth requires brand-building, and that whilst the 60/40 model is correct for established businesses, new brands tend to rely upon sales activation, or performance marketing.

What it doesn't show is that brand-building improves the performance of sales activation, as increased brand awareness results in taking a greater share of the 5% of in-market buyers. 

Longer-term metrics show the incremental revenue gains of brand-building activity.

Brand tracking allows you to identify precisely where you can improve for growth and quantify anticipated outcomes.

A brand tracking survey will give you clarity on how well your brand is performing in the marketing funnel against your competitive set and compared to the category averages. 

So, whether you are behind on awareness, consideration, preference or any other custom stages relevant to your category, you will be able to set improving that stage as your objective and set a metric for your key result.

A brand tracking survey will also show you which brand attributes are important to your category buyers and which attributes they assign to your brand and your competitors, so you can align your brand with the attributes they value the most.

Objectives and key results are how you quantify long-term activities and identify the budget required to reach them.

Use Specific, Measurable, Achievable, Relevant and Time-bound (SMART) objectives to quantify long-term activities and identify the budget needed to reach them. 

For example:

  • Objective: increase consideration in the funnel by 5% in 12 months.

  • Outcome: increase incremental revenue by 5%.

  • Budget: £X.

Another model is using Excess Share of Voice (ESoV). 

  • Excess Share of Voice is quite simply a brand’s share of voice minus its share of market. 

  • ESOV = Share Of Voice - Share Of Market

Share of Market can be obtained by comparing a company’s turnover to reported industry spend, or through Companies House submissions, or through Pomanda which uses Companies House and other data sources to give reliable actual or estimated figures.

Share of voice was traditionally calculated on media spend, but Share of Search is an accurate proxy. System1 partnered with Adam Morgan and Peter Field to show that dull advertising requires an extra £10 million media budget to achieve the same results as a good campaign.

The importance of this in quantifying brand-building spend is that ESOV is a leading indicator of future market share. If you want to grow your market share, you need to grow your share of voice.

But more pertinent here is the outcome that for every 10% ESOV you can anticipate an average market share growth of 0.5% in the following financial year, 1.2% for B2B brands.

Again, this allows you to quantify long-term outcomes and set the budgets required to achieve them in a sensible business-friendly manner as a SMART objective with key results.

  • Objective: increase ESOV by 20%.

  • Outcome: grow market share by 1%.

  • Budget: £X.

In conclusion, by speaking of business outcomes rather than marketing processes we have a far greater opportunity to gain cross-business support for balancing long-term brand marketing with short-term and regular sales activation marketing. The former, as we have established, improves the latter.

How you make your case depends upon the biases you expect of your audience. 

Sometimes it pays to show how marketing works (TLDR points 1-4½), allowing for questions and then moving onto OKRs, outcomes and budgets (TLDR 5-6). Other times it is better to start with the OKRs, outcomes and budgets and only lean into why as and when questions or challenges arise.

Keep it simple, keep it objective and be confident that effective marketing delivers the best business outcomes, both short-term and long-term.

Want to dive in more deeply? Read John’s deck below or watch the video underneath

Watch The Case For Brand Investment Video

» Remember to connect to John on LinkedIn and read more about John on his site.

Resources referenced in the above article can be found:

We will land in your inbox with another unfiltered newsletter next week on the 6th.

Have a great weekend.

Thanks, Danny, Harry and Team Marketing Unfiltered

PS. Remember if you’ve missed any previous newsletters you can enjoy

Reply

or to participate.