CMOs must not lose sight of the power of brand

Despite changes in the mar­ket over the last ten years, accord­ing to research from the Insti­tute of Prac­ti­tion­ers in Adver­tis­ing, the opti­mum split between brand and acti­va­tion expen­di­ture or per­for­mance mar­ket­ing remains steady at around 60:40.

The report, Media in Focus: Mar­ket­ing effec­tive­ness in the dig­i­tal era, found devi­a­tion either side of the 60:40 divide results in a “marked decline in long-term effec­tive­ness”. How­ev­er, the pro­por­tion of UK cam­paigns with acti­va­tion objec­tives rose to 72 per cent in the four years to 2016, up from 47 per cent before the finan­cial cri­sis.

The opti­mum split between brand and acti­va­tion expen­di­ture remains around 60:40

“Fol­low­ing the eco­nom­ic down­turn in 2009, the pow­er of the chief finan­cial offi­cer grew dra­mat­i­cal­ly,” Claire Cronin, chief mar­ket­ing offi­cer at Vir­gin Atlantic, explains. “Too many mar­keters were flat foot­ed in their response and over­ly zeal­ous in being seen to do the ‘right thing’ by can­celling all long-term brand-build­ing activ­i­ty, which was trick­i­er to track, and invest­ing in mea­sur­able dig­i­tal chan­nels.”

Savvy companies boosting long-term brand building

Vir­gin Atlantic was one of the brands to scale back its bud­gets, focus­ing resources on “bot­tom of the fun­nel” per­for­mance mar­ket­ing. The first thing Ms Cronin did when she joined in July was put a busi­ness case togeth­er to jus­ti­fy rein­vest­ment in brand build­ing. “I’m pleased that we’ll be redress­ing the bal­ance in 2018,” she says.

Josh Krichef­s­ki, UK chief exec­u­tive at Medi­a­Com, the media part­ner for brands includ­ing Sky and Tesco, is cau­tious about ascrib­ing the rise of per­for­mance mar­ket­ing to the crash because its ascent had begun before the cri­sis, but he agrees the board­room does not always appre­ci­ate brands. “If they’re KPI’d on sales, then brand mar­ket­ing can take a back seat because they can’t see a direct ben­e­fit,” he says.

If mar­keters ask Medi­a­Com to focus on per­for­mance, Mr Krichef­s­ki and his col­leagues encour­age them to think long term. “If we don’t, two years down the line they will fire us for not deliv­er­ing results,” he says. A dig­i­tal retail brand Medi­a­Com works with recent­ly ran its first nation­al brand cam­paign after its brand suf­fered when it focused sole­ly on per­for­mance mar­ket­ing.

Symbiotic relationship between brand and performance

But the val­u­a­tion of com­pa­nies that are yet to turn a prof­it, such as elec­tric car­mak­er Tes­la, sug­gests the cor­po­rate world can val­ue brands, says Brid­get Angear, joint chief strat­e­gy offi­cer at Abbott Mead Vick­ers BBDO, the adver­tis­ing agency for Mars and Cur­rys PC World.

“But I would still say build­ing brands is often seen as a cost to the busi­ness, unlike sales that are seen to gen­er­ate all the mon­ey. There is a con­stant need to remind peo­ple of the impor­tance of hav­ing a strong brand. I was asked to write a pre­sen­ta­tion to this effect only a cou­ple of weeks ago.”

There is a con­stant need to remind peo­ple of the impor­tance of hav­ing a strong brand

Richard Hunt­ing­ton, chair­man and chief strat­e­gy offi­cer at Saatchi & Saatchi Lon­don, which works with Direct Line and EE, cau­tions against mak­ing a dis­tinc­tion between brand and per­for­mance mar­ket­ing. “There is a sym­bi­ot­ic rela­tion­ship between cre­at­ing desire for a brand and busi­ness and secur­ing the sale,” he says. “I can’t look across our busi­ness and see brands that are going off per­for­mance mar­ket­ing – smart clients under­stand the impor­tance of both.”

Google tries not to dif­fer­en­ti­ate between its brand and per­for­mance activ­i­ty, says Gra­ham Bed­nash, senior direc­tor of UK con­sumer mar­ket­ing at the tech giant. “Every piece of mar­ket­ing com­mu­ni­ca­tions has a clear set of per­for­mance and brand objec­tives. We strive to make sure all our com­mu­ni­ca­tions feel like they come from the same com­pa­ny, and have the same tone of voice and sim­ple, human approach what­ev­er the objec­tive.”

Building up branding can make activation more efficient 

Between April and Decem­ber 2017, Proc­ter & Gam­ble, own­er of Ariel and Pam­pers, increased its mar­ket­ing reach by 10 per cent by cut­ting $200 mil­lion from dig­i­tal media and redi­rect­ing it to areas such as tele­vi­sion, audio and ecom­merce.

A study from Group M and TV mar­ket­ing body Thinkbox sug­gests the shift could also make the remain­der per­for­mance mar­ket­ing more effi­cient. TV Response: New rules, new roles found improv­ing brand health makes acti­va­tion activ­i­ty more effec­tive. 1 per cent increase in key brand health met­rics yields a 2 per cent improve­ment in cost per sale.

The research demon­strates not only the effec­tive­ness of brand adver­tis­ing, but also its impact on per­for­mance mar­ket­ing. It is incum­bent on mar­keters to make the case for long-term brand build­ing in the board­room. If they don’t, it will not be just their agen­cies at risk of being fired for not deliv­er­ing results.