Brand Marketing 2.0: Brand is Back, But Expectations Have Changed

Share this:

You may have recently heard the adage that “brand is back.” After two decades of advertisers over-investing in performance and under-investing in brand as digital marketing capabilities exploded, the pendulum of marketing spend is swinging back to brand.

As Kelsey Robinson, a partner at McKinsey & Co. said during a recent webinar on brand measurement, “A lot of our clients are seeing that … as they put more money in performance marketing channels … they’re also seeing a degradation of results because they haven’t invested in the upper funnel.”

Brands can now appreciate that “this isn’t a viable path forward and are indeed starting to see the importance of brand again.”

Why Brand over Performance?

So why should we view “performance spend vs brand spend” allocations as a pendulum swinging back and forth over the years? Let’s start with the fundamentals and the now-famous Binet & Fields’ 60/40 rule. From that research, marketers were advised to target a roughly 60%-40% ratio of brand investment to sales activation investment. This was the result of a desire to generate the broadest awareness for a product or company in order to lift sales channels.

Yet as digital performance channels proliferated, marketers were increasingly attracted to them and tempted to invest to chase short-term metrics. The allure of immediately seeing metrics like clicks, downloads, or form completions outweighed instincts to make investments that pay dividends over the longer term. For publicly traded companies, pressure from Wall Street spurred the desire for immediate outcomes to lift quarterly earnings. As a result, over the past decade, spend drifted further and further toward performance dollars and away from brand investments.

Smart executives, however, started noticing this was a major mistake. Simon Peel, Adidas’s Global Media Director, admitted that a focus on advertising efficiency rather than effectiveness led it to over-invest in performance at the expense of brand building. In fact, while Adidas thought only performance drove e-commerce sales, Peel said it was actually brand activity driving 65% of sales across wholesale, retail, and e-commerce. Since then, Adidas has been working to find the right balance, introducing a new campaign framework with emotional, brand-driving activity at the center. 

Gap Inc.’s executive team acknowledged a similar mistake. The company’s EVP and CFO Teri List-Stoll admitted on a 2019 earnings call that its Old Navy brand had “frankly become too heavily dependent on messaging around discounting as opposed to bigger-picture brand messaging, focusing on product and value.” Old Navy has similarly tried to recalibrate its messaging and invest more in branding. They are not the only ones.

CMOs Face New Challenges in Brand Marketing

So, it may seem the obvious answer is for brands to re-invest at the top of the funnel. But brand marketing today — the 2.0 version — is not that simple. There are two new issues CMOs must now be particularly cognizant of: increased sensitivity to brand voice and increased measurement demands.

Challenge One: Political Climate

As marketers re-focus on brand messaging, they’re being pulled into a more complex socio-political climate than ever before. They are now invited into — and even forced to participate in — the dialogue of the day. Brands could not stay silent on 2020 events like the COVID shelter-in-place rules or the racial justice movement.  “Staying neutral” was actually seen as “taking a side” — and not saying anything perceived to be as bad as saying something with which consumers disagreed. 

Per recent Toluna/Vrity research, 37% of consumers say they would never purchase from a brand again because they were silent on an issue important to the consumer. And 82% said they would pick Brand A over Brand B if Brand A publicly supported a cause that was important to them. 

Additionally, unlike in the TV-centric initial golden age of brand marketing, brands now have social media accounts where consumers can speak to them directly and demand engagement on topics traditionally not germane to a corporation. As such, these conversations, while potentially polarizing, have also become necessary. There is no let-up in sight in 2021.

Challenge Two: Brand Marketing Measurability

The other consideration in this second age of brand marketing is measurability. For decades, marketers were mostly left to “trust” that TV ads built brands, and for the most part that trust was warranted (the “TV-Industrial Complex” was real!).  Today’s ahead-of-the-curve marketers expect sophisticated analytics for brand spend — as sophisticated as they get for performance spend. These days, marketers can use real-time reporting systems to see the reach, frequency, brand lift, foot traffic lift, even the customer lift of all channels where they spend brand dollars — linear, CTV, streaming audio, digital.  

Confusingly, many marketers aren’t fully taking advantage of these relatively new systems to optimize brand investments despite the evidence such optimization works. According to a recent study from WARC, brands that leverage analytics to optimize campaigns can increase the effectiveness of their ad investments by up to 70% more than brands that rely solely on market perception to choose media allocation. It’s the smartest CMOs who are ensuring measurement has a seat at the table and setting up “data agencies” alongside their media agencies and creative agencies, and even appointing a “Chief Analytics Officer.”

Marketers should be thrilled to live in this second era of brand marketing.  If they find the appropriate brand voice and properly tune their measurement systems, it’s never been a better time to build their brands through advertising.

Chris Kelly is CEO of Upwave.

Chris is CEO of Upwave, the leading analytics platform for brand advertising, used by some of today's leading innovative businesses including Verizon, Ford, Exxon, Clorox, and Nike.