Is it me, or have many people forgotten that the only reason to invest in brand building is to help drive sales? The constant debate about whether to invest in brand building or sales activation seems to imply that sales elasticity is independent of the strength of the brand. To my mind that is just plain wrong.
Maybe I should start with my definitions of brand building and brand activation, here we go,
* Brand building is the process of predisposing people to buy your brand before they start shopping your category, or perhaps, before they even think they need a similar product or service.
* Brand activation is triggering purchases during search and shopping, either by direct appeal – my product is better or cheaper than others – or by triggering pre-existing positive ideas and feelings about the brand.
The truth is that the effectiveness of both brand building and brand activation is highly dependent on the strength of the brand offer in the first place. Is it a well-differentiated offer that is potentially meaningful to many? If so, brand building and brand activation are going to work that much harder.
In 2018 Formula One season, Lewis Hamilton won the championship three races ahead of the season end. His success is the result of multiple wins and hard work, both from the driver and team Mercedes. When faced with today’s short-termism, marketers might do well to reflect on Hamilton’s success.
Whenever we integrate brand equity and behavioural purchase data, we find that the stronger someone’s predisposition to buy a brand the more likely they are to follow through on it and make a purchase. It is the Formula One effect. If you are Lewis Hamilton and have pole position on the grid, then there is a pretty good chance that you will win the race. Not guaranteed, but more likely than if you start at the back of the grid. Superior driver skills developed over the years will help ensure that Hamilton makes the most of the opportunity.
When we track people’s online behaviour we find that people predisposed to buy a specific brand (the one in pole position) typically take less time and actions searching and shopping and end up buying their intended brand compared to those with a broader set of alternatives in mind. Getting a brand to pole position requires upfront investment seeding motivating ideas, impressions, and feelings; analogous to qualifying performance, development of a driver’s skills and the constructor’s ability to improve vehicle performance within a tightly controlled set of specifications.
Staying with an automotive theme, let us examine the example of The AA in the UK (The Automobile Association offers roadside assistance and other services to its members). For several years The AA had increasingly focused its marketing budget on direct-response media, mostly direct mail, while reducing its overall marketing budget. Financially this strategy seemed to be paying off in higher profits. Behind the scenes, however, eroding brand equity, weaker acquisition of new members and a 19 percent drop in new business price compared to five years earlier all signalled problems to come. What is more, existing members were leaving faster than they could be replaced.
The IPA (UK), Gold Effectiveness Award case study (available with subscription) sums the situation up as follows:
“Our audit had revealed an enormous problem - the AA's marketing strategy was efficiently delivering short-term results, but it was also marching the brand towards a commercial precipice.”
To cut a long story short The AA’s communication strategy shifted back to mass marketing: shifting spend back into emotional brand building and getting the balance right with direct marketing. Just as important, communication shifted from emphasizing the trauma of a breakdown to the positive feeling of getting your car back on the road. Acquisition and retention improved and at higher prices. Taking into account the number of new media-driven members acquired and their likely lifetime value the paper concludes that the ROMI for the campaign was essentially double the media spend.
So, if you are asking yourself whether to invest in brand building or sales activation can I suggest that you rephrase the question? The real question is how you get brand building and sales activation to work synergistically over time to grow sales and profits.
EDITOR'S NOTES
* This article is compiled based on Nigel Hollis' two blog article When did brand building get divorced from sales? and Why brands need to be more like Lewis Hamilton;
* To reach the author, or to know more information, data and analysis of brand consultancy in China and other parts of the world, please contact us.