September 10, 2019

by Nigel Hollis

My colleague Daren Poole pointed me to a study by the Financial Times (FT) and the Institute of Practitioners in Advertising (IPA) designed to understand why the balance of marketing spend has shifted from brand-building to performance campaigns. It suggests that poor knowledge of how brands create value over the short and long-term may be at fault.

First a caveat. Given that the data quoted in the The Board-Brand Rift report comes from the FT’s reader panel and appears to over-represent the UK and Europe we should probably regard it as directional rather than representative. That said, the report still makes for thought-provoking reading. Here are some of my thoughts on the salient findings from the report.

Good news, most business leaders do believe that a strong brand contributes to the bottom line of the business. I would like to think part of the credit for this goes to BrandZ and similar rankings that have publicised the value created by brands. However, given the next point, one has to wonder how deep that belief runs. Given the choice between investing in better supply chain management or a brand-building campaign how many would actually choose the campaign? When faced with a board that does not understand the value of a brand, maybe you should point out a few facts from this letter penned by Tom Roach, Managing Partner at BBH.

Bad news, over 50 percent rate the knowledge and understanding of their boards on how a strong brand is built and maintained as average to very poor. This strikes me as the heart of the problem facing marketers today. If your board does not understand brands and the subtle influence they exert to amplify value over the long-term, it is going to be tough to get them to commit the necessary investment to a brand-building campaign.

Bad news, when brand understanding is low only 49 percent of the total sample agreed that a balanced approach will deliver stronger commercial performance (compared to 83% of those who claim good understanding or better). Additionally, there is a divergence of belief between marketers and non-marketers as to whether a balance between short and long-term marketing objectives will deliver stronger commercial performance. A lack of brand health metrics credible to senior management was cited as the greatest impediment to getting the long- and short-term balance right.

Good news, there is a fix to the last problem. However, it requires developing a clear understanding of how your brand grows sales now and for the future and then putting in place the right portfolio of metrics to measure performance, not just relying on convenience metrics which offer a near-term view of what is happening and little insight into what might happen in future. For more on how to balance long and short-term marketing activities and metrics check out our Mastering Momentum report and webinar series.  

Meanwhile, what do you think is the biggest reason that many senior managers do not find brand health metrics credible?



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