The Return of Brand
After a decade focused on digital targeting & optimisation, branding is poised for a comeback
Marketing budgets typically split between brand spend (focused on establishing company values and purpose) and performance spend (focused on driving conversion and revenue). The two aren’t in conflict; investments in brand typically aid performance marketing, while performance marketing converts brand investment into a return.
Apple’s ‘Crazy Ones’ is a classic brand campaign. Products aren’t even featured:
This Apple display ad is pure performance. No values are on display, just product and a clear reason to buy (free AirPods).
Over the past decade, brand has taken a backseat to performance marketing.
The reason is simple: digital technology greatly improved the ROI of performance marketing.
Facebook’s incredible targeting platform allows marketers to A/B test hundreds of ad versions to determine the best advertisement to drive conversions, while at the same time isolating and directing media spend toward users most likely to press ‘buy.’ Head of Growth roles have become a key marketing hire with the ability to create digital content, optimise paid media across Google and Facebook, and develop rich attribution models. Creative agencies, once responsible for developing standout brand campaigns to differentiate their clients, have watched profits (and talent) move to tech platforms. To marketers, these platforms offer clear ROI and self-serve interfaces. Who needs to pay for a brand idea from an expensive agency when a perfectly targeted Instagram post will do it?
It’s not just advertising which has shifted its model. PR has shifted to a performance-focused affiliate model where brands pay for placement in magazines and newspapers, and media organisations take a cut of each sale. Getting your items into an internet list of ‘The 10 Best Father’s Day Gifts’ is a noted win for any growth hacker.
The performance optimisation of marketing has intensified with direct-to consumer roll-ups. Venture firms like Thrasio, SellerX, and Berlin Brands Group have raised over $1Billion in 2020 alone to acquire brands operating on Amazon and further optimise their digital advertising.
Who needs to pay for a brand idea from an expensive agency when a perfectly targeted Instagram post will do it?
Does this mean brand is over?
Not exactly. In fact, brand is poised for a major comeback. And along with it, creative agencies.
“There has been a sudden jump in desire to hire Head of Brand roles,” says Agnes Zuberecz, Senior Associate at recruitment firm True Search. “Companies are sick of depending on Facebook for growth…They are looking for someone to differentiate their company.”
There has been a sudden jump in desire to hire Head of Brand roles — True Search
What’s driving the shift back to brand? 3 factors.
1] Heightened competition:
While tech made it easier to optimise performance marketing, eCommerce platforms and digital advertising also made it easy to launch a consumer brand. Every consumer category has entrepreneurs looking to hit it big with the next Warby Parker, with a combination of sustainable materials / CBD additives / alcohol free messaging. As targeted ads pile up in consumers feeds, how do marketers compete?
2] A decrease in digital targeting capabilities:
Apple’s crusade to become the brand of privacy includes updates that ask users to opt in to tracking, and blocking email data collection entirely. Google is set to get rid of cookies, which track users across the internet and allow for better targeting. Without the ability to target, track, and optimise campaigns, digital ads are similar to mass TV ads. Except that the screen is smaller, and consumers can easily scroll past ads without sitting through them.
3] Decreased supply of digital advertising inventory:
As we exit the pandemic (or grow weary of restrictions), consumers are leaving home and spending less time on their phones. Every scroll fewer means one less space for an ad.
Add these forces together and you have higher demand for less effective advertising. Multiple DTC brands have reported a sudden jump in their Facebook CAC (customer acquisition costs) as brands compete for eyeballs online. Top DTC brands Warby Parker, Glossier, and Allbirds, have all acknowledged that digital is not enough to scale their business; they are expanding from eCommerce into physical stores as a means of growing sales and elevating their overall brand. Even so, profitability remains elusive, as both Warby and Allbirds plan to IPO in 2021 sans profit.
Their means of growth? Brand. AllBirds, maker of sustainable footwear, calls out brand as their top growth avenue. Their S-1 IPO filing includes the term ‘brand’ 329 times, versus just 68 times for ‘shoe.’ Warby Parker also calls out ‘brand’ as the number one factor that sets it apart in its own IPO filing.
As it should.
Building a brand is a challenge that requires aligning advertising, design, communications, as well as every other part of a company — product, supply chain, finance teams— to a core set of values, positioning, and identity. Brand leaders must also select a positioning that is relevant, interesting, and true to consumers. Once they get started, they face an uphill battle of convincing teams to invest into brand over the long term. Brand ROI is tough to measure, and takes time to materialize. It requires saying ‘no’ to short term investments. And making distinctive moves over category norms.
But once established, a brand sets a powerful moat that other companies will find tough to bridge. Every performance ad for an established brand can bank on established consumer awareness, which drives higher performance marketing ROI. Brand also allows companies to cross-sell products. Allbirds’ plans to use its brand to grow sales of shoes for different occasions and apparel products. Finally, brand promotes loyalty, repeat purchase, and longterm customer value. In other words, brand is a capital investment that pays back dividends in the form of strong affinity and awareness.
Brands have always been valuable. But performance marketing has proved too easy (and profitable) to ignore. As competition heats up (and digital tracking gets fuzzier) advertisers can no longer depend on just performance marketing for growth. They need to develop identities that will stand out in a social media feed. They need to be a part of stories that will generate press beyond a ’10 best t-shirts’ article. They need to generate fans who refer their brand to friends, resulting in exponential growth, not just generate click-throughs, which grows brands linearly. But to do that, marketers need a set of values and a clear mission. They need to connect product, advertising, and supply chain into a distinctive experience. They need a brand.