I Believe In Brand Building – Now How Do I Convince My CFO?
Ideas for demonstrating the impact of your brand investment on the bottom line
February 17, 2020
The biggest problem in B2B marketing is pervasive under-investment in brand marketing, which is hurting companies’ growth prospects. That’s the clear and obvious conclusion from new research conducted for LinkedIn’s B2B Institute by our partners, the ad effectiveness gurus Les Binet and Peter Field. Their analysis of the IPA Databank shows that B2B businesses grow most effectively when they split their marketing budgets roughly 50:50 between long-term brand building and short-term activation marketing.
Seems reasonable, except almost nobody comes even close to striking that balance, with the vast majority of budgets and efforts spent on bottom-of-the-funnel short-term tactics. Within the oak-paneled, ivy-clad walls of The B2B Institute, we like to joke that the best piece of branding work that’s ever happened in B2B is demand-gen folks calling themselves “performance” marketers, thereby implying that any other form of marketing doesn’t perform as well, if at all. Oh, the pernicious genius of brand positioning!
But seriously, why is it hard to make the case for brand? The reason often comes down to lack of evidence – or to be precise, lack of the kind of evidence that the rest of the business wants to see.
There’s a big difference between having general evidence for the principle of investing in brand (the B2B Institute report is a powerful example of this), and having specific evidence that your own investment in brand is working, right now. That’s what stakeholders in many B2B businesses demand. The trouble is, it’s difficult to provide. What’s hard to measure hardly gets managed, to riff on Peter Drucker’s original quote.
How measurement misses brand effects
Brand building involves investing in creating influential memories, building brand salience, mental availability and engaging on an emotional level. This takes place over long periods of time, with those memories being strengthened and built over the course of years. It makes businesses more sustainable and more profitable – but it doesn’t do so immediately. Think of a famous celebrity who always gets the best table and free champagne at any restaurant. It took effort to become famous, but now doors just open magically.
Investing in a strong and salient brand makes all marketing more effective and efficient, including future activation campaigns that drive leads and sales. It’s common sense – nobody buys from a company they haven’t previously heard of. Internal tests by our colleagues from LinkedIn Marketing Solutions showed that clients who ran both brand and activation campaigns concurrently achieved a 6X higher conversion rate for the latter.
Although brand investments benefit future activation campaigns, activation marketing can’t return the favour. That’s because it isn’t typically remembered at all. It focuses on driving an immediate action and it produces no long-term effect. However, activation marketing does drive a short-term spike in visible actions: leads, conversions, revenue. These blips light up the ROI dashboards that B2B businesses are focusing on. They look like great value for money – and their immediate uplifts tend to obscure the more gradual impact that brand campaigns have.
In a recent study, LinkedIn asked digital marketers about how they measure ROI – and the responses demonstrate exactly why it takes courage to switch more of your budget to brand.
Of the 4,000 marketers that we surveyed, 77% told us they calculated ROI after just one month of a campaign. That’s nowhere near long enough for brand marketing to deliver an effect. The playing field tilts even further towards activation when we consider the metrics that digital marketers are using to measure ROI. The most commonly used are click-through rate (CTR) and cost per click (CPC). These are metrics based entirely around the immediate actions that activation campaigns drive. They don’t reflect the benefits that increasing brand salience bring to your business. When businesses talk about ROI, they’re excluding brand from the conversation.
If we’re to balance our B2B marketing budgets more effectively and drive more efficient long-term growth, then we need to make the case for a longer-term approach to ROI. In the meantime though, we need to prepare for the monthly meetings where 46% of digital marketers find themselves justifying how they’ve allocated their budgets. We need some form of immediate evidence that can reassure the business that investing beyond demand generation tactics adds up.
Of course, we can always turn to the tools of traditional brand measurement, such as brand tracker surveys that record changes in awareness and perceptions. In isolation though, these won’t necessarily convince your colleagues that investing in brand is worthwhile. Is increasing the readiness with which your brand comes to mind over your competitors really improving the bottom line? Is it helping you or the sales team to meet your targets? These are the types of questions you need to answer.
Econometric modelling, which controls for the different factors that influence buying habits, is one of the best methods available for understanding the role that a brand plays in business growth. However, econometric studies are complex and time-consuming – and they don’t necessarily provide the immediate, tangible evidence that the business expects. What really helps is having numbers that you can point to that relate the strength of a brand to immediate business objectives and the bottom line.
I’ve had fascinating discussions with Les Binet and Peter Field about this, as well as with several other members of the B2B Institute and the marketing team behind our recent ROI research. These recommendations are based on those discussions. They’re a playbook for building simple and immediate evidence that your brand investment is working – and keeping your stakeholders happy while you reinforce the business’s long-term growth:
Distinguish between ROI and KPIs
The first, crucial step is to start differentiating between how you measure the Return on Investment (ROI) that marketing delivers, and how you use Key Performance Indicators (KPIs) to check that your marketing is on track to deliver that return. Too much digital marketing measurement mixes these two things up, with the result that ROI is discussed in terms of cost metrics like CPC or Cost per Lead (CPL). This makes no sense, since you can’t measure the value of any investment just by how much the investment cost. It’s worse still for brand investments, which aren’t designed to drive clicks or leads in the first place.
To give ourselves a chance of proving the value of brand, we need to start looking at real business impacts – real returns on investment in the form of revenue, profitability and lifetime customer value. These are the ways in which a brand investment positively impacts the bottom line. If we want evidence that brand marketing is working, we need to start looking in the right places.
Look back over several sales cycles to establish your baseline
The average sales cycle in B2B is six months. That’s the minimum likely period over which any marketing investment might deliver a return in terms of new customers and revenue. It’s not logical to measure the ROI of even activation marketing over a time period that’s shorter than your sales cycle. However, when it comes to investments in brand, we need to extend our timeframe further still. Because the effects of brand marketing accumulate over time they impact the bottom line over the course of several sales cycles.
To capture the impact of the brand investments you’re about to make, first calculate the ROI delivered over the last two to three sales cycles. You can then use this as a benchmark for how brand investments are impacting the bottom line over the next two to three sales cycles. For an idea of how long it might take, consider the case of BT Business, one of the campaigns studied by Binet and Field for the B2B Institute report. By measuring ROI over the course of two years, the company was able to see a significant increase in profitability so that campaign ROI reached 316%. It also recorded a 17% drop in cost per customer acquisition.
Find the natural comparison points in your marketing calendar
Measuring ROI properly will take time. As a B2B marketer who’s making the case for investing in brand, you’ll need some evidence to satisfy your business in the meantime. Is your brand paying its way by making your marketing more effective?
If you were a scientist in a lab, you might set up an experiment to prove something like this. You’d run an activation campaign in the equivalent of a test tube – and then run the same activation campaign in a different test tube having mixed in some brand marketing first. It’s difficult to run experiments like this out in the complex, real world where marketing takes place. However, there might well be points in your marketing calendar that give you the opportunity to test whether your brand is helping your activation campaigns.
Event marketing is one obvious example. If you invest in a stand at the same event each year, and run activation campaigns to help drive leads through the event, then you can compare the ROI of that marketing investment year-on-year. If your brand marketing is working, you would expect it to lift the ROI of the event, over the years that the brand campaign runs.
It’s not just events that provide the opportunity for real-world experiments, though. If you’re a software business supporting ecommerce companies that always runs a lead generation campaign around Black Friday, you can similarly compare the ROI of that activity year-on-year – and track the impact of your ongoing brand investment.
Pick brand salience KPIs that relate to your demand generation goals
Outside of year-on-year comparisons, you can also track the impact of your brand investment through more immediate KPIs. The sweet spot is metrics that are influenced by the strength of your brand, but which also have a direct impact on the bottom line. This helps to demonstrate how your brand is increasing the efficiency of your marketing overall.
Tracking growth in the volume of branded search traffic to your site, for example, demonstrates not only that people are aware of your brand – but that it comes to mind strongly when they are considering a purchase from your category. The proportion of inbound enquiries that you receive also reflects the strength and influence of your brand. When you see cost per lead (CPL) and cost per acquisition (CPA) declining consistently over time, you’ve got evidence that brand salience is making the task of your demand generation campaigns a whole lot easier.
The important thing with these metrics is to remember that they are indicators of the bigger picture rather than evidence of ROI in themselves. They can reassure you and your stakeholders that your brand campaign is working, not just in terms of brand surveys and brand equity measurements (although these provide other valuable evidence), but in ways that will positively impact the business bottom line. They enable you to observe how your brand is making your overall marketing more effective – and why you’ll end up with a more sustainable and profitable business when you get the balance right.