The B2B Marketer’s Guide To The “Share of Voice Rule”
How to use this tried and trusted formula to drive growth for your business
January 17, 2020
For more than 50 years, marketers have been able to rely on a rule to help determine how much money to invest in advertising to meet specific growth targets. The rule, called the “Share of Voice (SOV) Rule”, says the following:
“Brands that set their share of voice (SOV) above their share of market (SOM) tend to grow (all other factors being equal), and those that set SOV below SOM tend to shrink. The rate at which a brand grows or shrinks tends to be proportional to its “extra” share of voice (ESOV), defined as the difference between SOV and SOM.”
The SOV rule is most elegantly articulated in a 1990 article in Harvard Business Review by John Phillip Jones, called “Ad Spending: Maintaining Market Share,” and is backed by additional research from The Ehrenberg-Bass Institute and researchers Les Binet and Peter Field. The collective research shows that a brand tends to grow market share in proportion to the Extra Share of Voice (ESOV) that said brand achieves in the marketplace.
The SOV Rule, thus, provides a simple formula for working out how much your advertising budget needs to grow, in order to grow your bottom line.
Playing within the rules
While this formula is well-known in B2C marketing circles, it is little known in B2B marketing. That’s where LinkedIn steps in. New research from LinkedIn’s B2B Institute has shown that The SOV Rule applies in B2B markets just as it does in B2C markets. Our joint report with Les Binet and Peter Field analyzed effectiveness data from the Institute of Practitioners of Advertising databank and found an ESOV of 10% leads to market share growth of 0.7% per year. Interestingly, the SOV Rule appears to have an even stronger effect in B2B than in B2C, where 10% ESOV drives 0.6% annual growth.
Let’s put theory into practice now.
Imagine you’re a B2B marketer in a major cloud computing business and the CFO tells you that the business needs 2% share growth. You’ve got a ready-made business case for going back to the CFO to ask for more budget. In fact, you can be quite specific about how much budget you need. Let’s say your brand currently has 10% market share (SOM) and spends about 20% of advertising (SOV) in cloud services. Well, 10% ESOV (20%-10%) is only likely to generate 0.7% share growth, not the 2% share growth you need. In order to generate 2% share growth, you need to double advertising. You need 40% SOV, which gives you a 30% ESOV, resulting 2.1% market share growth (30% x 0.7%).
But what if you’re not a B2B marketer at a major cloud computing business who can spend big money on advertising? What if, like most B2B marketers, you’re trying to meet far more challenging growth targets in a cash-strapped business where you can’t just radically dial up your marketing expenditure to solve the problem?
In that case, you need to find a way to punch above your weight when it comes to the SOV that you achieve. The clues for how to do so are hiding in plain sight in the full research report that Binet and Field prepared for the B2B Institute.
The formula for punching above your weight in B2B
The report sets out five key principles for building the SOV that you need to exceed your SOM – and drive business growth:
Principle 1: The SOV formula works for everyone, even small firms
If you’re a smaller business looking to grow, then the SOV Rule still works in your favor. Let’s say you’re a challenger business with only 1% of the market. In that case, you are still likely to grow, even with only 2% of your category’s ad spend. And as your company gets bigger, you can invest increasingly bigger budgets into advertising to accelerate growth over time. It is worth noting that small companies with genuinely innovative products often generate strong word of mouth, accelerating additional SOV beyond their share of category ad spend, but that effect diminishes over time.
Principle 2: Balance brand and activation
Marketing spend translates into SOV most effectively when you have the right balance between long-term brand building and short-term sales activation (e.g. lead generation). The B2B Institute report shows that the optimum B2B marketing mix involves spending roughly 50% of your budget on brand and roughly 50% on activation. Balanced marketing tends to generate performance 4x better than purely short-term, sales activation strategies like lead generation.
Part of the reason that balanced marketing campaigns perform so much better is the impact of brand campaigns, which compounds over time, building on the brand memories and associations a brand creates. Activation campaigns, on the other hand, typically start from scratch with a new offer or approach each time.
Principle 3: Expand your customer base
If your marketing only targets existing customers then it won’t translate effectively into SOV, since you’re not investing in reaching new customers. Binet and Field’s research shows that the most effective marketing strategies are ‘reach’ strategies that target the entire category, reaching new prospects and old customers alike.
Simply put, reaching more category customers equals achieving more SOV.
Principle 4: Maximize mental availability
The most effective campaigns prioritize building ‘mental availability’, which is the extent to which the brand comes readily to mind in buying situations. The ultimate aim is brand fame: being the brand that comes to mind for the most category buyers in the most buying decisions.
Building a famous brand requires reaching all category buyers to get people to recognize and talk about your brand. One of the best ways to get reach beyond your size is to produce advertising different from everybody else in your category. It will be extremely difficult for a small brand to cut through with advertising fundamentally similar to everyone else in the category. However, if you can surprise people, make people laugh, or awe people, you have a better chance to compel them to remember and talk about your brand. That’s exactly what Volvo Trucks was doing when it dreamed up a never-even-thought-of-before stunt for Jean Claude Van Damme. It’s what HP was thinking when it decided to advertise IT solutions with a bizarre, furry, red monster. These types of ideas don’t tend to come from creative briefs that stress the need to communicate product benefits like precise steering or better systems integration. These types of ideas come from creative briefs where the chief priority is to be talked about.
Principle 5: Harness the power of emotion
Emotional campaigns (ones that try to make prospects feel more positively about the brand) are more effective in the long term than rational campaigns (ones that try to communicate information). This is because emotional content tends to embed more deeply in our memories. When it comes to maximizing SOV, emotion is a powerful part of any brand campaign because it is not only important that you see an ad, but also that you remember the ad (and the brand). Some of the most famous brand advertising of all-time makes powerful use of emotions in the ads, including this classic B2B ad from McGraw-Hill Magazines, which offers an entertaining – and harrowing – blend of emotions to make the sale.
Maintaining SOV to maintain SOM
The five principles listed above are core to marketing effectiveness for any brand – big or small. Brands must achieve high share of voice, high category reach, high mental availability and do so in campaigns that blend emotional brand building and rational sales activation. The companies – and marketers – that are able to invest in these principles can expect to grow their businesses – and their careers.