How the “Rules of Brand Investing” are Transforming B2B Marketing
November 7, 2017
Among the 7 trends transforming B2B marketing is a critical one that we call the “Rules of Brand Investing.” Historically, digital media planning/buying has been more of an art than a science. But B2B marketers are starting to realize that there may be a few iron-clad, quantitative rules for distribution – rules that need to be followed to maximize ROI. There are three rules in particular that we’d like to share with you.
First up is the “60/40 Rule.” This rule is based on some heavy-hitting research called “The Long and The Short of It.” That longitudinal study of about 10,000 brands, examined over 30 years, grouped brands into high-performing and low-performing categories. The study found that high-performing brands invest about 60 percent of their budget in thought leadership or branding, and 40 percent in more bottom-funnel messaging — what the researchers call “commercial activation,” and what we call “buy now!” advertising.
We explained previously why thought leadership is important, but how does that translate into media spend? Well, if you follow the 60/40 rule, you should spend 60 percent of your budget driving awareness and engagement with your “blockbuster” content, and 40 percent of your budget following up with the buyers who were exposed to your thought leadership, raising consideration of your products and services.
We suspect that this would be a major change for most organizations. In our experience, most clients seem to be following the 10/90 rule instead, where the majority of budget goes to direct response, which may result in short-term sales lifts, but ultimately offers diminishing returns compared to branding. And we’re starting to see the pendulum swing in the opposite direction, a positive trend for marketers and buyers, who need your brand’s topical expertise to succeed in their careers.
The second principle is called the “The 10:1 Rule.” The 10:1 Rule indicates that for every $1 spent on creative development, $10 should be spent on distribution. The logic behind the rule looks like this: in today’s content marketplace, where competition is infinite and no one remembers anything, it’s just not enough to have great creative. Consider the film franchise “Star Wars” for a minute. “Star Wars” probably has the greatest organic following of any piece of content in the history of mankind. It has 100 percent brand awareness (if you know someone who has never heard of “Star Wars,” please let us know so we can study him for science). And yet, Disney spent well over $500 million advertising “Star Wars,” both with traditional media and push-the-envelope digital integrations, like an X-Wing picking you up in Uber. If Disney needs to spend $500 million advertising a blockbuster that everyone has already heard of, imagine how much money you need to spend to turn your unfamiliar brand franchise into a familiar one. We understand that “spend an enormous amount of money on media” is not a message anyone wants to hear, but unfortunately, there’s no reliable alternative if you want to break through in a world where anyone with a phone can create content.
The good news is that if you take a more focused approach to content creation – a Hollywood approach, instead of a newspaper one – you can reduce your content development costs, freeing up funds that can be used to put your content in front of as many buyers as possible.
The third and final principle is called “The 80/20 Rule,” also known as Power Laws. It’s been around since 1896, when Italian economist Vilfredo Pareto first observed that 80 percent of effects tend to come from 20 percent of the causes. (Pareto realized, for instance, that 80 percent of land was owned by 20 percent of the population). The 80/20 rule has been applied to almost every business, most recently in the world of venture capital. VC firms know that around 80 percent of their returns will come from just 20 percent of their investments, so they invest in many different companies. But B2B marketers are starting to apply the 80/20 rule to their media planning efforts. What does that look like? Well, if you apply the 80/20 rule to your marketing, you’ll invest in a lot of content and a lot of channels, while keeping in mind that only 20 percent of your investments will deliver 80 percent of your returns. And you'll be prepared to spend the majority of your budget on the 20 percent of tactics that deliver exceptional returns.
To check out the rest of the 7 trends that are transforming B2B marketing, download the new “7 Trends in B2B Marketing: Think Like Disney and 6 Other Strategies” eBook today.