A year from now, will your brand be celebrating remarkable growth or lamenting missed opportunities?
In a world grappling with the aftermath of a global pandemic, geopolitical crises, and impending political shifts in the UK and US, brands are facing challenging circumstances as they navigate this turbulent landscape.
Operating in such difficult circumstances can create uncertainty, particularly around long-term decision-making. The fear of the unknown can hinder progress and prevent effective planning, innovation and growth. However, with uncertainty comes opportunity.
During periods of recovery, businesses are often forced to react in one of two ways. To maintain stability, they will either walk a well-trodden path and stick to what they know works best, or they embrace change. History shows that recovery periods are important; companies either emerge stronger or with regret. Writing for Harvard Business Review, Henry Mintzberg says that successful organisations balance deliberate planning with the ability to adapt and evolve in response to shifting conditions, while research from RGB suggests companies that welcome change encounter fewer hurdles when disruptions occur.
From safe bet to success: Tailoring brand strategies beyond 60/40
Embracing change is tough, even in ideal conditions. We often resist because it can feel like losing control, abandoning our comfort zone, and risking failure. All these fears push us away from the leap of transformation we sometimes need to effect change.
In the same way, we might view Binet and Field’s 60/40 rule as a safe bet. This research published by the IPA says that brands should allocate their marketing budget in a ratio of 60% for long-term brand building and 40% for short-term sales activation. This rule-of-thumb guidance is familiar to marketers, offers reliable advice for brand growth and provides a solid starting point for brands with limited resources.
But is this formula really the best path forward for your brand, or is it too generic to cater to your brand's specific needs? Determining whether a 60/40 split is right for your brand requires greater analytics and deeper insights.
There are a few reasons why the universal application of the 60/40 rule might not always deliver the results your brand is looking for:
Competitive categories
Different brand categories have varying market dynamics. In highly competitive sectors with rapidly changing consumer preferences, a more aggressive short-term focus might be necessary to capitalise on immediate opportunities.
Brand maturity
Brands in different lifecycle stages may need flexible strategies. New brands may need to invest more heavily in brand-building to establish awareness, while established brands might focus more on short-term activation to maintain market share.
Digital disruption
The rise of digital marketing has transformed advertising, making it possible to target and measure campaigns with greater precision. For some brands, a more data-driven approach might favour shifting the balance away from the 60/40 split.
Behaviour change
Changes in consumer behaviour and media consumption patterns may require more flexibility in advertising approaches, involving adjustments in the allocation of budget.
Evolving objectives
Some brands may have different objectives, such as direct sales, market penetration, or customer retention, which may call for a different mix.
Budget constraints
Smaller brands with limited marketing budgets might not be able to afford the ideal mix and could achieve better returns by prioritising one aspect over the other.
Data-driven insights
Data analytics can play an important role in quantifying the influence that brands have on consumer choices across different categories, highlighting how significance can change depending on the level of consumer interest. While a brand holds an important role in both high and low-interest categories, its weight of influence may vary significantly.
So, how can brands make the smartest marketing investment? It depends on the category your brand is in and its lifecycle position. Some will opt for the conventional 60/40 rule, as discussed. Instead of sticking to the familiar, successful brands leverage advanced analytical tools to help guide this process and provide data-driven insights to give them a competitive edge.
Stellar brands must push beyond the familiar and embrace a data-informed approach, which can unlock the full potential of their marketing investments.
Hall & Partners conducted a conjoint analysis with a leading international airline, revealing that brand influenced 20%+ of purchase decisions. While price and airport location were primary factors, strong branding enabled the airline to charge a 20% premium over competitors for similar products.
Exceptional brand growth demands boldness and bravery, requiring a willingness to adapt and tailor strategies based on nuanced, actionable insights. Stellar brands must push beyond the familiar and embrace a data-informed approach, which can unlock the full potential of their marketing investments.
Looking beyond the quarter
At Hall & Partners, we frequently engage with clients who discuss the prevailing industry trend of deciding between brand building and performance marketing. Understanding their distinct roles and how they interact is key to maximising commercial impact.
The primary goal of brand building is to create a lasting and meaningful relationship between the brand and its customers. This involves developing a strong brand identity, increasing brand awareness, and fostering brand loyalty over a longer period.
Performance marketing offers greater transparency. It provides clear insights into the impact of marketing expenditures and is appealing because of its immediacy and measurable impact: for example, spend X on banner ads, get Y in sales leads.
Furthermore, research shows that post-pandemic budget cuts have mostly affected brand-building activities, with investments shifting heavily towards performance media like e-commerce and retail media. This shift emphasises ‘performance’ channels that deliver short-term, measurable sales impact.
It’s important to recognise the proven long-term impact of brand building in driving sustained growth, while also acknowledging the direct returns that performance marketing can deliver. But, we should avoid looking at them as being mutually exclusive, as implied by the 60/40 rule. The best strategies integrate both, recognising their complementary roles.
A prime example of a category that combines both is food delivery. Despite a levelling off in growth due to the decline of COVID-19 and more people returning to the office and resuming on-premises dining, these brands have ramped up their marketing budgets to increase brand salience, capture market share and attract new customers.
Brands in this dynamic category invest hundreds of millions each year in advertising because they understand that building brand awareness is a critical driver of consumer choice in their category, which is highly influenced by short-term, timely activations.
The 60/40 rule is a helpful guideline, but it’s important to understand that brand building is a broad term. With advanced analytics, marketers can create a more focused plan. Strong brands often move beyond the 60/40 rule and are far more intentional about their brand-building efforts.
Game plan precision
Imagine an underperforming football team seeking to improve its results. The team is advised to build its roster with 60% focused on offence and 40% on defence. But how is the coach supposed to implement this strategy effectively?
To tackle the challenge, a speciality consultancy is brought in. They analyse the existing squad and offer tailored advice:
"Given your current team's strengths, we'll help you build a dynamic offence while crafting a winning defensive strategy."
The consultancy doesn't just give vague percentages but provides a clear plan that aligns with the team's unique abilities. They outline the specific positions to reinforce, recommend players who complement the team's style, and propose training regimens that boost both offence and defence. By offering this practical guidance, they empower the coach to make informed decisions, leading to a more balanced and effective winning team.
This analogy underscores the value of expert insights tailored to an organisation's needs, ensuring high-level strategies become impactful results. This is where Hall & Partners excels—helping measure brand health and maximise marketing spend on brand-building activities. It's not just about where funds are allocated, but how.
Bringing brand value to the boardroom
A common issue is that the C-suite often struggles to recognise the long-term ROI of brand building, particularly when budgets are tight. They prioritise immediate gains and often focus on performance marketing for quick returns.
Presenting a clear argument for the financial advantages of investing in your brand to your CFO and board will help secure the support and resources needed for your branding efforts. More significantly, an approach that translates brand value into financial language helps lay the foundations for substantial long-term commercial success, positioning brand strength not merely as a marketing focus but as a central pillar of corporate strategy.
This ‘beyond the quarter’ obsession that has seemingly gripped C-suite and the marketing world forces us to ask: If every brand is focused solely on the next quarter, then who is truly building a brand? The fixation on short-term results can often lead to neglecting the longer-term brand-building activities that fuel sustainable growth. The challenge lies in striking the right balance that resonates with your brand's unique context and goals.
6 key takeaways for marketers
Embrace change for long-term success – Brands that adapt and evolve their strategies in response to market changes tend to outperform their peers, underscoring the importance of embracing change and moving beyond safe, familiar tactics.
Adapt to changing market dynamics – Brands should be prepared to move beyond the conventional 60/40 marketing rule and adapt their strategies based on specific market dynamics, brand maturity, and evolving consumer behaviour.
Balance brand building and performance marketing – Both long-term brand building and short-term performance marketing are crucial for sustainable growth. Striking the right balance depends on the brand's goals, market position, and category characteristics.
Leverage advanced analytics – Using data analytics helps brands understand the impact of different marketing strategies, enabling them to tailor their approach to optimise ROI.
Convince the C-Suite with data – Presenting data-driven insights about the long-term value of brand building is essential to gaining executive support and ensuring consistent investment in marketing efforts that drive sustainable growth.
Score big with tailored insights – Craft a winning game plan by maximising your marketing spend and building a dynamic brand strategy for impactful results.
