| March 04, 2019
Is it me, or have many people forgotten that the only reason to invest in brand building is to help drive sales? The constant debate about whether to invest in brand building or sales activation seems to imply that sales elasticity is independent of the strength of the brand. To my mind that is just plain wrong.
Maybe I should start with my definitions of brand building and brand activation, here we go,
- Brand building is the process of predisposing people to buy your brand before they start shopping your category, or perhaps, before they even think they need a similar product or service.
- Brand activation is triggering purchases during search and shopping, either by direct appeal – my product is better or cheaper than others – or by triggering pre-existing positive ideas and feelings about the brand.
The truth is that the effectiveness of both brand building and brand activation is highly dependent on the strength of the brand offer in the first place. Is it a well-differentiated offer that is potentially meaningful to many? If so, brand building and brand activation are going to work that much harder. To hark back to my previous post, it helps if you are marketing a Lewis Hamilton rather than, say, Stoffel Vandoorne (there might be a reason most readers have never heard of him).
Staying with an automotive theme, let us examine the example of The AA in the UK (The Automobile Association offers roadside assistance and other services to its members). For several years The AA had increasingly focused its marketing budget on direct-response media, mostly direct mail, while reducing its overall marketing budget. Financially this strategy seemed to be paying off in higher profits. Behind the scenes, however, eroding brand equity, weaker acquisition of new members and a 19 percent drop in new business price compared to five years earlier all signalled problems to come. What is more, existing members were leaving faster than they could be replaced.
The IPA (UK), Gold Effectiveness Award case study (available with subscription)sums the situation up as follows,
“Our audit had revealed an enormous problem - the AA's marketing strategy was efficiently delivering short-term results, but it was also marching the brand towards a commercial precipice.”
To cut a long story short The AA’s communication strategy shifted back to mass marketing: shifting spend back into emotional brand building and getting the balance right with direct marketing. Just as important, communication shifted from emphasizing the trauma of a breakdown to the positive feeling of getting your car back on the road. Acquisition and retention improved and at higher prices. Taking into account the number of new media-driven members acquired and their likely lifetime value the paper concludes that the ROMI for the campaign was essentially double the media spend.
So, if you are asking yourself whether to invest in brand building or sales activation can I suggest that you rephrase the question? The real question is how you get brand building and sales activation to work synergistically over time to grow sales and profits. But what do you think? Please share your thoughts.