2020 is the year marketers re-invest in their brands

Marketers are re-assessing their spending plans for 2020, according to a WARC report, embracing a renewed focus on brand-building with long-term impact over performance marketing with short-term payoffs.

A pivot back to brand is the main theme highlighted in the Economy chapter of WARC’s Marketer’s Toolkit 2020, an annual report that assesses the influences on marketing strategies for the year ahead, based a world-wide industry survey.

That survey of marketing executives found that short-termism is the number one industry issue with 70% of respondents agreeing that brands have over-invested in performance marketing. Importantly, 40% predict increased brand investments in 2020 versus 32% who see higher performance budgets.

“Brand building is back and is set to be a major trend for 2020,” said David Tiltman, VP Content, WARC. But even while there’s plenty of evidence to support that contention, “we’ve also found that there are significant hurdles, including internal culture, marketing skillsets and the need for better brand metrics,” he added.

• Marketers recognise the crisis of short-termism

The efforts of researchers such as Les Binet and Peter Field to refocus brands on the long term are bearing fruit, the report suggests, as many CMOs acknowledge they are “way off” the pair’s rule of thumb of a 60/40 investment split between brand and sales activation.

At the same time, fresh research is underlining the crisis short-termism is creating. Field debuted new research (with the Institute of Practitioners in Advertising) during a WARC session at Cannes Lions last year arguing that short-termism had undermined the link between creativity and effectiveness.

Orlando Wood, Chief Innovation Officer, System1 Group, advises: “There are five practical ways that advertisers can make their work more effective: entertain for commercial gain; think dramas, not lecture; play with culture, don’t mirror it; people are characters, not ‘props’; and local richness beats global blandness.”

• Digital-first brands are turning to brand-building to scale their businesses

Established companies have been advised to learn from the new wave of ‘digital-first’ or ‘direct-to-consumer’ businesses disrupting their categories, but these challengers are now discovering the same rules of sustainable long-term growth apply to them as to traditional business models.

In the US, the Video Advertising Bureau noted a 60% increase in TV spend by direct-to-consumer brands. In the UK, e-commerce marketplace eBay – which had dedicated 90% of its budget to performance marketing for more than decade – upped brand investment from 10% to 35% over four years and saw a “dramatic” improvement in brand consideration and the growth of organic traffic.

• But there remains a gap between intention and action

Survey respondents may have acknowledged the effect of short-term strategies on their brands, but money continues to pour into marketing channels best suited to performance marketing. There is a positive outlook for search and online display in the survey, while ‘classic’ brand-building channels like TV and out of home look more negative.

Brands appear to view online video as key for brand-building in 2020, with more than 80% anticipating greater spend on that channel.

• Culture, skills and metrics are key barriers to brand-building

A general business culture of short-termism and a squeeze on budgets are significant challenges to brand-building. Another issue is a loss of confidence among modern marketers as to their ability to build brands. An IPA/ Financial Times study released mid-2019 found that almost one in three senior marketers rated their ability to build brands as average to poor.

WARC respondents also point to metrics – specifically, the need for better signals that brand-focused work is having an impact and can be presented in a business language that other members of the C-suite can understand. Fifty percent of respondents said customer experience (CX) will remain a focus for brands in 2020 but 71% say this is harder to measure than advertising.

Simon Cook, Managing Director, Cannes Lions, says: “Being creative while retaining consistency of brand is key to unlocking the benefits of brand-building: from forging emotional attachments, to driving long-term brand equity and sales influences.”

Test-and-learn may be key for companies looking to reinvest in brand. Marketers should take note of an experiment by Australian insurance giant IAG: to test the case for long-term brand investment, it will spend 80% of its budget on brand-building activities in a targeted part of Australia for the next two years.

Sourced from WARC