Back in the 1950s, when advertisers used to advertise, publisher McGraw-Hill created ‘The Man in the Chair’ to demonstrate the power of being a reputable B2B brand:
Depressingly, looking at B2B brands 60 years on, the message hasn’t sunk in. Most B2B brands are not really brands at all. At best they are visual identities, maybe with some values or a mission statement. Most B2B brands are unheard of outside a few small niches. Most carry little authority, saliency or mental availability.
Indeed, even within their own organisations, most B2B brands are familiar only to the marketing department. Ask a member of the sales team or someone in finance what the brand values are? Ask someone in HR what it should be like to experience the brand? Expect to receive blank looks.
There are two factors which have created this problem.
The first is simple economics. It’s hard to get precise figures on what B2B brand managers invest in brand building, but our experience combined with various reports over the years puts it about 17% of total budgets. Instead money is funnelled into short term performance marketing, vigorously targeting ‘likely buyers’ at the point they are in market rather than filling the funnel with future buyers.
To borrow from Professor Mark Ritson, marketers are so busy picking the low hanging fruit, they are forgetting to water the tree.
The second is a question of brand strategy. In my experience B2B brands are fairly poorly defined and have not been developed with a strong strategy or positioning in mind. The brand is something to stick on a letterhead or business card, rather than a strategic asset designed to beat competition and enhance the organisation’s chances of success. Decisions are made about visual identity, values, experience principles, strap lines etc, all without reference to a wider strategy or rationale.
Strong brands matter
This is tragic, because evidence shows us that strong brands matter, a lot.
The IPA’s book, The Long and the Short of it looked at 996 effectiveness award winning campaigns featuring 700 brands across 83 categories, to determine the factors which contributed to both short and long-term business effects (growth, price premium, market share, etc). They found that whilst promotional activity drives effectiveness over the short term (sales uplift), it is brand building campaigns that create large business effects over the long term (profit gains, market share, unprompted awareness, etc).
Interestingly, in many cases an over-reliance on short term tactics can actually have a harmful effect on long-term brand building. As Peter Drucker explains:
“Long-term results cannot be achieved by piling short-term results on short-term results.”
The book clearly outlines a model for how brand managers should balance both short and long-term targets. 60% of budget should go on brand building, with 40% on short-term sales conversion activity. Brand building should be done using broad reach media channels, where it forms opinion at a cultural level. Sales promotion can be done in a more targeted way, to nudge leads down the funnel and enable sales conversations.
Is B2B different?
Of course, you could argue that most of the case studies in the IPA’s effectiveness archives are B2C case studies, which they are. Maybe B2B brands are different? Maybe they don’t matter as much? Maybe humans ditch their irrationalities and psychological ticks when they enter the workplace and become truly rational creatures, immune to the persuasive influence of strong brands?
The evidence suggests not.
In fact, the same data suggests brands in ‘high consideration’ categories (where purchases are slow, complicated and deliberate) rely on strong brands even more than in low consideration categories (where purchases are quick and instinctive), or in categories where emotions play less of a role in decision making. Most B2B brands sit in these kind of categories – long sales processes, complex products, multiple stakeholders to impress across a variety of touchpoints, more rational decision making.
Let’s just let that sink in a moment. Currently B2B brand managers spend on average 17% of their budget on brand building. But yet it should be 70%.
This isn’t just forgetting to water the tree. This is an act of wanton desertification.
How B2B brands work
So why do B2B brands need even more investment than B2C brands? There are four possible hypotheses below which point to reasons why:
1: B2B products are often hard to buy and complex to understand.
Indeed, it is their ‘high consideration’ nature that make strong B2B Brands so essential. As Daniel Kahnemann argues in Thinking Fast and Slow, when we have a difficult decision to make, we often replace it with a simpler one. When faced with weighing up a set of complex products and services, which often require deep technical expertise, it’s much easier to replace this decision with a simpler question, ‘which one of these brands am I familiar with’.
The incredible thing is that we are almost totally unaware of doing this. As the psychologist Jonathon Haidt describes:
“We like to think of our conscious mind as the President in the White House, dishing out orders. But in reality, it functions like a press secretary, automatically justifying any position we take.”
2: Brands are a common language that cuts across silos and technical knowledge.
B2B purchases are further complicated by the fact that usually multiple stakeholders are involved in the purchase, often with competing agendas and requirements.
Strong brands cut across these differing agendas. They give Finance a language to use in conversation with HR. They give Marketing a language to reach out to Operations. We might not agree on what’s most important, but we can all agree that Microsoft are better known, and more reputable, than some start-up tech company.
3: Strong brands minimise the risk of getting blamed if things go wrong.
Linked to group decision making is blame avoidance. Rory Sutherland amusingly points out that:
“The key driver in B2C purchases is maximising pleasure, whereas the key driver in B2B purchases is avoiding blame.”
There is more than a grain of truth in this, after all, ‘No one gets fired for buying IBM’. Strong brands give B2B purchasers the confidence that if the purchase is a huge disaster, they have something to hide behind. ‘Who would have thought this strong brand was so poor? Their reputation more than justified the decision, etc.’
4: Strong brands add a premium to otherwise often commoditised products.
Many B2B brands sell commoditised products or services, for example raw materials or building services. Often the products and services are pretty interchangeable with competition and B2B brands end up competing on price with heavy discounting. Strong brands help to hold a price premium. They help to differentiate products in the minds of buyers. They help to encourage customers to buy more, and buy more often.
Long term campaigns report highest levels of large price effects.
Strong brands also help to coordinate sales, service and marketing in a way which drives a consistent experience – adding value on top of commodifiable service. Cloud storage is about as commoditised as you can get, but Dropbox have built a fantastic business using consistently brilliant user experience – which is all part of a wider brand experience strategy. Accenture have used their strong brand to create a language that their whole business speaks, which describes the world of business as they see it. This language is repeated across comms, sales and consultancy, creating a sense of differentiation in a sea of consultancy sameness.
This ‘whole business experience’ approach to brand building is why, at Omobono, we view brand growth through three lenses: Brand, People and Platforms. We call this the ‘Halo Model’ and it allows us to build consistently strong brands across every touchpoint, not just comms.
The brand advantage
So, the bad news is it is highly likely you are underinvesting in your brand, and strong brand managers face a fight to wean the business off the crack cocaine of short-term performance marketing and onto the wheat-grass smoothie of long-term brand value creation.
The good news is that your competitors face the same fight, and hopefully they haven’t also read this blog post. So, develop a strong brand strategy, build your whole business experience around it, spend most of your budget making people aware of what you stand for and make your brand strong.
And the next time you’re in a procurement process, the person sitting opposite will already know who you are and want to buy from you.