Brand Shift – Why your marketing budget needs a new strategy

So folks, in our last video we talked about how marketers like you and I fell into the CPO trap. How we started to think like a controller. How it became normal for you to focus on short-term KPIs and how you let clicks and short-term ROI put you under pressure. Not nice. Not only are you ruining your health, it’s not good for your brand either. It is slowly but surely losing its personality and your brand is becoming increasingly interchangeable. What you sell becomes a commodity and the price war is on. 

But that’s not all, the spiral continues – downwards. Loyalty decreases, your customers switch to the competition because nothing keeps them loyal to your brand. That’s why you have to advertise more and more, and because your competitors are caught in a similar downward spiral, they all push for advertising space all the more. What happens? The ads become more expensive. It’s a vicious circle. Everyone then becomes louder and louder in the lower funnel, more and more aggressive, and at the expense of the brand.

The performance managers see it themselves, the trade press sees it, and many old-school brand consultants have always known it: the brand has been criminally neglected in the last six to eight years. And the experts, who are greying with age and who have always been wary of performance or have never fully understood it, want to throw all performance marketing into the garbage can for good like an old stinking fish – and just go back to beautiful brand advertising, colorful images, a perfect world, just like in the good old days.

You have to be very strong now. The 90s are not coming back. Even if you wish they would. Because the world has turned and performance is here to stay. And that’s a good thing.

But what needs to happen is a better balance between brand and performance. And that doesn’t mean brand performance. For heaven’s sake, we’ll have to talk about this combination another time, otherwise we’ll get completely bogged down. 

There are figures. Hard figures from studies: advertising expenditure has shifted massively towards performance in recent years. Reports clearly show for 2024, e.g. from Statista and DataReportal, that digital channels now account for over 70% of global advertising investments, compared to around 50% in 2018 – figures that are confirmed in CMO surveys.

On the other hand, Amazon 2023 found that 81% of global consumers are more likely to buy from brands whose values they share. We clearly see the relevance of clearly defined and clearly communicated brand values. Surveys among marketing decision-makers, such as the CMO Survey or reports by the CMO Alliance, show that budgets for branding measures are set to increase again, even if spending is often still heavily performance-based at present. There is still a gap between aspiration and reality. This means that if you invest boldly in branding today, it will pay off for you. Customers are hungry for strong brands.

Is this just wishful thinking on the part of consultants like me? No, I’ll say it again, it’s based on studies. And the most convincing figures for me come from the research of Les Binet and Peter Field from London, who have conducted empirically watertight research into the effectiveness of advertising. They have categorized the results of campaigns over many years and calculated that the proportion of long-term brand building measures should be around 60-62% of the budget. Yes, this means that only 38-40% remains for short-term sales activation. In their studies, Binet and Field show that the best long-term business results are achieved in this way. In their studies, they use a database of marketing campaigns in which the actual business results, i.e. turnover, profit and market share, have been proven. These results are not a snapshot, they have been continued and are still highly relevant.

Binet and Field show that focusing on short-term effects, what they call short-termism, is ultimately detrimental to sustainable business success. 

So there’s no choice but to give your marketing a new direction – what I call a marketing turnaround – and reinvest in brand building. And what does that mean? 60% of marketing spending must be aimed at making the brand positively known to all future potential customers. This means consciously not only addressing those who are currently in-market, not always focusing on target groups that are ready to buy, not just siphoning off existing demand. Oh my goodness, I feel like Bublath in the 90s, trying to sell something to an astonished audience that contradicts conventional wisdom. 

Let’s try this: maybe you’ve seen this diagram before. Time runs from left to right and sales are plotted on the y-axis, roughly speaking. These spikes are the short-term sales activation. There is a certain willingness to buy, which I siphon off with ads that trigger an immediate reaction, a quick purchase decision from the customer. This is achieved through time-limited offers, discounts, rational arguments or FOMO strategies. The effect is quickly visible, which is the intention, but also quickly over once the existing willingness to buy has been exhausted. Until another campaign is launched at some point. This is the sawtooth pattern. In contrast, the staircase function of long-term brand development. It is not only aimed at immediate buyers, but also aims to anchor positive associations, awareness, trust and emotional ties to the brand in the minds of all potential customers, even if they do not yet have the money for it or are at a completely different stage in their lives. The content of the ads is also different: the focus is not on price or rationality, but on emotions, values, positive moods and different personality concepts. 

And the great thing is that these emotional images degrade much more slowly than rational statements. Yes, the effect of emotional messages also builds up more slowly than the loud sales pitch, as we can see from the fact that the staircase curve takes 6 to 9 months to outperform the sawtooth curve – on average, that is, if we take the middle of the sawtooth, not the top of the tooth. In the long run, according to Binet and Field, the staircase beats the saw twice and three times over because not only does the effect last longer, but folks also become less price sensitive. And that’s not all.

Let’s briefly recall what makes a strong brand:

Firstly, trust and emotional connection. People buy from brands that they trust and with which they feel connected. This creates loyalty that goes beyond price. Brands are products and services with personality that are expected not to come cheap.

This brings us to the second point: pricing power: customers are often willing to pay more for strong brands. Strong brands, often charged by an emotional connection, generate a higher willingness to pay. Customers pay a price premium for the trust, image or feeling that the brand conveys.

This protects you from pure price wars and directly improves your profitability and margin. 

Thirdly: Mental availability. A strong brand is present in consumers’ minds when they have a need. They automatically think of you. The best way to achieve this is through consistent presence and linking your brand to relevant purchasing situations. Brand assets such as design, colors and sound also play a decisive role here so that folks know immediately: Ah, this is the one and only unmistakable brand. 

Fourthly: Higher customer loyalty. Even though Binet & Field emphasize that growth comes primarily through penetration (more buyers), their data shows that customers of large, strong brands tend to buy them slightly more often than customers of smaller brands. This higher relative loyalty is more a result of mental and physical availability and naturally contributes to the stability of your sales.

Fifth: Easier introduction of new products: An established, trusted brand serves as a strong platform to successfully launch new products or services under a well-known brand umbrella.

And sixth: brand resilience: strong brands are more resistant to external influences and can withstand crises such as economic downturns or PR problems much better because they can build on a larger reservoir of customer trust and awareness.

And now comes the seventh point to reassure paid media managers: Sustainable demand. Brand building creates the future demand that performance marketing can then harvest. It makes all your marketing more efficient. Short-term oriented sales campaigns work much better and cheaper, so have higher click-through rates and better conversion rates, if they build on the foundation of a well-known and positively perceived brand. Because the trust is already there. You will also see stronger organic effects. Strong brands benefit more from word of mouth, direct website visits and organic search.

What does this mean for you? As a decision-maker, you should now ask yourself a few questions:

How is our marketing budget and effort currently allocated? Is there a balance or do short-term goals dominate?

Are we investing enough in ensuring that future customers also think of us? Are we building up mental availability?

Do we only measure short-term KPIs or also long-term brand indicators such as awareness, image, consideration, etc.? And how do we measure them?

Do our brand and performance folks really work together on common goals?

Finding the right balance is a core strategic task. It depends on your industry, your target group, and your current market position. And yes, it’s a bold step, it takes time, but it can lead to your marketing turnaround—a sustainable change in your business success through the consistent application of the right marketing measures. There is no magic formula, but awareness of the need for balance is a first step.

I hope this video has helped you. My name is Christian Jourdant, and I’m here to help you turn your marketing around. See you again soon!

English and Spanish subtitles available