In recent times, CMOs (under pressure from their CFOs and CEOs) have increasingly – wrongly – shifted focus and budget away from long-term brand building, and towards short term growth through sales activation. 

In part this is because the impact of sales activation is easier to measure (e.g. PPC rates), increasing pressure for MQL volumes from sales teams, and in part due to a mistaken belief that constant focus on a series of short-term profit activities leads to sustainable long-term profit. 

This fundamentally misunderstands a core foundation of the value of a businesses – which is its ability to generate long term cash flow. A company’s share price is a function of its future earnings potential: investment in brand building is an investment in future sales. 

This doesn’t make short-term sales activation redundant.

It does mean, though, that constant focus on the short-term can actually diminish a firm’s ability to generate long-term profit. 

In their excellent report, 2030 B2B Trends: Contrarian Ideas For The Next Decade Peter Weinburg & Jon Lombardo explain why this is especially true in B2B brands. 

In B2B marketing, “there are…two types of customers: in-market and out-of-market. In-market customers are ready to buy your product or solution right now. Out-of-market customers are not ready to buy today but will be ready to buy from you in six weeks, a year or ten years. Successful marketers harvest short-term demand from in-market customers, while building long-term demand among out-of-market customers.”  (my italics).

The report’s authors go on: “Now, ultimately, you need both brand building and sales activation to grow a business. But…you need to adopt different creative, distribution and measurement strategies for these two types of marketing. Conflating long and short is a mistake”. 

The authors widely reference the work of Binet & Field, which explains that short-term sales activation activity “doesn’t create demand; it just helps businesses capture the demand that already exists. Brand building is what actually generates demand, in both the long term and the short term.” 

The authors’ own research with Binet and Field shows that in B2B, the optimal balance between brand and activation is a 50/50 split: 50% long-term brand, 50% short-term activation. 

Weinburg & Lombardo happily acknowledge that Sales Activation activity generates short term sales, and should not be discounted.  

However they have identified a number of benefits of Brand Marketing that are frequently disregarded. For this blog, I’ve picked out four of the key benefits they cite: 

(i) Short term sales activation directly benefits from long term brand marketing 

B2B buyers are no different from B2C consumers in that they “are much more likely to buy from companies that (they) have heard of already. By priming potential buyers with brand messaging, you will find that your activation campaigns work much harder. Brand thus lowers activation costs, increasing its overall efficiency.” 

(ii) Long term brand building provides an investment in future sales that short term sales activation cannot deliver

This is important because sales cycles in B2B tend to be long – 2-3 years, possibly more. It follows that in the short term, there are going to be relatively few customers looking to buy your B2B product/service in the next one to three months. The authors cite experts from the Ehrenberg-Bass Institute’s estimation that at any given time, only 5% to 10% of customers are in-market in a given category.” 

The vast majority of the your eventual B2B purchasers will therefore not currently be “in market” for what you are selling. 

This means distinguishing between “In-market customers” (at whom short term Sales Activation should be targeted) and “Out-of-market customers” (at whom Brand Building marketing should be targeted).

The key point is this: “Out-of-market” buyers deliver future cash flows, which is how companies are valued.  

Or, in your CFOs terms: 

• Sales Activation = In-Market Customers = Current Cash Flows  
• Brand Building = Out-of-Market Customers = Future Cash Flows 

 (iii) Long term brand building increases pricing power 

The authors claim that “Increasing pricing is often a more profitable way to grow a business than increasing sales volume. In fact, decreasing price sensitivity might be the single most important effect of brand marketing.” 

Again, this is particularly relevant to B2B marketers, where the volume of sales prospects is dramatically smaller than in B2C markets. 

Weinburg & Lombardo cite Warren Buffet who believes “the single most important decision in evaluating a business is (its) pricing power. Good businesses can increase their prices and gain more customers. Bad businesses can’t.”  

Pricing power is a function of Brand Marketing. The authors’ research with Binet and Field shows that “brand building becomes more and more important as businesses attempt to raise prices.” 

In the simplest terms, the more famous you are, the more you can charge your clients. 

If you choose to compete on price, however, you can always be under-cut. 

(iv) Long term brand building gives you a “competitive moat” 

Think of your B2B brand as your reputation.  

Competitors can try and copy your product and processes, but it is incredibly hard for them to copy your reputation. 

As the authors point out, “Your brand codes or distinctive assets are ownable, in perpetuity. Product benefits, on the other hand, are easily copied. Activation or lead generation marketing is even easier to copy.” 

An ongoing investment in your brand therefore helps build a barrier to market competition. 

(v) Long term B2B brand investment makes doing shorter-term business easier 

In B2B, pretty much all key accounts are introduced via face-to-face meetings (either in person, or on Zoom).  

If your B2B brand is well known – and for the right reasons – it is far easier for your sales team to book immediate appointments with their prospects than if no one has heard of your brand, or knows what it sells or stands for. 

Your sales team will therefore have to spend much less time explaining who your business is, and can focus with greater credibility on why a prospect should agree to see them. 

My conclusions from the above

B2B sales activation has an important short-term role, but it does in itself not create long-term desire – indeed it can actually lead to long-term margin erosion where a lack of brand investment can weaken a seller’s pricing power. 

B2B sales activation primarily provides an opportunity to purchase – it is a channel to release the “pent up” demand.  

What must not be missed it that short-term demand is “pent up” by long-term brand investment.  

The lowest hanging fruit leads for a B2B sales team are often within easiest reach because the buyer is already aware of – and well-disposed towards – what a brand offers. 

Buyers, specifiers, influencers, budget-holders and decision makers are demonstrably happier to buy from a brand they believe they can trust, and are prepared to pay a margin premium for it. 

B2B brand building is a long-term investment in that trust. 

Simon Hayhurst

Simon Hayhurst | LinkedIn

January 2021 

Last year Peter Weinberg and Jon Lombardo at the LinkedIn B2B institute published their excellent “2030 – B2B Trends” report. 

Not every B2B marketer will have the time to work through every argument and nugget in the report’s 43 pages which is a shame as it’s closely packed with good advice. 

So with due deference to the authors, I’ve tried to capture the essence of the report in three bites-zed blogs, one for each of the 3 trends Weinberg & Lombardo have identified. 

You can find my blog with a summary of Trend 1 “The War on Brand” here.  

This is the blog for Trend 2 – Blockbuster Marketing 

A key challenge many B2B marketers face is that their marcoms budget will be a fraction of the budget their B2C cousins have at their disposal. 

This heightens the importance of ensuring the creative execution of the B2B communications achieves maximum cut-through.  

Weinberg and Lombardo argue that “creativity is one of the most important variables in marketing success. Some would say it is the single most important variable and that strong creative can multiply the financial returns of a marketing campaign by 12x”. 

There are many schools of thought as to what makes for compelling, persuasive creative, but Weinberg and Lombardo make the case for adopting some core probabilistic principles that can increase the likelihood of achieving effective creative communications.  

Yet being the true contrarians they are, the exemplar the authors cite for these principles isn’t from the B2B world at all: it’s from Disney. 

Creative Principle # 1 – Big Bets 

Disney realised “consumers only see between four and six movies a year, and to de-risk that purchase, buyers choose movies with big stars, big effects and big budgets”. By focusing budget on a small number of big budget productions, Disney were able to concentrate effort on movies that would have broad appeal and mass cut-through.  

The report authors argue that for B2B marketers (who generally don’t have the budget of a Disney), fragmenting creative approaches minimises the likelihood of achieving cut-through brand awareness. And given (as we saw in part 1) strong brand awareness is a predictive precursor to effective sales activation, brand fragmentation ultimately leads to lower sales, both now and in the future. 

Lower budgets tend to lead to creative caution. The authors’ contrarian position is that overreliance on “test and learn” leads to fragmentation of execution, a lack of consistency of message, and ultimately a failure for communication to achieve their objective. 

Indeed, as Weinberg and Lombardo point out: “The truth is that marketers don’t usually learn much from their tests because the tests fail to replicate. What works at a small scale with small numbers rarely works at a big scale with big numbers”. 

Creative Principle # 2 – Surprising Familiarity 

The authors’ plea to “take risks, think big” in Principle #1 doesn’t mean that applied thinking goes out of the window. Again, they analysed Disney’s creative strategy to look at how Disney decided which big bets to place, and the criteria for placing them. 

They found that Disney’s biggest grossing, most profitable movies focuses “on familiar franchises—old creative from the back catalog that everyone already knows.” The fact that cinema-goers already knew many of the characters from the Avengers, Star Wars and Jurassic franchises meant that for the sequels / prequels, much of the selling had already been done before the latest movie was even conceived.  

Yet, as Weinberg and Lombardo point out “Marketers are obsessed with newness. We want never-been-done-before ideas. Most CMOs begin their tenure by scrapping the old creative campaign and launching a new one. This tends to be a catastrophic mistake and an enormous waste of money. Stick with your old, familiar creative. Any change to the brand needs to be incremental.” 

B2B marketers don’t have the budget of Disney. We have got to get far better at leveraging existing brand assets than trying to create new ones. 

Creative Principle #3 – Extreme Distinctiveness 

Pause for a moment and ponder how often B2B comms rely on generic stock imagery of businesspeople shaking hands. Stock shots of cityscapes. ‘Industry in action’.  

You cannot hope to stand out from the crowd if you copy them. 

The authors argue “Marketers need to do a much better job of employing their own distinctive assets in their creative” and widely cite Professor Jenni Romaniuk, author of Building Distinctive Brand Assets and How Brands Grow Part 2. “Romaniuk explains that without distinctive assets, consumers fail to link the creative execution with the brand. And as she often says, no matter how you think advertising works, it can’t work if the ad doesn’t get attributed to your company. If EY runs a terrific account services ad but no one remembers that the ad came from EY, those EY marketers have created zero value”. 

They continue: “Every brand has at least two distinctive assets: their name and their logo… Find assets that are unique to you (not your competitors) and famous (known to all buyers in the category). And put those assets on every single ad.” 

That doesn’t mean that the logo is the first thing anyone should notice about the ad – no-one browses their favourite media looking for logos – but it’s vital that once the reader’s attention has been grabbed they remember who it was who grabbed that attention. 

Creative Principle #4 – Total Merchandising 

By applying consistent creative to every piece of communication, over time you build brand presence and brand saliency. In a B2B world where marketing budget is scarce, this is vital. 

Again, the Disney analogy: 

“Every Disney asset markets every other Disney asset. Star Wars: The Rise of Skywalker is an ad for The Mandalorian, which is an ad for Star Wars: Galaxy’s Edge at Disney World, which is an ad for all of Disney’s merchandise. This approach creates an awe-inspiring flywheel of money and allows Disney to squeeze every cent of value out of every creative asset it owns.” 

Throughout the report, the authors cite Salesforce as a B2B company that has successfully adopted these principles. Personally, I’d cite The Economist, which has been applying the four principles flawlessly, successfully since the last century: 

• Big Bet on singular creative approach: singular relevant insight, displayed in white on red type-only ads 
• Surprising familiarity: the ads have run for decades, yet each new ad brings a fresh insight, and creates a desire to learn more 
• Extreme distinctiveness: compare any Economist ad to an ad for Newsweek or Forbes or HBR. 
• Total merchandising: the ad colourways reflect the branding assets. Even though the logo is the smallest thing on the ad, creative & brand consistency means you are in no doubt about whose ad you’ve just read 

You’re probably now struggling to recall an ad for Newsweek or Forbes or HBR. If you’re a B2B marketer with a relatively small budget, please have a think about why. 

Simon Hayhurst 

Simon Hayhurst | LinkedIn 

January 2020 

Over the past few days I’ve been publishing my precis of the excellent LinkedIn B2B 2030 Trends white paper from Peter Weinberg & Jon Lombardo. Parts 1 and 2 can be found here (A Refocus on B2B Brand as a Long Term Sales Driver | LinkedIn) and here (Blockbusbuster B2B Marketing | LinkedIn). This is part 3: The Death of Hyper Targeting.

Weinberg & Lombardo’s hypothesis is that in B2B marketing, narrow hyper targeting is far less effective than broad targeting.

They cite 5 core reasons to support their hypothesis:

#1       3rd party B2B data is unreliable

The authors cite a recent academic study from MIT, Melbourne Business School and GroupM, in which the researchers decided to test the accuracy of third party B2B data and found that “gender targeting is accurate (only)50% of the time”.

They also found “age targeting (is) accurate 25% of the time”.

Weinberg & Lombardo make the point that the more personalisation criteria a B2B marketer makes in their selection overlays, the less likely the resultant communication is likely to reach the narrowly-targeted audience they think they are reaching.

And with the most basic criteria (age & gender) being unreliable, attempting to sub-targeting by employer, years in role, job title, employer turnover, decision-making authority, marketing budget etc. makes it less and less likely that the targeted audience is being reached.

Why is this important? Because hyper-personalised data is far more expensive to purchase than broadly targeted.

#2       Changing buying networks

The data inefficiencies in reason #1 are amplified by reason #2.

Whilst most first-party data is accurate (e.g. self-identified data purchased from LinkedIn), the temptation is to narrowly target personas whom B2B marketers believe might be the most influential (e.g. procurement managers at aircraft manufacturers).

But this ignores a key aspect of B2B buyer behaviour: the buying cycle for a B2B purchase can often be several years. Crucially, over that time a multitude of new prospects will enter / leave the target decision-making unit.

If you want to reach future buyers, you’ll therefore need to broaden your targeting. Proof? According to LinkedIn’s own data, “Every four years, around 40% of LinkedIn members change their industry, seniority, function and company size.”

The authors conclude that “the best way to catch a moving target is to cast a wide net across many seniorities, functions and industries…Hyper-targeting ignores future buying networks, which imperils future cash flows.”

#3       Multi-dimensionality

Hyper-targeting wrongly assumes that a single B2B decisionmaker is the only valuable audience.

Of course, most B2B purchase decisions are impacted by specifiers, budget-holders, end users, initiators and the rest. Hyper-targeting only the key decision-makers may well mean that your business doesn’t even make the short-list if it’s screened out at an early stage by people you haven’t reached.

As Weinberg and Lombardo point out, there’s a further advantage to broad targeting: “Potential employees, potential partners, potential investors, potential regulators…these are all extremely valuable audiences worth reaching. If you want to hire—and retain—talented employees, get meetings with big buyers and attract great partners, you need to reach all those folks”.

#4       Inherent Uncertainty

The authors assert that “Hyper-targeting assumes a level of predictability that does not exist in the real world…(and)…assumes you know exactly who your buyer is in the first place”.

The truth is that “the vast majority of what buyers do is dark behaviour that’s not trackable, so even the best data will give you an incomplete understanding of reality”. (Indeed in a recent separate LinkedIn report, it’s claimed that businesses that have ‘gated’ thought leadership – i.e. white papers for which the potential reader has to give their contact details before they can access it) often manage to unintentionally screen out potential buyers who are genuinely in the market for the service, but want to retain some control over when a sales representative gets in contact to discuss it).

#5       Imaginary Efficiencies

Weinberg and Lombardo’s simplest argument against hyper-targeting is their math argument: “Hyper-targeting almost always increases media costs. The CPCs and CPMs are much higher for hyper-targeted segments than it is for broadly targeted segments”.

They claim “Even when factoring in a decent amount of wastage, broadly targeted media allows you to reach more of the right buyers at a better price point. You can go too broad at a certain point, but that point is higher than you think”

In summary, the characteristics of the B2B buying process make hyper-targeted messaging grotesquely inefficient:

• The data’s generally poor
• The lengthy buying cycle means individual prospects are constantly entering / leaving the buying arena
• Targeting final decision makers only means you may well end up not even being shortlisted if you haven’t also targeted gatekeepers, influencers, specifiers etc
• Much prospect behaviour is beyond the reach of targeting databases in any case
• The extra fees data owners charge for what they claim is highly-targeted data are generally offset by paying less for more broadly targeted data in any case

Conclusion

The solution is to focus on what the authors call Category Reach.

“You need to reach all potential buyers of the category. Anyone who could buy from you today and in the future, and nonbuying audiences that might work with you in other ways.”

Weinberg and Lombardo point out that “reach is, and always has been, the single greatest predictor of advertising success…Reach matters, in B2B and in B2C”.

This doesn’t mean a complete abandonment of all targeting – today’s trainee brain surgeon is unlikely to ever become an IT decision maker, even at a pharmaceutical company – but targeting too narrowly in B2B can prove both expensive and inefficient.

Simon Hayhurst

Simon Hayhurst | LinkedIn

January 2021