In the first blog of this two-part series, we break down the findings of LinkedIn and the B2B Institute’s joint report, ‘5 principles of Growth in B2B Marketing’, and explore why it takes a balance of brand building and sales activation marketing to effectively grow their businesses. [You can read part two here.]
The myths of B2B marketing
People are emotional creatures. That’s why brand building works so well on consumers. People become invested in – and attached to – their favourite brands, from cereal, to phone networks, to operating systems.
But business buyers are rational. Right?
OK – maybe not completely wrong. Purchasing decisions are made rationally in any successful business. But you’re missing a trick if you think building a B2B brand doesn’t matter.
But sales activation or performance marketing is the most effective way to measurably grow a B2B business. Right?
In fact, a jointly commissioned report by LinkedIn and the B2B Institute – ‘5 Principles of Growth in B2B Marketing’ – has the data to prove it. (And, by the way, so does our client’s data.)
The politics of B2B marketing
So where do these entrenched views come from?
B2B companies tend to be driven by either product leaders, service leaders or sales leaders.
Product/service-led companies tend to view marketing as ‘the price you pay for an inferior product or service’. Sales-led companies are driven by short-term sales targets, and they want leads. Now.
So, whilst many B2B marketers recognise the commercial potential of longer-term brand building, they face an uphill internal struggle to make their case.
But the ‘5 Principles of Growth in B2B Marketing’ report empirically proves the business case for longer-term B2B brand building and its impact on growth, by demonstrating:
· B2B brand building increases ‘mental availability’ and ensures your brand is easily remembered in a buying situation
· Effective brand campaigns reach every buyer in your category
· Creative brand campaigns that capture attention at an emotional level are delivered consistently over time, growing significant sales in the future, not just in the short-term
· Increasing loyalty does not significantly add to growth, but customer acquisition does
Investing in advertising share of voice
B2B brands follow the same ‘share of voice’ rule as their B2C cousins. The report defines the rule as follows:
“There is a well-known relationship between a brand’s “share of voice” (typically defined as its share of all category advertising expenditure) and its rate of growth.
Brands that set their share of voice (SOV) above their share of market (SOM) tend to grow (all other factors being equal), and those that set SOV below SOM tend to shrink. The rate at which a brand grows or shrinks tends to be proportional to its “extra” share of voice (ESOV), defined as the difference between SOV and SOM.”
The research data shows a significant correlation between market share growth and ESOV for B2B brands, specifically, demonstrating that in B2B, 10% extra advertising share of voice causes 0.7% market share growth per annum.
Balancing brand strategy and performance tactics
The report shows that the best performing B2B brands have an optimal balance between long-term brand building and short-term sales activation/performance marketing.
In B2B, the optimal budget allocation is 46% for brand and 54% for sales activation.
Sales activation focuses on an immediate response, and is generally a rational sell, featuring a piece of informational content, an offer or a product/service feature capable of generating a cost-efficient response.
It’s tightly targeted at hot prospects who are in-market with an intent to purchase, and designed for simple, quick response. Sales activation is great for short-term lead generation and delivering directly measurable ROI, but, it’s unlikely to be memorable, so the effects are short-term and won’t contribute to long-term growth.
In contrast, brand building drives long-term growth, with its effects lasting longer and accumulating over time.
It uses creative impact at an emotional level to create a lasting memory that influences buying decisions long after the adverts run, with a reach that’s much broader than sales activation campaigns, targeting the whole of market, and its effectiveness relying on repeated exposure.
The time frame for any brand building to take significant effect and pass the sales activation peaks shown in this graph is typically 5-6 months.
A real world example, courtesy of Proctors
Not convinced? We recently we decided to test this theory out for ourselves, using the website data of one of our clients. And the results were pretty impressive.
Not only did we find that brand traffic – both direct and brand search – built consistently over time in line with their brand building activity, but we also found that the conversion rates from website visit to meeting requests and paying clients was 50% higher than any other traffic source.
If that wasn’t enough, we also discovered that in territories where there is low brand awareness the conversion rates from lead generation campaigns increased over time as the effects of our brand building efforts kicked in.
Stay tuned for part two, where we’ll explore the case for making your brand famous.
In the meantime, if you’d like to discuss your brand strategy armed with the latest industry data, or to discuss your creative marketing requirements, get in touch with us today at firstname.lastname@example.org.