I was recently invited to sit in as a guest on a client’s budget planning process. The company is a large, and well-known international organisation and there were around fifteen people present at the meeting representing everything from corporate communications to business unit managers.
The subject got around to media spend and the subject of allocation between corporate communications and the various business areas came up as well as allocation between media channels. The debate started to get focused around ‘brand advertising’ versus ‘product advertising’. A number of people in the room, mainly from the business units, argued that they just wanted hard hitting advertising focused on features and benefits that helped them sell products. After 30 minutes or so, it started to get rather heated and eventually, I suspect to call on someone in some way neutral, I was asked to give some thoughts.
This particular company is a very technically oriented organisation, and I knew that ‘branding’ is a relatively ‘new’ concept for many of the engineers who have traditionally driven it. I started out by stating that ‘corporate’ brand advertising that doesn’t actually help sell a product is actually waste of money (big grins from the engineers around the table). Equally, product advertising that doesn’t help to build the brand is equally wasteful (big smiles from the corporate communications folk). I’ve personally never seen it as an either or situation. In terms of the returns they could expect to get from their ‘brand’ advertising these should be measured not in direct sales that week, month or even year – but over the next several years. And therein lies the true value of brands – they help to sell products and services not just tomorrow – but over a number of years. Branding is a long-term process and the payback and value is equally long term.
It’s interesting how few B2B brands today attempt to put an actual financial value on their brands. In the latest B2B Marketing Insights survey conducted by Gyro International the majority of marketeers who responded said they felt brands were as relevant and important in the B2B world as in B2C (business to consumer). Yet despite this only 9% value their brand on the balance sheet and only 7% measure the value of brand equity.
Brands in the B2B sector are more relevant today ever before, as it’s one of the last few unexploited areas that can deliver business advantage. Most companies have already been through intense focuses on quality and production – to make them-selves as lean and efficient as possible. Supply chain and distribution has also seen some radical changes over the last ten years with the internet making e-commerce almost stronger in the B2B area than even in B2C. And with technology advantages becoming ever more difficult to find and ever more easy for competitors to replicate, marketeers need to find sustainable competitive advantages outside of the traditional comfort zone of the product sphere. That makes ’the brand’ the key area. Companies in the B2B sector have always valued and engaged in marketing – but it has been seen as a cost of sales. To view branding as something that actually puts value on the balance sheet – is another deal.
The B2C world has looked at various formulas for working out that ‘value’ for some time now. Take the latest Interbrand Best Global Brands 2008 survey, which puts a monetary value on the asset of the world’s biggest brands. Not surprisingly Coca Cola came out top, with a ‘brand asset value’ of over $66 BUSD. But in the top ten are two almost purely B2B brands – GE and Intel, with values of $53 and $31 BUSD respectively. These are both companies that recognise the value that their brands can leverage in not only helping them sell their products and retain long term customers, but importantly add value to their bottom line as well.
It was Intel, who recognised that differentiation by products and technology alone would not be enough. The man behind the famous Intel Inside campaign, Dennis Carter, was questioned about why a business-to-business chipmaker such as Intel would launch such an intense and expensive marketing campaign. He replied ‘In technology where products change rapidly, the brand is doubly important – more important than in packaged goods’. Not a bad quote to end with.