Where Brand Love grows

Last click has enjoyed a good run. Google and FB have been considered a full proof engine for growing sales. Real-time analytics are showing us that sales are growing as long as we are spending. The role of the strategy was reduced to designing good tests and with that a funky role of Growth Hacker emerged. 

I had been there, having been managing  6 and 7-figure online budgets that drove results both via DSP and on the publisher side. I have seen the role of the context being diminished in favor of the click. Somehow the quality of content next to which your banner appeared mattered less and less. 

As practitioners, we see advertising spend as an investment. Subsequent spend is building on the previous activity and that is what grows the brand. The relationship with the customer base strengthens as more people get to know and consider you. With time the trust and love grows, making the price less of the factor in the decision making process. 

It is a long process but essential if you are serious about long term growth. 

So can you build a brand using just online activity? Based on my experience: No.  

During my online days, I loved working with brands – big and small, some household names but also ambitious newcomers. All the effort, creative execution and being present on the right type of sites became less and less important – what counted was the last click. 

The whole industry, especially quality publishers, were scratching their heads what to do with those CTRs. At that time I realised the ship had sailed, and so I started looking around for a new medium.  Ideally one which has traditionally been associated with brand building and where technology has yet not been applied to its full potential. 

Posters. Could this be the answer for the ideal scenario of Long Term Growth and Short term Sales? There was an opportunity to apply the best of both worlds.   

What became apparent to me was that short term sales did not equal long term growth. In  fact quite the opposite. 

A study by Imperial College actually proves that activity driving immediate results has no meaningful long term value for the business.

Dr. Gokhan Yildrim, who leads Data Science in Brand at the Imperial Business School, studies price promotion as a short term tactic to drive sales and its impact on Brand.  His study showed a maximum of a 9% gain in brand value in consumer goods but not so surprising fall of 10% for luxury brands. 

Conclusion: the cost and risk of running short term promotions is useful to drive surplus stock but has no or even detrimental effect on your brand. 

In fact, if you look at the world’s most valuable brands like Apple or Chanel, there is no sale and those that love Apple or Chanel are happy to pay the full price. 

Whilst Apple uses discounts to clear the previous generation stock from time to time, Chanel prefers to destroy surplus. This grows the Chanel brand in a very quantifiable way. 

On average a Chanel bag will grow 15% in value. This means that you can sell a used bag for a profit after a few years. As a fashion brand, they achieved what some watch and jewelry brands have.  A piece of quality of which retains  its value for years to come.  

Ok, so those are the Masters of Branding – how about the challengers? 

Brewdog is a brand that emerged in the crowded IPA beer market and managed to stand out. We have not seen them on promotion and they are considered pricey.

If you are interested, you can find out why, but that is not why customers choose them. The cool factor is undeniable and the customer’s love apparent.

The company is not participating in price competition, because that is not why their customers are drinking Brewdog. Have they built that love online? The short answer is no. It’s the real-world that allows them to communicate what they stand for. Unique pubs and striking outdoor ads have built the brand from 0 to category domination in a space of a few years. 

Just like short term price promotions can give the feeling of growth, online ads enjoy the same undue reputation. Some brands tried inverting the funnel where those that bought from you will become acquainted and will this with time turn to love?   

Analytics are a powerful business tool, but only if the full picture is taken into account. I love the quote from Justin’s Gibbons P2+C=5 book: comparing last click to a beer mat to take credit for all the beer sales of the world’s most renowned beer brand. 

“ So a consumer who has seen a TV ad, read the story about the brand, attended a pub event, seen their rugby team sponsored alongside a  poster, has ordered the drink purely because they have seen the mat on the bar…. The last click can be misleading when budget allocation is made purely on last action before sales.”

So at the time when brand value is more important than ever and where sales still determine short term business decisions what’s the advice for CMO’s?

Practitioners and academics agree on the 60/40 approach. Both Justin Gibbons and Dr. Yildrim provide strong proof that building a brand will provide long term business growth and will drive sales, whilst the 40% of budget spend on sales helps to drive all important transactions. 

Marketing science teaches us that the success of the business is determined by how well you can predict demand, so you can invest where it matters. 

So what price promotion and last click have in common? They both fail to include crucial factors when analyzing  sales. It’s the brand love that actually builds repeat purchase, regular and predictable sales which ensures long term growth. 

So if the relationship with your customers is a long term matter for you, invest in the brand and enjoy a more reliable buying pattern. Customers will thank you by paying the fair price.