The long and the short

Marketing Week (MW): Which is the better investment, branding or promotions, and do you think marketers prefer one or the other?

Brian Walmsley (BW): For me, the debate often lies in which is more important out of marketing and sales. Marketing is driven by branding, strategy and consumer insight, whereas sales is about pulling the lever of promotions. If measured purely on short-term revenue – and if you define better as “Am I going to hit this week’s number?” – then short-term tactical sales win. However, that is a zero-sum game and a downward spiral, and you won’t be in business in a few years if that’s all you do.

Alison Hand (AH): The relationship between the sales and marketing functions is absolutely central to getting the answer to long-term brand health right. If they are working separately then somebody is a loser in that battle. It is as much about human relationships as it is about the principles of marketing.

Yvonne Chien (YC): Branding plays an extremely important part in the long-term growth of your business as well as the efficiency of your direct response marketing. If you look at your search data or traffic data, the brand terms play a huge role in even your search spend, your search engine optimisation or your direct traffic. If you don’t pay enough attention to that you will end up spending a lot more money on direct response than you may have had to.

Gareth Jones (GJ): We have started to do what Yvonne was alluding to – using brand impression volumes in Google as a proxy for brand health. We do all the normal measurement in terms of awareness, preference and consideration but those are intermediate measures. The manifestation of whether your brand is salient is someone typing it into Google or not. We can tell when we are dialling up the ‘promotionometer’ too strongly because people start typing our brand into Google less.

Alicia Grimes-Gibson (AGG): Working with retailers, we are finding there is a pressure to invest in lots of short-term beauty promotions and with my marketing hat on that is pretty scary because of the danger of eroding the brand. In previous years consumers were very loyal and now they want something to go with that £90 premium beauty purchase. Our challenge is getting that balance right between desire and expectation.

Robert Moss (RM): At Secret Sales we procure brands and sell them at a discount. As long as we are really sharp on our editing of the products that we sell, and curate it in a way that we know our customers are going to like, then it works. It is instant gratification for the consumer. The spontaneous purchases happen because of the value of the brand that you are selling.

Colin Clarke (CC): I think the debate has always been there. It is that short-term versus long-term, brand or promotion dilemma, which used to mean non-measured or measured. Often it was people being quite philosophical against people perceived as being quite hard-nosed. The way in which technology has impacted marketing is that now so many things get measured in a different way. The role is not to make an either-or decision but to be more sophisticated in having a perspective that you are able to sell in your organisation.

YC: Brand is less measurable and that is where CMOs get caught out. Branding is fundamental and companies should spend a decent percentage of their budgets just on branding.

MW: Are there times when branding works better than promotions, or vice versa, and how planned or reactive should CMOs try to be in getting the balance right?

GJ: We work on a weekly trading rhythm and there is a high degree of intensity in the mobile phone sector. We try to be planned and considered but there are always going to be what we call ‘reactions’. We also understand that numbers can distract you because they can tell you what has happened but not necessarily why. It becomes really powerful for both branding and promotions if you can dovetail the data with the qualitative consumer insight.

RM: The role of a marketer within an online pure-play environment is very commercial. You become incredibly numerically literate when you work in ecommerce. You can model your performance over the next two to three years pretty accurately, based on what’s been happening over the past three months. You become a stats junkie.

CC: In a very reactive business like Robert’s at Secret Sales, you are going to be on the numbers every week, whereas we have a much longer-term vision of how long the journey to critical mass will take and the things we will need to do to make that happen. At Visa, to get products through to critical mass, we need a whole ecosystem to go with them. So, for example, with contactless payment technology it is a journey where you need a lot of planets to align and you need to take a long-term perspective.

Visa’s sponsorship of the Olympics last summer also worked at a number of different levels. There was anthemic brand work as well as hard-working campaigns run over long periods of time. In addition, we were able to showcase technology such as contactless mobile payment. I think confident marketing is about how you can maximise all the levers at a particular time.

YC: I love the Olympics example because it is a very integrated marketing campaign. Every year a company should set aside the budget it is going to use for brand at a long-term level and really think big. Then, with the direct response budget you can be very fluid in terms of optimisation, thinking about what is coming and what the competition is doing.

AH: I think that word fluid is really interesting because one of the things that we see in consumer research is that the risk depends on the categories you are working in. For example, in a grocery environment the balance between great everyday pricing and constant promotions is a very fine line. If you can surprise your customer then you somehow can avoid the situation where they are comparing you as a commodity.

Phil Rance (PR): I also wonder if there is a little bit of a dirty secret in the room too: that we all want to think as marketers that it is about the consumer, or that it’s seasonal or about the competition. However, don’t financial targets determine the timing of these promotions quite often?

BW: Yes, we know that great stat from Symphony IRI a couple of months back: 56 per cent of all sales in groceries in the UK are sold on promotion. The profitability for manufacturers in general is declining and you then get into a downward spiral with product quality. Part of the answer to that is the ruthless understanding of commercial data, econometric modelling, and aligning sales and marketing. I think it is important to redefine the wording on this so that it isn’t about branding and promotion but about customer experience and insight.

MW: Is the ‘race to the bottom’ something for which marketers only have themselves to blame, or is there a fundamental change in the way consumers are buying more on discount?

AGG: Before you might have done a ‘dirty’ promotion and customers would come in-store to the counter and redeem it. However, now consumers will communicate that promotion with their network on Twitter, Facebook and so on and all of a sudden you seem to be a brand that is always on promotion. The promotion element of trying to build a brand is really tricky.

BW: I have worked in some great categories including baby wipes, which is just brutal. There are three incredible manufacturers in Johnson & Johnson, Procter & Gamble and Kimberly-Clark competing in the same market. Mums love to talk about the category and they will put up postings on Facebook saying: “Did you know it’s buy one, get seven free in Morrisons today?” The grocery buyers know that too and as they are both measured on footfall and their category sales, they play the manufacturers off against each other, asking them to fund promotions more than they did the previous year. It is a bit like crack cocaine for the sales guy.

AH: That is really interesting – your point about consumers being actors in the whole promotion process and that you have at that point lost control of the experience. That is one of the big changes that we have seen in recent years.

YC: I think it also goes back to understanding your customers and the way they purchase. They might be willing to spend a lot of money on a really nice car but in other product categories they might be very value-focused. I question the idea of promotion and whether that devalues the brand. We have learned that when we have done promotion it stimulates demand.

RM: There is a reality to the risk of promotion but there is a model in there – much like the historical product sampling model of cosmetics brands – that if you get the brand in a consumer’s hand and they love it, then they become a full-price consumer.

CC: One thing that is changing on promotions is in the loyalty space. Obviously the whole data agenda and loyalty is another version of promotion and creating incentivised behaviour. I think for consumers it is increasingly difficult to understand what is and what isn’t an offer. Sometimes brands that are open to throwing themselves through a range of channels are in danger of creating an almost worse perception about being on discount, and being easily distributed through a range of third-party suppliers.

MW: Do different messages – either branding or promotion – work better when they’re targeted towards different groups of people, or should you stick with one positioning at a time?

AH: An example that does it spectacularly badly is the car industry. It classically does too much gender segmentation. For example, a car magazine I receive at home has lots of articles about golf, which is of no interest to me.

BW: In my experience, targeting is often one of the things that marketers are bad at. That observation about cars could probably be true for many. Social media, for example, is guilty of getting obsessed by the wrong metrics, or preaching to the already converted, or just talking to a relatively small group and not driving penetration. I focus on ‘inside-out’ marketing at Bounty – working backwards from the moment that product is used. With nappy cream, for example, there is a key week in a pregnancy when the consumer is thinking about the product.

GJ: For Carphone Warehouse, there are a lot of prompts and triggers to getting a new phone. What seems to be a unifying motivation for lots of people is a ‘flight to value’ and there is a big distinction between value and low price. We need to be involved in the researching journey and the path to purchase before a consumer has made their mind up that they want that Sony Xperia Z or Samsung Galaxy S4.

MW: Do branding and promotions need the same amount of attention in terms of segmentation?

YC: As marketers you can get so caught up with segmenting a customer journey. There is a risk that you overcomplicate and the higher brand element is not given enough attention. That is really blinkered because no matter what segmentation you are looking at it is still a matter of questions like: ‘What does Carphone Warehouse stand for?’ and ‘Why would someone go to Carphone Warehouse?’

CC: I think we are at a crossroads in terms of how we should use targeting and segmentation in a way that is better, more effective, more consumer-friendly, and at the same time understands the limitations and resources we work within. It is not the amount of data now; rather it is the ability to deliver once you have got that information.

BW: One of the key roles of marketers is to know yourself, define your business, define your brand and be true to that whether you are talking about price promotion in a store or elsewhere.

MW: Thinking more about this topic, how much should we depend on insight and how much on instinct?

RM: It is a high-risk strategy just relying on instinct because if you get it wrong, then “there is the door”. It’s left- and right-brain [logical and creative] stuff. You have to use any tools you can to prove your point, for example business case studies from previous stuff you have done.

CC: Some people have an instinctive feel about building brands. You are talking about the Nikes and Apples of this world, where very tough and results-driven brand people have space for some of the most creatively interesting people. You come back to this debate about insight and gut and without gut it is difficult to see great brands growing. The great brands are often characterised by those who are most prepared to make a leap.

AH: I fundamentally think that the great marketers are those that back their gut. I also think that they are really good at using insight. The myth with Steve Jobs at Apple was that he didn’t believe in insight and research. I don’t think that is true. What he did was take the basic truth that people want beautiful things that work really intuitively and built an entire business off that insight.

PR: It might be that there isn’t really a distinction between instinct and insight, rather that those people are getting their insight from somewhere else. Maybe they grew up with it, like Philip Green spending his formative years in the rag trade.

MW: Does insight play a role in how marketing develops over the course of a campaign, as well as whether it should focus at the outset on branding or promotion? And is there a point at which you need to ignore data?

YC: It’s an interesting question as with online marketing and direct response today you can quickly test the copy that gets the clicks. The one that is what you think you want to say from a brand perspective isn’t the one that always performs. If you want to maintain your brand, you have to decide sometimes that it can’t just be about the click.

AH: I don’t think you can always take attitudinal research at face value; rather, you need to look at the context of other intelligence that you have. For example, we worked with Volkswagen Group when it bought Skoda in the mid-90s. Every piece of research we did at the time said: “Change the name”. However, if you have got 100 per cent brand awareness, changing the name is only going to give you more problems.

AGG: We have been doing a campaign with Stylist magazine and the sales team were getting a bit nervous about how effective it has been. However, instinct tells us that we should continue it for six months and we will see the sales eventually. I think metrics that we are working to are becoming more short-term and that is a tricky one.