This is the B2B century, and marketers will be the ones to lead it
The history of marketing is synonymous with consumer brands, but now B2B is the key driver of economic growth and it will be marketers who build those businesses.
The marketing industry is obsessed with B2C brands.
We love to talk about Coke and Pepsi, Rice Krispies and Frosties, Daz and Dove. Their every logo refresh and agency review gets covered in breathless detail. B2B is the opposite – nothing gets covered in any detail. “Put me on the B2B account,” said no creative director, ever.
We hear it all the time: “I don’t care about B2B. It’s too niche.”
But is B2B really a niche?
By some estimates, B2B is half of the global economy: 50% of the UK FTSE 350 firms are purely B2B, as are nearly 40% of all businesses in Great Britain. In the United States, an astonishing 72% of businesses are primarily B2B, and B2B sales add up to over $9tn a year.
The biggest B2B categories are already bigger and faster-growing than the biggest FMCG categories. Cloud computing is a $791bn business, with an expected 17.9% CAGR. Soft drinks is a $434bn business, with an expected 4.7% CAGR. Amazon’s B2B business grew to $25bn in five years. It took 10 years for its B2C business to grow that big. There were 10 successful tech IPOs last year, and nine out of 10 were pureplay B2B businesses.
The fastest growing companies in the world don’t sell fizzy drinks and designer shoes anymore. These days, the fastest growing companies sell workflow management solutions and cyber-security software. Dishwasher detergent is a great business, but it’s not a growth business.
In other words…B2B isn’t a niche, it’s a goldmine.
B2C is our past, B2B is our future
We understand why the marketing industry focuses on B2C: it’s our legacy.
The marketing industry built on the modern consumer economy. Washing machines and refrigerators, soap and cereal, mobile phones and video games; we brought all those products to market. We conveyed their value to the customer. We created new categories with jingles and taglines and mascots, advertised through every new medium that mankind invented.
And we should be proud of that work. It wasn’t easy. The washing machine was a complicated piece of machinery back in its day. In fact, it’s still pretty complicated. Do we really need 15 different settings to clean our socks? But all that hard work paid off, for us and for society. In 1900 we spent 58 hours a week on housework. By 1974 it was down to 18. That would never have happened without the contributions of Madison Avenue.
But although B2C may be our past, B2B is our future.
You could think of the past 100 years as the B2C century, when the marketing industry freed us from the drudgery of our homes by bringing innovative consumer products to market. The next 100 years will be the B2B century, when the marketing industry frees us from the drudgery of work by bringing innovative business products to market.
We no longer waste 58 hours washing our clothes. But we do waste countless hours scheduling meetings, aggregating data, orchestrating workflows and so on. These are the problems that modern B2B brands will solve.
And those brands will be built by B2B marketers.
Today, most B2B organisations are product-led, and myopically focused on product features and specifications. Meanwhile, the marketing department sits in the basement, colouring in our PowerPoint presentations and organising big customer events.
But that won’t last long. The Bass-Diffusion Model shows that innovative products can grow quickly without much marketing support. But eventually, the novelty wears off and sales start to sag. That’s when businesses make major investments in marketing.
The next 100 years will be the B2B century, when the marketing industry frees us from the drudgery of work.
You saw it with Amazon. Jeff Bezos famously said that advertising is “the price you pay for an unremarkable product”. Today, Amazon is the largest advertiser on planet Earth. Jeff Bezos ate his words, and so will every Silicon Valley CEO who insists that product alone can grow a business. Marketing is like gravity. You can defy it for a little while, but sooner or later, you’ll have to play by its rules.
In fact, the evidence suggests that advertising in particular might create even more value in B2B than it does in B2C. Research shows that general advertising elasticity is 0.1%. In other words, if advertising increases by 1%, sales increases by 0.1%. But that same research shows not all categories respond the same way to advertising, and the “durables” category, which is most similar to B2B, has a higher elasticity. Our research with Les Binet and Peter Field reached a similar conclusion: 10 points of excess share of voice gets you 0.6% market share growth in B2C, and 0.7% growth in B2B.
There’s less competition in B2B, and less competition means more upside.
As B2B grows, we’ll grow
As far as we’re concerned, the B2B century officially began this year, at Cannes. In a keynote address, the CEO of LinkedIn, Ryan Roslansky, announced the creation of a new B2B Cannes Lion. He implored the industry to shift its attention to B2B, the key to our future.
As Ryan explained, the B2B century will create massive economic opportunity for everyone in the marketing industry. The engineers needed us to make vacuum cleaners popular, and they’ll need us again to make robotic process automation popular. In fact, they’ll need us even more, because it’s a hundred times more difficult to convey the value of robotic process automation.
Yes, the marketing industry will need to adapt and retool itself for the B2B century. But at its core, the B2B century will require the same skills as the B2C century: the ability to understand the customer’s needs, ensure the product is easy to mind and easy to find, and build distinctive brands that can charge higher prices. If we can make car insurance funny, then we can make commercial insurance funny too. We just have to recognise the opportunity.
B2B businesses undervalue marketing. And marketing undervalues B2B.
But the truth is that B2B needs you. And you need B2B.
Welcome to the B2B century.
Peter Weinberg and Jon Lombardo are the heads of research and development at the B2B Institute, a think tank at LinkedIn that studies the laws of growth in B2B. You can follow Peter and Jon on LinkedIn.
Peter and Jon will be speaking about unlocking B2B growth at Marketing Week’s Festival of Marketing on 6 October. For more information and to buy tickets visit the Festival website.