Imagine for a moment that you are not a B2B marketer. Instead, think of yourself as an investor, and ask yourself this: how do you identify great investments? Well, here’s a winning approach learned from watching the movie ‘The Big Short’ over and over again.
First, find a contrarian idea. The Big Short is about five investors who predicted the housing market crash that was the catalyst for the financial crisis of 2008/09, in defiance of conventional wisdom.
Second, make sure you are right by examining the evidence. In the movie, the character played by Steve Carell flew down to Florida to confirm the housing market was, in fact, comprised of sub-prime loans.
Third, be prepared to wait a while. The housing market did not collapse overnight. It took several years for the contrarians to cash in on their investment.
The big long
Let’s return to the world of B2B marketing. If Warren Buffett was a B2B marketer, where would he invest his capital? We’ll tell you where: at the very top of the funnel. In fact, that’s precisely what Warren Buffett does, buying stakes in famous brands like Coca-Cola, Geico and Apple. In B2C and in B2B, brand building might just be the single best investment a business can make.
Brand building is contrarian. Most B2B marketers are focused on the bottom of the funnel. A recent survey from LinkedIn shows 96% of B2B marketers do not measure impact beyond six months, which is when brand effects begin to pay off. Emotional brand campaigns are fairly common in B2C, and exceedingly rare in B2B.
Brand building is right. According to our 2019 research with Les Binet and Peter Field, B2B brands that invest at least 50% of their budget in long-term brand building deliver the best financial returns in terms of market share growth, profitability and revenue.
Brand building requires patience. Brands are built over decades, not quarters, by constantly investing in repeatable and distinctive creative concepts. DeBeers’ ‘A Diamond Is Forever’ campaign has been running for almost 90 years.
Brand building is The Big Short opportunity in B2B, The Big Long, if you will. And over the next 10 years, we expect to see the dollars flow towards the top of the funnel.
Why are we bullish on brand? Well, simply put – the benefits of lead generation tactics are narrow; it increases short-term sales.
The benefits of brand building are broad and multi-dimensional. Although you need to invest in both lead generation and brand building, brand ultimately creates far more value for a business.
Here are five key benefits to building a famous B2B brand:
Benefit 1: Short-term sales
Brand building does, in fact, increase short-term sales. You are much more likely to buy right now from a brand you know and like. On LinkedIn, we see that ‘priming’ a buyer with a brand ad can increase short-term conversion rates by six fold.
Benefit 2: Long-term sales
The primary benefit of brand building is that it has a positive effect on future sales from future buyers who are not yet in-market. Lead generation, in contrast, influences only those who are ready to buy right now. And contrary to popular belief, future sales are much more important than short-term sales for two reasons.
First of all, businesses are valued based on future sales (“future cash flows” in CFO-speak). By some estimates, 80% of the value of a stock is based on sales 10 years or more in the future. If you want to convince your CFO to invest in brand, try flipping the funnel on its side and explaining that brand advertising delivers durable future cash flows.
Second of all, in any given category there are many more buyers “out-of-market” than “in-market”. Today, there might be only 20 accounts looking to buy cloud computing solutions. Over the next three years, there could 200 accounts up for grabs and brand building will ensure your brand gets into those 200 consideration sets.
Benefit 3: Pricing power
B2B marketers obsessively track their impact on sales and completely ignore their impact on price. According to our surveys, only 30% of B2B marketers believe marketing has any affect on price. But reducing pricing sensitivity is probably the single most valuable thing that marketing does. Increasing sales 1% will increase your profits 3%. Increasing pricing 1% will increase your profits 10%. Research shows that famous B2B brands can charge higher prices for their products and services.
Benefit 4: Talent acquisition
“Talent is our number one priority,” says every CEO, ever. So then why is it a non-priority for so many B2B marketers?
On LinkedIn, we see potential employees are 58% more likely to respond to recruiters after seeing a brand message first. Just like buyers want to buy from famous brands, people want to work at famous brands. Who do you think has an easier time attracting top talent, McKinsey or Rick’s Discount Consulting Shack?
Benefit 5: Category optionality
Categories are mortal, brands are immortal. Every category shrinks eventually, and when that happens your brand can help you escape to the comfort of a new and growing category.
Consider the case of Microsoft, which pivoted from Windows to the cloud using the same B2B brand that was known and trusted by IT departments the world over. Brands mitigate risk by giving you a beachhead in future categories.
Our thesis is simple: brand building is the future of B2B marketing. Our advice? Bet big on The Big Long. It’s a savvy investment in your career and your bottom line.
Peter Weinberg and Jon Lombardo lead Linkedin’s The B2B Institute, a think tank funded by LinkedIn which researches the future of B2B advertising and decision making. This is an extract from a report, 2030 Marketing Trends.