The strong focus on short-term sales success has resulted in brands slipping into a dangerous imbalance – our Crossmedia Xccelerate strategy unit experts are convinced of this. To develop their full appeal, brands need time. And they also need brand managers who have the courage to be guided by more than just quick wins and quarterly figures. In this interview*, Florian Holub and Daniela Pohle tell us what the perfect balance between activation and branding looks like, and why brand has always been an integral part of Crossmedia’s media planning.
*German speakers can watch or listen to a recording of this interview here.
What, in your opinion, is the biggest misunderstanding when it comes to the topic of brand?
Florian Holub: Brand communication is often perceived as “nice to have,” as something you can afford to do once the real work – the actual selling – is done. However, brand building and sales are not a case of either/or; much rather, they are two sides of the same coin. One cannot function properly without the other – possibly for a brief period, yet definitely not in the long run. In marketing, we are noticing a progressive and persistent focus on short-term measures that clearly favors sales. This is seen in the way campaigns are created, as well as the types of metrics that are used to measure success and failure, and plenty more. This trend is fueled by seemingly ubiquitous measurability (especially in digital areas), shorter trend cycles, the corporate focus on quarterly numbers and short-term profit, rather than on sustainable growth. Where something can be measured, it will be measured – almost as an end in itself. However, at any rate, this is often done without any questions being asked regarding the usefulness for real, reliable insights. And on the basis of these short-term KPIs, we then optimize campaigns, determine budget volumes and allocate this budget to media channels.
What is the consequence of this focus on quick wins and quickly verifiable successes?
Daniela Pohle: All these factors mean that communication is becoming increasingly imbalanced between activation and brand communication. Media, channels, measures, and metrics that focus their attention on activation are becoming increasingly more important, while others are neglected. Basic research paints a clear picture: communication follows different mechanisms of action, depending on whether one takes a short-term or long-term perspective. It is not the same drivers that determine short-term and long-term success – on the contrary: if we reach for the tempting low-hanging fruits and follow the path that seems most promising in the short term, this often leads us astray, or even down a dead-end street.
Florian Holub: In this respect, media is a true reflection of our society: The capitalist maxim of profit maximization, with all its sometimes dangerous excesses, has brought us to a point where we are wrestling with the consequences of climate change, and a situation in which the long-term balance of ecosystems and the availability of resources, etc. is uncertain. Where resources are exclusively siphoned off and exploited without thinking about tomorrow, the time will ultimately come in which nothing is left. Harvesting without replanting, in a manner of speaking. When this maxim is applied to marketing, it means: activating, activating, activating – but without building up any new demand; without anchoring the brand in the minds of tomorrow’s target group, and without opening up new potential for products. This is a finite-based principle.
Where should brand managers begin if they would like to stop this downward spiral?
Daniela Pohle: According to studies, only 13% of customers measure campaign success over a period exceeding one year. Thus, with such a system, it comes as no surprise that it is often not seen which media really succeed at sustainably unfolding their power, just as little is it possible for the power of the brand to actually attain the status it deserves. Measures that consistently focus on investing in branding do not even get the chance to prove their success. As a result, they are discontinued quite soon or, at least, are systematically underestimated regarding their contribution to the company’s success. Long-term studies have shown that, while branding campaigns have a smaller short-term impact on direct sales, they have a greater impact on long-term market share gains, profit growth and price elasticity. This is because only brand campaigns create emotional preference exceeding that go beyond rational purchase arguments, price and offer. That’s why their effect extends beyond the (advertising) impulse, contributing to the increase of basic sales and improving the conversion of any activation measures. On the other hand, activation leads to immediate and efficient sales uplifts. However, these gains also quickly disappear again if the advertising euros fail to materialize or, in the worst case, even succeed at training customers to wait for special offers and to be less willing to spend their money.
Florian Holub: The real power lies in the interplay of the two approaches: via highly-efficient, data-driven, personalized, lower-funnel communication, with focused targeting on people who are currently “in-market” for my product, to whom I can give the decisive final push, at the right moment, with the appropriate arguments or offers. And via broader, powerful brand communication – which thrives on emotion, creativity and differentiation; which is not different for every viewer, but creates an unmistakable brand image in the consumer’s mind, in every single one of its colorful facets.
Which brands can you mention as positive examples of the harmonious interplay between activation and branding?
Daniela Pohle: Our client, Heycar, is a great positive case for the balance between branding and activation. With our approach, we were able to continuously increase both brand values and website visits. In the YouGov BrandIndex, in terms of awareness, Heycar is even ranked among the top climbers out of more than 1,000 brands in the past few years, when it comes to absolute growth, and in percentage terms it is even the strongest brand of all!
Florian Holub: AirBnB provides further proof of this. The brand turned off its performance measures during the pandemic (unlike most) – and noticed that 95% of the traffic came back regardless. As a logical consequence of this realization, budgets were subsequently shifted towards PR & Brand.
Is there a golden rule that should be followed? What should the ratio between activation and branding be?
Florian Holub: This works best when these two elements are in balance. Where exactly, the perfect balance lies, depends on numerous factors and varies with the respective industry, the degree of innovation, company size, distribution, and more. A comprehensive consideration of these contextual parameters for one’s own brand, allows the share between branding and activation to be balanced in the best possible way. A good starting point is the range of 50-70% brand budget. If you move away from this and invest a higher share of the spendings in pure activation, the efficiency quickly drops below 50% of the optimal value.
So, in your opinion, if there is a formula for success and positive examples – what is still standing in the way of a brand renaissance?
Florian Holub: Sadly, a number of things. For one, “brand” is no longer as sexy as it used to be. Today, the CMO distinguishes him-/herself through innovation in the tech stack, through automation, algorithms, and AI in marketing, however, no longer through the emotional TV spot or creative brand staging. On the other hand, to say the least, we are moving in a market with framework conditions that are not particularly conducive to sustainability and long-term strategies. Not to mention how often an agency is pitched and replaced, let’s just think about how long the average marketing manager stays with the company. And more importantly, what incentives are even provided for him/her to stay? Even with capable, experienced CMOs, in the vast majority of cases, the company’s long-term success has to stand up to and is counteracted by monthly sales, quarterly turnover or similar indicators.
Daniela Pohle: You would really have to feel very attached to the company for you to put its future above everything else, even at the risk of neglecting your personal fortunes and your own financial livelihood. Thus, it’s only human, surely understandable, and even downright sensible to decide against fighting windmills, and rather to select the easy way out, until the next exciting position opens up. By no means is the discussion about brand and sales, about the short and long term, limited to our media universe, nor can it be solved within it; the entanglements are much more far-reaching and interdependent. And as long as institutionalized hurdles, such as short-term oriented bonus models or the low level of corporate loyalty are not lifted or watered down, marketing and agencies can only effect a change for the better within narrow boundaries, even when fighting with combined forces.
Florian Holub: Even where brand has relevance and is being lived in daily practice, we often notice the absence of holistic approaches, which ensure that brand strategy does not just remain at the c-level or appear and end in annual strategy presentations. With all of today’s developments – fragmented media usage, increased audience segmentation, diversified product portfolios, and accelerated trend cycles – it is increasingly important, but also challenging, to create a consistent brand experience across all touchpoints. This poses a mammoth task for marketing.
What role could and should media agencies play here?
Daniela Pohle: The holistic view of brands is a design discipline for us media agencies, in which we can play out our core competencies and live up to our claim as consultants on equal footing. Transferring the unique DNA of the brand into media planning, so that it can unfold its full strength in communication, i.e. building an adequate stage for the creation and message – this has always driven and inspired us at Crossmedia. Because brands are created in the minds of consumers, not only by what they communicate, but by how, where and when they communicate, thanks to their unique media signature, if you will. Today, this task is more relevant than ever. Yet, at the same time, we need to find new ways to do this; we need to create mechanics and platforms that ensure that brand and creativity don’t get lost in the algorithm.
Florian Holub: In the future, despite all the revolutions and technical innovations, and now, perhaps more than ever before, a strong brand will remain an insurance policy against drowning in the din of digital noise. It’s not about becoming a love brand, an intimate confidant of the target group, with whom consumers interact daily – like with a good friend – and whom they constantly think of. A strong brand works best when we are NOT thinking about it. The true power of the brand unfolds passively, at a subconscious level. If we’ve done everything right, we take the stressful decision away from the consumer by making it for him. Long before the customer is faced with a decision to buy something, we have already embedded the brand so deeply in his mind that, at the moment of need, he automatically reaches for it and tunes out the rest. To achieve this, the brand must build neural structures within the consumer’s mind over time and via numerous contacts – unforgettable links with relevant needs, consumption and opportunities for purchase. The brand must provide the right and relevant message, as well as creative, strong media that is always in line with what makes it special, and ensures that it stands out.