Imagine for a moment that you are not a B2B marketer. Instead, introduce yourself as an investor and ask yourself the following: How do you identify great investments? Well, here’s a winning approach that you’ve learned from watching the movie ‘The Big Short’ over and over again.
First find a contrary idea. The Big Short is made up of five investors who, despite conventional wisdom, predicted the crash of the real estate market that triggered the 2008-09 financial crisis.
Second, make sure you are right by examining the evidence. In the film, the character played by Steve Carell flew to Florida to confirm that the real estate market was indeed made up of subprime loans.
Third, be ready to wait a while. The real estate market didn’t collapse overnight. It took the Contrarians several years to benefit from their investment.
Why B2B brands need to invest in brand marketing
The big long one
Let’s go back to the world of B2B marketing. If Warren Buffett were a B2B marketer, where would he invest his capital? We’ll tell you where: at the top of the funnel. That’s exactly what Warren Buffett does, who buys stakes in well-known brands like Coca-Cola, Geico, and Apple. In the B2C and B2B space, brand building is possibly the best investment a company can make.
Brand building is contrary. Most B2B marketers focus on the bottom of the funnel. A recent survey by LinkedIn shows that 96% of B2B marketers don’t measure impact for more than six months. Then brand effects begin to pay off. Emotional brand campaigns are widespread in the B2C area and extremely rare in the B2B area.
Brand building is right. According to our 2019 study with Les Binet and Peter Field, B2B brands that invest at least 50% of their budget in long-term branding achieve the best financial returns in terms of market share growth, profitability and revenue.
Brand building requires patience. Brands are built over decades, not neighborhoods, 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 great opportunity in B2B, The Big Long, if you will. And over the next 10 years, we expect the dollars to flow towards the top of the funnel.
“Juggling funnel” is the answer to marketing effectiveness
Why are we optimistic about the brand? Simply put, the benefits of the lead generation tactic are small. it increases short-term sales.
The benefits of branding are broad and multi-dimensional. Although you have to invest in both lead generation and branding, the end result is that brand creates far more value to a company.
Here are five main benefits of building a well-known B2B brand:
Advantage 1: Short-term sales
Branding does indeed increase short-term sales. Chances are you’re now buying from a brand you know and like. On LinkedIn, we see that “priming” a buyer with a branded ad can increase short-term conversion rates up to six times.
Advantage 2: Long-term sales
The main benefit of branding is that it has a positive impact on future sales from future buyers who are not yet in the market. In contrast, lead generation only affects those who are ready to buy. And contrary to popular belief, future sales are far more important than short-term sales for two reasons.
First, companies are evaluated on the basis of future sales (“future cash flows” in CFO language). By some estimates, 80% of a stock’s value is based on sales 10 years or more in the future. If you want to convince your CFO to invest in a brand, turn the funnel on its side and explain that brand advertising will provide lasting future cash flows.
Second, there are many more buyers out of the market in a given category than there are in the market. Today there may only be 20 accounts that are looking to buy cloud computing solutions. There could be 200 accounts up for grabs over the next three years, and branding will ensure your brand is included in those 200 considerations.
Advantage 3: pricing power
B2B marketers obsessively pursue their impact on sales and completely ignore its impact on price. According to our surveys, only 30% of B2B marketers believe that marketing has an impact on price. However, reducing price sensitivity is probably the most valuable thing marketing does. If you increase sales by 1%, you increase your profit by 3%. If you increase the price by 1%, you increase your profit by 10%. Research shows that famous B2B brands can charge higher prices for their products and services.
Advantage 4: talent acquisition
“Talent is our number one priority,” says every CEO. Then why isn’t it a priority for so many B2B marketers?
On LinkedIn, we see that prospects are 58% more likely to respond to recruiters after first seeing a brand message. Just as shoppers want to shop at famous brands, so people want to work for famous brands. In your opinion, who has it easier to attract top talent like McKinsey or Rick’s Discount Consulting Shack?
Advantage 5: option of the category
Categories are mortal, brands are immortal. Each category eventually shrinks and when that happens your brand can help you escape for the comfort of a new and growing category.
Consider the case of Microsoft, moving from Windows to the cloud with the same B2B brand known and trusted by IT departments around the world. Brands reduce risk by giving you a bridgehead 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 wise investment in your career and bottom line.
Peter Weinberg and Jon Lombardo lead LinkedIn’s The B2B Institute, a LinkedIn-funded think tank exploring the future of B2B advertising and decision making. This is an excerpt from a report, 2030 Marketing Trends.