Five ways brand marketing creates financial value

So much is written about why brands are valuable. And about how brand marketing influences future buyers. I should know, I have written a lot about those topics. But I am not sure that I ever really mapped out the different ways brand marketing creates financial value. Here is my first attempt, I would love to know what you think.

Start with the sales funnel
Let us start with that good, old fashioned, but enduring device, the sales funnel. Like it or loath it, it is worth building on a foundation with which most people are familiar. Normally, we have three basic stages to the funnel: people buying now, people thinking about buying, and people not thinking about buying now but who will in future. All three tend to be viewed through the lens of the product or service category.

Flip the funnel
I have taken a leaf out of The B2B Institute's playbook and flipped the funnel on its side. Why? Because we want to take time into account. Brands are built over time. So, now we see that the majority of a brand's buyers lie somewhere in the future. The time horizon is going to vary by category. The gap between choosing a new insurance policy is going to be very different to the interval between choosing a new car. Paint is going to different to mortgages. A printer different from cloud computing. But in each case, there is usually more sales leverage to be gained by widening the mouth of the sales funnel than improving conversion rates.

Extend the time horizon
But there is a bigger time horizon than just the purchase cycle, because the cycle is defined by people who have already bought the category. And getting them to switch brand again could be a big challenge. The easiest acquisition ought to be the first-time buyer, particularly if they are already inclined to choose your brand. The problem is that they will not know they need your category, well, until they need it. People's needs change over time. So that future time horizon needs to be far longer than we might otherwise think.

  • That teen playing Demon Slayer? They are going to need a bank account, renter's insurance, maybe a new laptop, when they go to college in a couple of years.
  • That college student studying for finals? Before too long they will have a job and be able to afford a subscription to Birchbox, maybe new specs from Warby Parker, and perhaps use Rent the Runway for those special occasions.
  • What about that single hanging out at the bar after work? I'm betting on a big wedding at some point, then kids. Goodbye city apartment, hello suburban home, Toyota Sienna minivan, and a Labrador.
  • Oh, and that department head in engineering? They just became the head of sales and marketing. Good job they have some idea of what Adobe Experience Cloud has to offer.

You cannot accurately predict when life events will happen, but the odds are that that they will. People who have no need of your category today will do so. And, when the time comes, if they already understand your brand, how it might meet their new needs, how it fits with their values, or might signal their status, then your brand is in pole position to be chosen. They are part of your brand's future revenue stream. But do not expect them to behave differently toward your brand until that time. Brands that fail to predispose people to choose them will be at the back of the starting grid when the time comes for them to buy.

Most brands are not relevant right now
Not everyone is a dispassionate observer. Some categories, like cars, sneakers, or professional sports, attract passionate followers who are always on the lookout for something new and interesting. In B2B, professional interest means someone might check out thought leadership articles or check out the latest developments in their industry at a conference. But these tend to be the exceptions rather than the rule. Generally, if your brand its product category has no foreseeable relevance, people are not going to pay much attention to what your brand has to say. Unless, of course, you can find some way of earning their attention. Whether it is B2B or B2C the right creative idea and execution can attract attention and seed ideas and impressions that will become relevant in future. But to have any effect, those impressions must be memorable and linked to the brand in people's minds.

Widen the funnel beyond buyers
There is a big temptation in business to set limits on marketing activity. Focus on hot prospects in these industries. Target IT decision makers. Do not waste money on people not ready to buy. Hopefully what I have written so far has given you pause for thought about why that rationale makes little sense for brand marketing. But there is also a prevailing belief that the most effective advertising is personalized, tailored with as much accuracy as possible to an individual buyer. Not only do I believe that this belief is delusional from the viewpoint of data implementation, but I also believe it completely misinterprets the surround sound power of a strong brand.

Brand advertising is a signal of a brand's status. And when that advertising reaches a wide audience the brand's status becomes apparent to the population at large. Which means that when the brand's name comes up in conversation, people have some idea of what it stands for. What the company does. Whether its reputation is good or bad. Why the other person referred to it in the way they did. And that is important because advertising does not just influence buyers, The wider audience might include,

  • Stakeholders who prefer to go with a well-known brand
  • Employees who believe their company is the best in its industry
  • Job seekers who trade salary for adding the well-regarded brand name to their resume
  • Investors who believe a well-known brand offers a less risky return
  • Resellers who believe listing the brand adds greater sales potential
  • Kids who tell their parents that the brand is dope

Or maybe it is the guy writing a blog post who uses a specific brand name because it will be well-known to his readers. Brands are a form of social currency. But that currency only achieves its greatest value when everyone has a shared understanding of what the brand stands for. And when it does, it helps create value for the brand. 

Brand marketing affects the whole sales funnel
It is tempting to assume that brand marketing only affects the mouth of the funnel. Not so. If your brand marketing does not boost the effectiveness of your performance marketing, then it is probably not going to do much of a job against future buyers.

However, there is a huge difference in mindset between people who have no need of your product category right now and those who are buying or researching a purchase. Personal relevance. When people know they need to make a purchase decision pay attention to things they would not otherwise. They watch videos, they visit web sites, they read reviews. They assess capabilities, compare options, and check out prices. You know they do. You see their data trail; you target their behaviors. The people who are off the radar are the people who do not even know they need your category yet.

But performance marketing does not work independently of brand marketing. Particularly when a common theme or look is used across all advertising, the two can work in synergy, with brand marketing can sensitize people to notice and respond to performance marketing and shortcut people's decision-making process. If someone is already primed to buy your brand, they will spend less time researching options and be more likely to pay attention to information that confirms their initial impression. Search and performance marketing become signposts to get them where they want to go as quickly as possible.

Branding marketing pays off at the point of purchase
What is more important than widening the mouth of the sales funnel? Making sure your brand can justify its price point at the point of purchase and deliver a good margin. When a final decision is made your potential buyer must believe there is good reason to pay the price asked for your brand. Outside of impulse and packaged goods, where prices are low and behavior dominated by habit and salience, people try to make informed decisions. And this is where prior brand impressions, expectations, and emotions can have a huge impact on purchasing decisions.

The reason to pay the price might be because your advertising did a great job of highlighting product features better than the competition. (It does not matter whether the product really is better, because most people will not be able to judge that for themselves once they have been primed to believe it.) The reason might be because people are willing to pay more for a brand whose values align with their own – but it helps of they know that before they start making their decision. The reason might be because people believe your brand has the right expertise to get the job done quickly and well – but again, you must highlight what your brand has to offer ahead of time. The better you seed motivating impressions ahead of purchase, the more people willing people will be to pay the price asked for your brand.

Lastly, let's add a bucket to the sales funnel
One of my problems with the sales funnel has always been that it reflects an acquisition mindset. Marketers go to all that effort to acquire new users and then what? Well, the obvious answer is "Job done, now it is over to the folks in CRM."

Except, these people still see your brand advertising. (Be serious, your targeting is not that good.) It would be a shame if existing brand users called your advertising out as misrepresenting their real brand experience, or your messaging undermined their belief in what the brand stands for. Besides, provided the brand experience lives up to expectations, these people ought to be the easy wins of the future (never mind the potential they offer in terms of cross-sell and upsell). So, let's add a bucket and try to make it leak as little as possible. Make sure that your existing buyers see your advertising and make sure that it maintains salience and reinforces positive perceptions, because at some point your existing buyers will probably have to make another purchase decision. Users do not just have a current value, they have a lifetime value. 

Brand marketing, so much more than widening the sales funnel
Most marketers seem to believe that the primary job of brand marketing is to widen the mouth of the sales funnel by creating perceptions of purpose, expertise, trust, quality, and value.
That is important. By making their brand more attractive than the competition, their brand will gain more than its fair share of future buyers willing to consider their brand for purchase. Then it is the job of performance marketing to capitalize on that interest and convert the prospect into a user or owner. But the influence of brand marketing is far greater than just widening the mouth of the sales funnel. In total, I believe there are five important ways that brand marketing can build financial value,
  1. Priming people to choose your brand before they even realize they have a need for it
  2. Creating a common understanding of your brand that encourages value-adding behaviors
  3. Accelerating a purchase decision in favor of your brand
  4. Justifying the price asked at the point of purchase
  5. Enhancing the perceptions of current brand buyers, making them more likely to buy again
So, what do you think? Am I missing anything? Please share your thoughts.

Comments 2

Guest - Graham Staplehurst

on Monday, 14 March 2022 11:42

...and at what point do we all realize that a 'funnel' is a very poor metaphor for this cyclical, inter-dependent network of effects, Nigel? It's time to kill this particular misnomer.

...and at what point do we all realize that a 'funnel' is a very poor metaphor for this cyclical, inter-dependent network of effects, Nigel? It's time to kill this particular misnomer.

Nigel Hollis

on Monday, 14 March 2022 14:46

Like Tom Roach says in the post I linked to, it is "the cockroach of marketing concepts." Is it simplistic. Yes, but makes it easily intelligible. You are not going to exterminate it, so either learn to live with it or help it evolve!

Like Tom Roach says in the post I linked to, it is "the cockroach of marketing concepts." Is it simplistic. Yes, but makes it easily intelligible. You are not going to exterminate it, so either learn to live with it or help it evolve!
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August 13, 2022

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