Using Sprite as an example, Chris Burgrave shows how short-term budget cuts lead to a slow erosion of brand equity, eventual retailer delistings, and a massively expensive relaunch years later. The initial savings are dwarfed by the future investment required to regain lost ground, making consistent brand support more cost-effective.
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A powerful brand not only increases customers' 'willingness to pay' but also improves stakeholders' 'willingness to sell.' This lowers costs across the business, as strong brands can attract top talent for lower salaries, secure better supplier terms, and reduce their cost of capital and debt due to a lower perceived risk.
Gap's Head of Digital argues that a lack of brand investment forces performance marketing to work harder and become less profitable. Strong brand relevance makes all other marketing efforts more efficient, creating a symbiotic relationship.
Former AB InBev CMO Chris Burgrave argues that brand building is a financial activity, not just a marketing one. A brand's ultimate purpose is to de-risk a business by creating repeatable, predictable future cash flows. This reframes the conversation from soft metrics to tangible financial outcomes like growth, profit, and risk reduction.
Data shows that adding brand marketing to a performance-driven engine can increase median ROI by 90%. The persistent tension between brand and performance stems from short-termism and the allure of easily measured clicks, creating a false dichotomy between two essential functions.
Relying solely on short-term performance marketing becomes unsustainable. Brand investment acts as the fuel for these channels; cutting it means you must spend progressively more just to maintain the same results, leading to a negative spiral.
Data reveals a 'doom loop' of diminishing returns for companies over-relying on performance marketing. Brand investment acts as a multiplier, improving conversion and efficiency. Campaigns that combine brand and performance see a 90% higher ROI, while performance marketing for a weak brand yields a negative 40% ROI.
Reacting to a regression towards tactical performance marketing, branding expert David Aaker introduced his "Five Bs" framework (Relevance, Image, Loyalty, Portfolio, Equity). It reminds leaders that brand is a long-term asset and notably includes "Brand Portfolio" to emphasize that a strong brand rarely stands alone, requiring co-brands and endorsers.
In a world demanding short-term results, brand marketing isn't a separate luxury. It is a critical investment that builds top-of-funnel awareness, ensuring that lower-funnel performance tactics have a sufficient audience to convert and ultimately work harder.
When pressured to hit quarterly targets with promotions, use a simple filter: 'Does this action increase the long-term desirability of my full-price product?' This framework helps balance immediate revenue needs with the crucial goal of protecting and building brand equity, preventing a downward spiral of discounting.
While intended to drive sales, frequent discounting damages brand perception by training consumers to see the brand as low-value. This creates a "deselection barrier" where they won't consider it at full price, eroding long-term brand equity for short-term gains.
