Running to stand still?

Many companies are holding fire on their brand strategies and chasing quick sales this year. But are they risking their long–term growth prospects by taking their eye off the brand?

Branding, Essentials | 3mins read | Michael Gough

Running to stand still?
Running to stand still?

The pandemic has been a challenge to businesses everywhere, but one sector that has been hit particularly hard is hospitality – especially hotels. While restaurants and cafes have been able to adapt and sell takeaways or home dining experiences, the hotel sector has few opportunities to respond creatively to Covid restrictions. There’s simply no way to sell accommodation as an online experience.

One of the biggest names in accommodation, Airbnb, has seen their business activity curtailed spectacularly. And faced with these dramatic new circumstances, it did something counter–intuitive. It slashed its marketing spend and doubled down on brand.

 

 

Times are tough and their priorities are shifting accordingly. Many of them are choosing to re–allocate resources to sales, making that the focus for the next couple of quarters, and putting brand strategy on the back burner.

 

This is no temporary measure either. They intend to make it permanent. “What the pandemic showed is we can take marketing down to zero and still have 95% of the same traffic as the year before” said chief executive Brian Chesky. “We’re not going to forget that lesson.”I say this is a counter–intuitive thing to do because I’ve spoken to a range of business leaders who are making the opposite decision. Times are tough and their priorities are shifting accordingly. Many of them are choosing to re–allocate resources to sales, making that the focus for the next couple of quarters, and putting brand strategy on the back burner.

This sounds like a good idea on paper. It might help to protect bottom lines and bring in new contracts. But as Airbnb have shown, it’s not the only approach.

Neither are Airbnb alone. A number of high profile brands have taken similar decisions recently, in some cases cutting their targeted advertising spend by 99%. For a major corporation, that can be a change in spend worth tens or even hundreds of millions of dollars. L’Oréal and Huawei have also re–focused on brand during the pandemic. What’s the logic here?

 

 

sales activation doesn’t create demand; it just helps businesses capture the demand that already exists. Brand building is what actually generates demand, in both the long term and the short term.

 

Part of it is the difference between short term and long term success, as Les Binet and Peter Field described in their influential report The Long and the Short of It. They argue that long term growth and short term growth are built in distinctively different ways. A focus on long term growth can bring short term benefits, but the opposite isn’t true. Long term growth will not materialise from a series of short promotional campaigns aimed at delivering an immediate sales boost.

The reason why lots of short term campaigns don’t add up to the sum of their parts was explained recently in a paper from LinkedIn’s B2B Institute. Its authors argue that “sales activation doesn’t create demand; it just helps businesses capture the demand that already exists. Brand building is what actually generates demand, in both the long term and the short term.”

This is a vital insight for the kinds of businesses we work with, especially those who are pausing brand investment as part of their pandemic response. The warning from Binet and Field would be that they are also pausing their prospects for long term growth. The result is that many companies are going to find they have spent 2020 and 2021 running to stand still. The focus on sales and marketing will mean they end the pandemic years without losing too much ground, but they won’t have moved forward either.

Author and entrepreneur Seth Godin agrees: “While it’s tempting to build an organization with direct marketing techniques,” he writes, “just about all the brands that matter to our culture aren’t built this way.” With so many targeted sales platforms online, it can be tempting to lean too hard on that line of marketing – Godin even calls it a trap. For a brand to become a household name, it has to do more than that. It has to look beyond the immediate performance data and do the work to build its reputation.

Now, what works for Airbnb or Uber might not be the same thing that’s going to deliver for your business. There is no one–size–fits–all approach, but it’s going to involve a balance of branding and marketing. Binet and Field suggest that a balanced ratio between the two is usually going to fall around 60:40 – a solid base of long–term brand work, activated by short term marketing campaigns.

You’ll be best placed to determine what the right ratio is for your firm, but don’t defer to sales and marketing and let the brand coast. Those companies that are choosing to consolidate their brand are betting that, as things re–open, consumers will have them at the front of their minds. While others are running to stand still, their focus on brand may bring them out the other side of the pandemic several steps ahead.