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Brand equity drives resilience
Savvy marketers know that a strong brand is more change-resilient, whether it’s in the form of macroeconomic elements affecting financial growth, the increase of commodity prices amidst supply chain disruptions, or geopolitical affairs. During times like these, it may feel natural to batten down the hatches, but a competitive business landscape and leadership expectations still demand positive results despite the pressure of macroeconomic headwinds. For businesses that are thinking beyond next quarter’s results and are invested in building a long-term brand of tomorrow, a downturn presents an outsized opportunity for companies to differentiate themselves while protecting core commercial metrics like retaining a premium on price.
Maintaining pricing power
Consider this: As inflation rises, consumers, too, are tightening the purse strings and cutting down on discretionary spending. For brands, this means that retaining an existing price premiumisation becomes tantamount to defending topline growth. Research shows that brands with a strong identity are less affected by price elasticity. A study by the Harvard Business Review1 shows that “products with stronger brands tend to be more price inelastic, which makes building brand equity a good investment.” Put plainly, price sensitivity is not a byproduct of consumer behaviour that cannot be helped, but a marketing outcome that can be shaped by brand builders.
Bouncing back better
Beyond pricing, investing in brand arms businesses with bounce-back-better armour. According to research by Kantar BrandZ, robust brands that weathered the 2008 financial crisis recovered nine times faster.2 The economy will turn a corner eventually, and when it does, businesses that have carved a strong brand will be the first to regain their footing.
A balancing act: Short-term spikes vs. long-term growth
Evaluating the returns of marketing investments with a short-term lens can be myopic. Research by Nielsen, Nepa, and GfK3 to examine the role digital advertising plays in driving brand growth found that businesses are grossly undervaluing advertising if they only measure short-term outcomes. 60% of the ROI from advertising comes in the long term. That said, a perennial marketing dilemma presents itself: How can marketers achieve quantifiable short-term wins while optimising for long-term growth?
The ‘Dragon Tail Effect’4 is a framework used at Meta that makes the case for how performance advertising, coupled with brand advertising, can maximise business performance in both the short and long term. It posits that “brands need to synergistically run performance and brand campaigns in order to be successful in the longer run and drive sustainable growth.”
As illustrated above, investing in brand campaigns ensures that the baseline of sales is consistently growing over a period of time, while performance campaigns add short-term spikes, or ‘Performance Peaks,’ on top of the baseline when activated. “This leads to optimal short-term performance while sustaining and growing the underlying health of the brand in the longer term,” determines Meta.
Another study by Analytic Partners5 revealed that during a downturn, brands that doubled down on their media investment saw their incremental sales grow by 17%. Meanwhile, brands that reduced their media spending recorded an average loss of 18%. While cutting on advertising spend may save on cost in the short term, it corrodes long-term attributes like brand equity and saliency, which are much harder to regain. Companies must sustain their marketing investment even amidst an economic downturn to maintain growth while building for the future.
How is brand building changing?
Multiplicity effect in a digital landscape
Consumers of today have a plethora of touchpoints at their disposal. The advent of new technologies, coupled with shifting consumer habits, means that marketers need to meet their consumers where they are at.
For marketers, a befitting term to think about how to connect with consumers is ‘multiplicity’ — the holistic effect of experiences arising from multiple entry points, touchpoints, and channels that are optimised by machine learning. Leveraging a broad range of channels and touchpoints like short-form video, business messaging, creators, and cutting-edge technologies like AR/VR and the Metaverse is what enables brands to effectively connect with consumers. Another facet of multiplicity is interconnectivity between an ecosystem of apps. From an advertiser perspective, the ability to market to consumers through various channels like WhatsApp, Instagram, and Facebook is an example of multiplicity.
Multiplicity also drives results. A study titled ‘No Silver Bullet’ by Kantar and Oxford University’s Saïd Business School finds that the campaigns that leverage and invest in a broad set of channels, including social media, are 2.6x more effective for brand outcomes.6 The study also suggests that many marketers have an opportunity to optimise their media spend as they are overinvesting in traditional channels, like TV.
A digital shift and the always-on phenomenon
Ipsos’s recent State of Connective Media report shows that the future of media looks progressively digital. Results from the study highlight that it will become increasingly expensive for brands to reach the next generation of audiences through traditional ad-supported methods like TV.
As consumers turn away from TV screens and towards mobile screens, a new ‘always-on’ shopping behaviour emerges. Gone are the days where specific pockets of time are set aside to shop — it’s now about always-on shopping and always-on experiencing. In tandem with shopping, consumers are also consuming content, all of which are opportunities for brand-building experiences. For Gen Z, this behaviour rings especially true. 72% of Gen Z social shoppers in APAC agree with the phrase “I am always browsing for shopping inspiration when spending time online.”7
Great expectations: Diversity, equality, and inclusion
One-size-fits-all marketing has never been particularly effective, but with changing consumer expectations, diversity and representation in advertising have become critical. In particular, brands invested in grooming the next segment of consumers need to pay attention to Gen Z’s inclinations. 49% of Gen Zers prefer to buy brands made that made accessible to everyone8 and 46% prefer to buy from brands that are socially responsible.9 Catering to this group of consumers will be a big win for brands, considering Gen Z makes up 41% of the world’s population10, with a growing influence on household purchases.
Now is the time for next-generation brand-building to take place in support of future demand. Brands must begin to invest in building up their younger audiences and focus on their media habits to capitalise on long-term growth.
Building breakthrough brands to solve key jobs to be done
As one of the largest social media and digital experience platforms in the world, Meta has size on its side. Its power of multiplicity extends to 3.7 billion monthly active users across its family of apps.11 Marketers can leverage integrated business tools and platforms within the Meta ecosystem to deliver desired outcomes on multiple surfaces — all in one place.
With this level of connectivity, the right tools are at the fingertips of savvy marketers. Consider the below as a summary of the key jobs that need to be done (JTBD) and how these can be tackled using solutions within Meta's technologies.
1. JTBD: Build long-term brand equity to maintain pricing power
As the Harvard Business Review pointed out, products with stronger brands tend to be more price inelastic, which makes building brand equity a good investment. Additionally, having a strong brand protects the company’s entire portfolio of products, which in turn safeguards overall profitability for the business.
2. JTBD: Maximise full funnel experiences
By applying the Dragon Tail Effect framework to brand campaigns, the strong combination of brand and performance marketing is expected to reap synergistic benefits across short- and long-term horizons. The case study of Konvy Thailand exemplifies this. Konvy partnered with content creators to drive awareness to discounts and deals on its products during the 11.11 Singles’ Day mega-sale event. Working with top lifestyle content creators brought in a new way of advertising. The results? 8x more purchases compared to photo and video ads alone through integrating brand and performance strategy with Branded Content Ads.
3. JTBD: Harness multiplicity
As highlighted by the ‘No Silver Bullet’ study, brands increase their effectiveness when they tell their stories across multiple touch points. The average campaign could have been 2.6x more effective at driving brand outcomes with a varied media plan. This means that brand building should be done holistically, and marketers need to look at the bigger picture of leveraging an ecosystem of various channels and entry points. Take Spotify SEA, for example, which leveraged the power of multiplicity through augmented reality filters and Branded Content Ads. Spotify optimised branded content strategy by identifying local content creators in each market. This resulted in Spotify's ‘Only You’ campaign achieving lifts in brand metrics across the three targeted Southeast Asian markets.12
In summary, short-term marketing helps people buy, but long-term marketing helps people choose. The adage underscores the importance of building a meaningful brand that customers will trust well into the future. This earned bond gives brands firepower when defending revenue metrics while also building long-term brand equity. More than ever, now is the time to double down on brand-building investments. In the words of Henry Ford, “Stopping advertising to save money is like stopping your watch to save time.”
[1] Gallo, Amy. (2015, August 21). A Refresher on Price Elasticity. Harvard Business Review. https://hbr.org/2015/08/a-refresher-on-price-elasticity
[2] Kantar BrandZ Report. https://www.kantar.com/inspiration/brands/brandz-retail-ranking-shines-light-on-most-resilient-global-retail-brands
[3] Meta Marketing Science 2022. The short- and long-term impact of advertising. https://about.fb.com/wp-content/uploads/2022/07/The-short-and-long-term-impact-of-advertising.pptx.pdf
[4] WARC Report: The Dragon Tail effect: Brand building in the age of Convergence. https://bit.ly/fee2ctatia
[5] Analytic Partners. (2020, April 28). Report: Cutting Ad Spend Guarantees Losses in a Recession. https://analyticpartners.com/news-blog/2020/04/report-cutting-ad-spend-guarantees-losses/
[6] Bell, J. Jason; Thomaz, Felipe; Stephen, Andrew T. (2021, May 29). No Silver Bullet: Cross-Media Complementarity. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3836621
[7] YouGov. Meta Seasonal Holidays Study.
[8] Ipsos. Retail Future of Shopping.
[9] YouGov. Meta Seasonal Holidays Study.
[10] United Nations. World Population Prospects 2019.
[11] Meta. Q3 2022 Investor Relations Press Release.
[12] Facebook: Spotify Southeast Asia. https://www.facebook.com/business/success/spotify-southeast-asia
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