Fresh from the stage at The Drum’s landmark B2B conference, we bring you David Haigh’s crash course in advocating for greater investment in B2B.
How can B2B marketers advocate for greater investment in brand? (The Drum)
David Haigh was once an agency financial director (and later managing director), so he knows a thing or two about how to convince the purse-string holders to open those strings a little wider.
For the last 30 years, Haigh has been chief executive of Brand Finance, a consultancy that specializes in ‘branded business valuation’ – quantifying the value of essential but often obfuscated or hard-to-pin-down qualities like brand.
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In that role, Haigh tells the audience of The Drum’s B2B World Fest this week, he finds himself playing “almost psychiatrist or intermediaries between CMOs and CFOs” in the former’s endeavors to maximize marketing investment and the latter’s quest to shore up the value of every investment.
What do marketers need in order to approach these conversations armed with the material to secure more marketing investment and to resist familiar practices like cutting brand investment during financial downturns? Here’s a crash course.
A convincing argument for marketing investment to a financial director, Haigh says, has one essential component: “Clear evidence that brand building is a strategic investment,” told in data not anecdote, and in a way that’s comparable to other investments the organization might make.
According to Brand Finance’s data, Haigh says, the macro of marketing investment in B2B is clear: despite conspicuous strides by some players, B2B brand value remains underinvested overall.
Research the firm conducted in collaboration with B2B shop Stein found that 18% of the total value for the average top consumer company comes from its brand. For the average top B2B company, that number’s only 13%.
The upshot: There’s headroom for brand investment in B2B, to capture at least that lagging 5%, says Haigh.
And there’s plenty to suggest that that lag in value comes from a lag in investment. According to the CMO survey, conducted by Deloitte and others, marketing expenses account for 12.2% of overall budget (or 10.2% of revenue) for B2C product companies; those numbers drop to 8.7% and 6.1% for B2B product companies. (Service companies tell a similar story: 9.6% and 10.4% respectively in B2C; 10% and 6.2% in B2B).
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Well aware of these numbers, the B2B world is well-used to pushing for greater marketing investment, Haigh says.
According to another study, this time by Stein and the ANA, 85% of B2B CMOs believe their organization under-invests in marketing. With those CMOs representing trillions in brand value, Haigh says, “that says to us that $3.5tn of B2B brand value is not properly supported.”
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Investing in brand, in B2B as elsewhere, pays back not just in recall, brand love and sales – but in metrics across the board, Haigh says.
Take attracting talent: according to Brand Finance’s Employer Brand Index, brand ranks right at the top when workers are asked what attracts them to work for a company. “To me, culture and brand are the two,” Haigh says. “They’re pretty much interchangeable, or they’re exposed to each other… Employees are very affected by brands.”
Other studies support the same findings, Haigh says. According to research by the London Business School, for example, at the top 100 companies, CEOs at “more strongly branded companies” earned on average $4.5m less each (though Haigh admits that this one “is not always a brilliant argument if you’re the marketing department” if it appears that “it’s not very good for [executives’] pay packet to build the brand up”).
Making a rational, data-backed case for greater B2B brand investment is essential, Haigh says, but it won’t get you all the way unless you also consider what drives a chief executive and the rest of their board colleagues (after all, B2B buying groups are as driven by emotion as they are by reason). After that, the goal is to make the money holders allies in the argument for investment with the wider group of decision-makers.
“What you really need to understand are motivations. First of all, you need to understand the business model, then you need to understand the motivations of the CEO and anyone else on the board,” says Haigh. “It’s quite difficult to understand business models in B2B, so… get a CFO or someone similar who can translate all the obfuscating language that they love throwing at you. Make sure you get a CFO or a finance person on your side and win the argument with the CEO.”