Brand or Demand

How should I spend my communications budget in the current economic climate? Do I continue to invest in brand building activities or slash the lot and spend every dollar I have on demand generating activities driving enquiries and sales?

I’m paraphrasing of course but this is a question we have been asked to consider on a number of occasions in the last couple of months.

We’ve decided to conduct research to gather different evidence and opinions on the subject for the clients concerned, all of whom happen to be B2B brands. For them the question is actually simpler. They want to know whether they can justify advertising or if they would be better shifting budget into direct and digital channels.

Already I have heard from several commentators arguing that brand building in B2B markets is an ineffective use of budget. I guess those SAP, Accenture and Oracle ads I saw as I came through Heathrow a few weeks ago are all a waste of time and money then?

The same commentators see the B2B purchaser as a purely rational animal, buying and making recommendations to peers based on price, product and service features. I expect us to also challenge that. Isn’t there also a role for more emotionally led communications in B2B marketing?

Some areas we are exploring in the research include:

• Understanding decision making networks and how to deliver an optimum mix of brand and selling messages
• If appealing on an emotional level to the target whilst giving them the rational arguments they need to appeal to their peers / boss is a valid approach
• Understanding the different stages of the buying process and when to deliver emotional vs. rational selling messages
• Understanding the role of different channels and how to use them to deliver emotional vs. rational selling messages
• Understanding the difference between reputation, relationship and brand

Any ideas / comments welcome. I suspect the answer to the original question will of course always come back to the individual client objectives. I am sure we will find historical case studies that support putting $$s into advertising in a recession and equally case studies that can be found to support a shift into direct channels.

Away for a while

Time to add to this blog has been a little limited since News Years Eve.

The reason?

The arrival of Aveline Stella Mabbott shown here!

Will We Be Green in 2009?

I mentioned a month or so that we were looking into the relative importance of sustainability, CSR, green and the whole environmental debate for our clients. We were hearing in the media that 2009 will be all about thrift and as such our green consumer values will go out of the window. We wanted to see if this was true.

So with this in mind Gyro has just completed research with close to 2000 consumers and over 150 Marketing Leaders in 8 countries. The objective behind this 2 pronged research was to understand the above question and also to discover whether the people behind the brands fully appreciate the buying motivations of their customers. The results show a considerable disparity between what brands are communicating and what their customers actually care about.

A selection of highlights includes:

- Marketing Directors significantly underestimated the role green issues can play in the purchase decision of consumers. Even in current economic times.
- People see themselves living increasingly green lives over the next 24 months.
- The UK significantly lags other major European countries in green attitudes.
- Around half of consumers do not trust the claims of green brand advertisers.
- People want to see evidence of companies’ progress in ‘green R&D’. They are not interested in hearing about car sharing schemes. This is about real technological efforts and breakthroughs.

We jointly hosted a roundtable with The Times this week to discuss the results. The Shadow Environment Minister and representatives from P&G, Coke, HP, Shell, BT, Adobe, Google, Nokia Siemens Networks and The Carbon Trust all contributed towards a really interesting debate.

Drop me an email - richard.mabbott@gyrointernational.com - and I’ll be happy to send you a copy of the report.

Social Enterprise – Why Wouldn’t We?

This time last year I wasn't changing nappies, I was in South Africa, rising at 5.00am each morning to go out on an open top 4x4 looking for lions and other hungry residents of Madwike game reserve.

The animal highlight was the sight of a female leopard taking down an antelope, only for three hyenas to effectively mug her of her dinner minutes later. Away from the game, the other highlight was the hospitality of the local people who run a number of the lodges on the reserve.

Accommodation options include the Madwike Collection, a group of fabulous lodges that in most cases are ‘community owned’. http://www.madikwecollection.co.za/

This means they are run and operated by the local communities with private capital and expertise being used to get them up and running. After a period of ‘a few years’ the lodges are handed over to the communities which means that your tourist $$s have a better chance of going to the people who really need them.

I thought this was a pretty cool idea and it played a huge factor in our decision to stay there. It is also just one example of a fast emerging sector of the economy that I hope defies the current economic downturn.

UK consumers seem to agree. A recent YouGov poll showed that social and environmental values of business are as or more important than before the onset of the credit crunch.

Only 13% of respondents said that they believe that social and environmental values of business are less important since the credit crunch began, whereas almost three quarters (71%) believe that they are as or more important than before the economic upheaval.

According to Government figures, there are 55,000 social enterprises in the UK that contribute £8.4 billion per year to the UK economy. YouGov’s poll also shows that people want more social enterprises in the UK. When asked what we need more of to ensure a sustainable economy for the future, 42% of respondents chose social enterprises, ahead of government institutions, charities funded by donations, and traditional business.

So it seems that in these tougher times, people in the UK not only want to see vibrant businesses contributing to the economy, but they also want those businesses to consider the communities and the environment in which they operate.

If you had been to Madwike and seen the impact the venture is having there, you’d find it hard to disagree that there is even greater need in countries outside the UK.

My tips on Madwike by the way: Stay at Thakadu River Camp for a couple of days and then move to Buffalo Ridge. You’ll get the warmest of welcomes and see more of the park.

Christmas thanks

A few brands deserve my thanks this Christmas.

> Thanks to Waitrose for adding a little bit of festive spirit and emotion into their Christmas advertising. Their ad stood out like a lighthouse in a dark, relentless sea of kitchen, bedroom, sofa and DIY sales.

> Thanks to John Lewis for the excellent email that gave me an early start in their online sale. The nursery is getting closer to completion at every click of the mouse.

> Thanks to Pro-Active for the hamper. The chocolate covered coffee beans have been popular all round.

> Thanks to Dubai Holdings for making Fi and Lucy’s Christmas.

> And thanks to UGG for getting me in the good books.

Now I'm off for a well deserved Chesterfield ....

Brands are for life. Not just the credit crunch.

So should we spend our way out of it as Chancellor Darling (and John Maynard Keynes before him) seems to be advocating or should we batten down the hatches and come back when it is all over (as Pete next to me in the office is advocating)?

Personally I am not sure either route is preferable. For one I don’t have any hatches and for two I can’t help thinking that the ‘spend now, pay it back later’ approach was the thing that got us into this pickle in the first place?

Anyway, clearly I am no economist so I will bring the question back to a marketing theme and ask: What should brands do in a downturn?

It is well documented that brands that increase advertising during a recession, when competitors are reigning in spend, can improve market share and return on investment at lower cost than during good economic times. But how should brands behave during such times? What messages should they take to consumers?

Well hopefully Xtreme will have part of the answer. A recent email informed me that they have put together a report that ‘explores and analyses recessionary marketing communications tactics and strategies from around the world’. I thought this seemed like a nice idea so we have ordered a copy.

In addition to generating them a sale, the Xtreme email did another job. It prompted me to recall a rather jarring brand experience I had had courtesy of Orange a day or so earlier.

I had flicked through 5 or 6 pages of press doom and gloom – Mumbai, house prices, the pound against the dollar, more failing retailers and another round of job cuts – when I logged onto Orange broadband at home.

The message on the home page read “How bad will it get?” with the usual ‘expert’ telling me it could undoubtedly get worse. Now I am not sure I want to see Orange jump on the back of the credit crunch band wagon. I expect it of Tesco. I expect it of Asda. But I want Orange to tell me it’s all going to be OK. That things are rosier than we might think. That the future is bright for gawd’s sake!

So what does my own reaction tell me? It tells me that marketers and agencies need to think twice when the idea of a credit crunch campaign falls hits the flip-chart. Credit crunch busting offers and promotions might drive penetration in the near term but we must question what the effect will be on the brand in the long term.

Brands are precious. They are for life not just the credit crunch. Be careful out there.

The Art of Integration

Is Integration becoming a dirty word in agency land?

We always keep an eye on the competition and one thing is certainly true, it has never been a more popular term to describe an agency’s offering!

So it may not offer much differentiation for agencies going forward, but more importantly what does it mean for clients? We recently spoke to around 60 international marketing directors to get their views.

Our research points to different client segments requiring very different engagement models. At the one end there are clients who value the full-service agency model. They are often resource constrained and work for businesses that perhaps don’t value the marketing function as much as they possibly could. They want the efficiencies an integrated agency can bring and the convenience of having ‘one throat to choke’!

At the other end of the scale are the more sophisticated marketing operations. These are brands with bigger budgets, more marketing resources and, more often than not, communications functions that are organized by discipline (or ‘silo’ if you are a true integrated believer!) They buy specialists – direct marketing agencies, digital agencies, advertising agencies, branding agencies and media agencies – and often build rosters of similar companies to drive competition and / or manage workload.

So one questions is, are these bigger clients uninterested in the idea of Integration?

We certainly think not. We see an increasing trend towards a requirement for more Integrated Planning, with agencies being thrown together to collaborate on initiatives. Whether this works and is effective against the original objectives always comes down to the agencies and individuals involved. The client can always help by ensuring there are clear areas of responsibility … especially when it comes to delivery of the plan! And the agencies can help (and make things easier for themselves) by cutting back on the number of people involved from each side!

We are certainly comfortable with both the above approaches as I am sure are many of our Integrated competitors. Our approach has always been rooted in Integrated Thinking rather than simply Integrated Deliver. It is not about being full-service or a one-stop shop. It is about solving clients’ business problems and we are always happy to work with other like-minded agencies to achieve that goal.