There is a Crisis in Brand-building

Marketing budgets are under unprecedented pressure. The events of 2020 saw deep cuts to investment in marketing in general, and brand-building in particular. More than ever before, marketers have to achieve more with less.

If we hold that a strong brand is key to the long-term health of businesses, we now face a profound risk – both to our commercial prospects, and to the reputation of marketers as drivers of growth.

As the business world looks toward a post-pandemic world, the marketing discipline needs to rethink the way it talks about brand, and reframe it for a world of digital commerce, algorithms and almighty walled gardens.

The past year has seen a step-change in purchasing online.

The peaks we’ve seen at the height of lockdown are unlikely to last, but development has been accelerated, companies in a slew of categories have been forced to invest in new infrastructure, and there is a clear direction of travel.

Global, E-commerce's % share of retail

For media owners, there have been relatively few media winners who saw both increase in consumer usage and an increase in ad spend.

The biggest winners have been the companies that span both digital commerce and advertising. In the West, that means Amazon, and the emerging retail media sector.

As brands sell more through e-commerce, they need a presence as close to the point of purchase as possible.

Global, Year-on-year% change in user activity and advertising spend in 2020

The cutbacks have been to brand investment – across advertising, sponsorship and associated costs.

Where are budget cuts being made?

Will this money come back as the economy returns? Or are we seeing a fundamental reappraisal of how the marketing budget should be spent?

There is no consensus here

While some argue that companies need to maintain brand spend, others argue that the world is moving away from brand-building. In his book Post Corona, Scott Galloway argues that we are moving from the ‘brand age’ to the ‘product age’ – where brand reputation can be swept aside by user reviews and convenience.

So we set out to answer three questions

Does brand still matter in the world of digital commerce?

How do you balance brand and performance when driving online sales?

Do you need online ads to drive online sales?