As part of our ongoing effort to help chief marketers navigate the new normal, Jann Martin Schwarz, the global director of the B2B Institute, a think tank funded by LinkedIn, and a member of the ANA’s Global CMO Leadership Coalition on COVID-19, addresses the challenges brands face today in delivering greater perceived value.
1. What is the most pressing issue to you and your organization right now?
My team is focused on looking a few months out and developing strategies to help marketers navigate the medium- to long-term impact of the crisis. The immediate needs clearly center around the health crisis. Each company is facing a different scenario on how to respond right now in a way that builds trust with all stakeholders, and my colleague Ty Heath has done some very thoughtful work on that topic. But we are starting to focus on the next phase where many companies will hopefully come out of the existential response phase and want to start selling again.
What drives a fast recovery out of a recession? Historic data tells us it’s continued investment in brand-building. If you can afford to keep investing in brand-building, you can gain market share in times of economic trouble and help accelerate the recovery. Marketing isn’t just a cost center; it is a driver of growth, a creator of pricing power. All value is perceived value. If value is not perceived by the consumer, then a brand might as well not exist. Without advertising, a brand’s perceived value often fades quickly — its pricing power erodes. Brand advertising is not about profiting in recession; it is about investing now so you can capitalize during the recovery.
To do that effectively, marketers need real insights on how to create perceived value right now. At the B2B Institute, we are tapping into an extensive network of experts to think through that. We recently published a paper featuring renowned marketing effectiveness expert Peter Field, called “Advertising in a Recession — Long, Short, or Dark?” In it, he provides a best practice guide to advertising in a recession.
2. What is the role of marketing today vs. pre-coronavirus?
Among the brands which are still in a position to advertise, many marketers seem to be over-correcting for COVID and focusing too much on everything that has changed. Marketers are always tempted by herd mentality and trying to ride the latest trend. As people have pointed out, many brands focusing on COVID messages sound exactly the same, down to the identical piano music. If your objective is to remain relevant for the purpose of selling once people are able to buy again, that lack of distinctiveness is going to be a problem.
What should ads look like during a recession if you want your ad to help you sell? We just published some research centered around what advertising creative works in today’s environment. Conducted by System1, the study analyzed audience reactions to advertising messages in a very scientific way. According to Orlando Wood, the chief innovation officer at System1, “people will want brands to be generous, modest, self-aware, have a sense of humor, and demonstrate spontaneity.” Contrary to what some marketers may think, people are open to receiving selling messages from brands. It’s not a good time for hard sells. But that doesn’t mean you should freeze your work and only reflect COVID messaging, unless your specific circumstances force you to.
3. In your opinion, which brands are resonating during this time?
Smart brands are those which know what they stand for and find a distinctive way to reflect what is happening in the world through the lens of what they know about themselves. Consumers are very good at detecting empty words and grandstanding. Marketers shouldn’t overreach and they need to stick to clear brand codes. Brands that have realistic sense of self will do well. Being realistic means acknowledging that brands are mainly important because they are a shortcut to help people make decisions, not because people have a deep love for them. They represent a mark of trust for consumers, especially in an unstable environment like the one we’re experiencing now.
4. Why should B2B marketers continue to advertise during this time? The B2B Institute has stated that a 50/50 budget split of brand-building vs. short-term sales activation is ideal. What should the split be now, or in three to six months?
It’s impossible to generalize in the short term. Some businesses face existential threats, while cloud and remote work businesses are booming. Once we emerge from this crisis, I am concerned that short-term thinking will lead to a prolonged reduction in brand investment, which was already way too low in B2B during good times. It is important to make that clear to the industry and other stakeholders adjacent to marketing, such as finance and the C-suite. They often see marketing as a cost center instead of a strategic growth driver. But that is usually a costly mistake, in bad times as in good. Again, all value is perceived value. If you want to create value and pricing power, then you need marketing to make sure your value is actually perceived by your audience.
And even if we like to see ourselves as 100 percent objective decision-makers in a business context, all value is to some extent subjective and open to interpretation, and that’s true in B2B too. Yet for some reason B2B marketers think that influencing people through broad, emotional narratives is not as important as in other areas of marketing. This doesn’t make sense. Business people are people too, and emotion is important in business. B2C is about avoiding regret. B2B is much more about avoiding downside risk — getting blamed for buying the wrong thing. This is a very crucial emotion that marketers must address, especially in risky times. If you have a hyper-rational view of the world, it is hard to understand how to respond effectively in a time like this.
5. Is there an outcome that can help the industry be stronger than it was before this?
We need to think of marketing beyond just one of the four “Ps.” Most marketing is focused on promotion; product, price, and place are handled elsewhere. Many marketing teams today act more like the MarComm trafficking department rather than as a growth partner. Our opportunity is to reset. It’s never been more important to flip the script. Marketing has a bigger strategic role to ensure value is actually perceived and pricing power created. This requires leadership, senior marketers who have gained the trust of the CFO and CEO, and a true understanding of business strategy, not just marketing tactics.