The Return of Brand Marketing and a New Era of Advocacy
2020 has pulled the chair out from underneath seasoned marketers that entered the year with swelling budgets and confident growth strategies. Advertising budgets have deflated, retail activity has plummeted and the fight for brand loyalty has only become more competitive. The interesting element of these shifts is that the economics of a COVID-conscious world did not create them, it only accelerated them.
After speaking with over 200 brands, our Advocacy Lab team has gathered insights and distilled the major trends that marketers should be on the lookout for in the coming years, even after the economy bounces back.
Performance Marketing and Advertising Becomes Less Fruitful & More Challenging
Advertising and performance marketing has dominated the strategies of millennial marketers, and for good reason. Ad networks like Google and Facebook have created incredibly efficient and reliable machines—campaigns can be carefully segmented, monitored, optimised and measured, making them especially easy to justify in budgets. With enough ad spend and optimisation, campaigns become reliable revenue generators. Even with such a well-built operation, advertising spend has dropped dramatically through COVID, exposing some more fundamental flaws in the system that were previously masked by strong economic growth. So why is the efficacy of performance marketing on the decline?
For starters, market saturation has become an issue, even pre-COVID. Competition has been on the rise for impressions leading to rising costs and lower returns, and coupled with more competition is the issue of consumer behaviour. Modern customers are now more receptive to organic marketing channels like word-of-mouth, community initiatives and advocacy.
The nature of performance marketing ties its fate closely to consumer spending and economic activity. When consumers decide to stop spending, the impact of performance marketing and advertising drops dramatically when it comes to revenue generation. A constant flow of ad spend and consumption activity has to be present; when either one stops, so do the results.
Brands are beginning to understand that performance marketing, while still integral to a strategy, has a lot of market forces pushing against it. And with that consideration, they are beginning to reinvest into brand marketing.
The Resurgence of Brand Marketing
Data-driven performance marketing emerged thanks to a combination of developments including the internet, social media and analytics tools. While attribution and analytics can still be challenging in digital marketing, they were even more challenging and ambiguous in the pre-digital era. Now, the nature of marketing is going back to brand building efforts.
Brand marketing is a struggle to justify—it is difficult to measure and optimise, it requires long-term vision building and is very subjective when it comes to budget allocation and strategy execution. For many, brand marketing’s negatives outweighed the positives in the past. Now, long-term brand building is one of the only differentiators there is to help brands stay competitive.
This is largely in part because of how consumers and their behaviour have changed over time.
How Consumers Are Changing
Millennials and Gen Z represent the new locus of consumer wealth, and they make purchasing decisions much differently compared to older counterparts. The psychographics and behaviour of this upcoming generation is defined by a number of key principles:
Digital Natives – Modern consumers are attracted to DTC brands that operate digitally and create direct relationships to them via multiple 1st party channels.
Identity & Purpose – Consumers are now much more likely to choose brands that invoke their sense of identity, purpose and belonging. Unilever found that its purpose-driven brands grew 69% faster than all of its other brands, and the success of others like Patagonia, Tesla and Supreme are strong markers of success through the cultivation of culture and purpose.
Customer Experience is Paramount – 84% of consumers believe that the customer experience is as important as a brand’s product or service. Customers want brands that not only connect with their passion points, but deliver brilliant customer experiences on top of them. Trust and authenticity are also important—65% of customers have stopped buying from brands because of actions they deemed distrustful.
Less Focus on Ownership – Over 50% of customers in the world wish they could own less products. Customers are more than happy to embrace the flexibility of subscription and sharing economies. The subscription economy has grown 300% since 2012 and Gartner predicts that 75% of DTC brands will be selling subscription services by 2023. Customers want more flexibility, more cultural value and less ownership.
Decreasing Trust in Influencers – Consumers are losing their trust in prototypical social media influencers—the ones with large but impersonal followings built on a cult of personality. 96% of UK adults do not trust these influencers. In their stead, consumers are opting to trust brand advocates, micro-influencers and trusted personal connections.
More Choice, Less Loyalty – Loyalty must reward much more than purchasing now. Customers have more choice and convenience than ever before when it comes to switching brands, to the point that brands cannot compete solely on points like price and product. Brand passion is the key differentiator now.
Brands Are Taking Control of Distribution
Crafting the perfect culture and story is now a make or break task for brands that want to attract customers and grow, and in light of that, there are some major changes in how brands are approaching their distribution methods.
Marketing and Distribution Become Vertically Integrated – Creating strong customer relationships is made difficult by fragmented communication channels and a layer of non-brand parties (like marketing agencies or multi-brand retailers). Brands are responding accordingly by bringing their communications and distribution in-house. Vertically integrating distribution and marketing channels means a brand can fine-tune their messaging and relationship to drive organic growth and create brand advocates that pull in new customers through storytelling.
The Creation of Advocates – Brands are beginning to treat their customers like a channel in and of themselves. Cultivating advocates among customers creates more opportunity for word-of-mouth referrals and increases the velocity of organic growth. This is often done through advocacy and ambassador programs that reward customers for more than just repurchasing.
The Creation of Brand Networks
While brands are tightening their grasp on distribution and messaging, they are actually expanding their relationships with partners in different ways. They are beginning to further segment advocacy and community partners, seeing professionals, partnered vendors, collaborating brands, agencies and suppliers as a collection within a network that can assist each other’s brand building efforts.
These networks can be extremely powerful hubs of authority and organic growth, as customers appreciate brands that are tied to the ones they love. Supreme is a perfect example here. The massively popular luxury streetwear brand holds a tight grasp on their messaging, culture and distribution, but they create powerful growth by leveraging brand collaborations with big names like Gucci and Luis Vuitton.
Advocacy is Becoming More Formalised
As advocacy plays a larger role in brand building, marketers are beginning to formalize the process. Brands are now adding terms like “community” and “advocacy” into the names of their marketing departments and job titles. Budgets are formally pouring into advocacy initiatives and marketers of all types (including the data-driven performance marketers) are becoming brand-building hybrids.
Brands are reorganizing their marketing departments to reflect the new normal—we are beginning to see community teams that aren’t relabels of social media departments, and advocacy teams that sit between roles like marketing, customer service and product development. As advocacy scales it brings with it new management challenges, which has ushered in a new industry of brand advocacy companies that are helping brands drive programs and manage relationships.