Posts Tagged ‘2010’
Is it just me or is the tech industry finally getting back to investing in their brands?
For some tech companies this may be good news, but for others it may be too late.
Let’s face it, 2009 was pretty bleak as it relates to creative marketing. Sure there were a few brave brands that continued to push the limits and invest during this downturn but for most technology marketers 2009 seemed more like a duck and cover exercise. Most of us expected to see the typical surge from the consumer electronics industry during the holiday season, but did you anticipate big investments from some of the technology powerhouses in the fourth quarter?
Let’s start with Intel (one of my favorite B2B brands). They continued to invest in their brand as usual but took a slightly different approach by moving beyond only product advertising (applause here). They introduced their new “Rock Star” campaign—“Sponsors of Tomorrow”, featuring their people— the very thing that makes them different. This culturally driven brand expression is brilliantly displayed in a contemporary but authentic fashion. If you have not seen the spots, I strongly suggest checking them out to see how B2B branding should be done.
Next, there is Yahoo spending in excess of $100 million on re-energizing its brand with the “It’s You” campaign. Although the campaign is eloquently produced, it’s not for me. It seems like Yahoo has been on vacation during the last several years of innovation and lost its once celebrated cache. Nevertheless, they are back in the game and it will be interesting to see how consumers react, or don’t, to their welcome back positioning.
We’ve also seen Microsoft demonstrate its commitment to investing in its products by launching the Windows 7 operating system to the tune of $300 million. So what’s with the recent surge of investment by Tech firms?
That’s simple, it’s time to get back in the game—and the ones who lead the charge are the ones who reap the rewards. Let’s face it, whether you’re a large or small company, marketing is about timing and connecting. So, as you look at your own company, ask yourself a few questions. Are we poised to take advantage of the first mover position? Is our brand correctly positioned in light of the major changes in the marketplace and is our messaging strategy relevant to the current audience needs. Posing these questions to your leadership team should bring up some interesting points of view.
But that’s my point of view? What’s yours?
It surprises most agency professionals to learn that many marketers—both consumer and B2B—are intensely interested in exploring a value-based compensation arrangement in place of the traditional hourly rate.
A recent position paper from the Association of National Advertisers states clearly:
“Traditional metrics used in today’s cost-plus compensation agreements (usually based on time) have no relationship with the external value created for the client in today’s intellectual capital economy. Therefore, pricing should instead be based on results and value created.”
In forward-thinking companies across the country, marketing, finance, and even procurement officials are actively engaged in internal discussions around value-based compensation. If the marketing services profession isn’t more proactive in this area, clients may well be the driving force behind a change in compensation practices. And that’s ironic, because almost all pricing innovations come from sellers, not buyers.
Selling outcomes instead of hours
From a marketer’s perspective, the chief frustration with the traditional cost-based compensation system is that they’re not sure what they’re really buying. Are they buying the firm’s time? Dedicated staff? A set amount of work? In the end, they don’t really want to buy any of these things; they want to buy outcomes.
In a cost-based compensation arrangement, the client pays for efforts rather than results. Agency professionals log and charge hours regardless of the outcomes the hours produce. In a value-based arrangement, marketing firms and clients identify specific metrics of success and structure agency compensation around outputs instead of inputs.
Value-based compensation works primarily for one major reason: it aligns the interests of the agency and the client. Both parties are working to achieve the same things. They both have similar financial incentives. Structured properly, value-based compensation agreements can also give both parties similar risks and rewards.
Imagine how this could change the dynamics of an agency-client relationship. Suddenly, the concept of “partnership” takes on real meaning. Clients start to view “risky” agency recommendations differently, because they know the agency has skin in the game. A new level of trust and mutual respect emerges, because both parties have a stake in the outcome.
Value-based pricing is unquestionably where the marketing world is headed. The question is, who will get there first: agencies or their clients?
Originally posted on B2BBrandDebate
Geoffrey Moore, best-selling author of “Dealing with Darwin” and others, recently posted on his blog that, for B2B companies, the “impact of brand is dramatically muted,” and that “brand value…has virtually no relevance to B2B complex systems enterprises.” No doubt, Moore is a brilliant business strategist, but these statements give me doubts about his expertise when it comes to brand strategy. At the very least, I disagree with his assessment of the impact a strong brand can have in the B2B arena.
Moore touches on the idea that “nobody ever got fired for hiring…” but underestimates the power of creating a focused, differentiated brand identity. The idea that decision-makers in B2B companies somehow make decisions entirely differently when they’re choosing consumer products or business partners—even if they think they’re making the decisions based on different criteria—simply doesn’t hold up. It’s been proven wrong again and again in fields ranging from advertising to neuroscience. For example, we may think we want to do business with Siemens because of the details of their RFP response, but in fact their brand’s association with answering difficult questions may bias us in their favor, even without us knowing it.
Unfortunately, Moore’s narrow view of branding will give the wrong impression to B2B businesses, who in this economy can’t afford not to position their brands so that they create powerful connections with their customers and prospects. While achieving such a connection may not fit Interbrand’s definition of brand value, I challenge Mr. Moore to find a B2B business owner that would describe it as only “marginally” important.