>> Hello, and welcome to the first ever episode of B2B Edge, new TV show that some critics are saying maybe the next Game of Thrones. A lot of critics have been saying that. I'm Peter of House Weinberg, this is my colleague John. >>John Lombardo from the B2B Institute, many critics are saying this is the top TV show of the upcoming slate, I'm playing John snow in this Game of Thrones reprisal. >>I think we will start with some boring logistical details, always a good idea. As we walk through the research some of you may have questions, those symptoms are perfectly normal, if you are joining through Slido you can submit your questions on the right side of the console come if you are truly and through LinkedIn live does tell us what you think, we will log on afterwards to answer any questions we missed. We will share the slides after the presentation and if you want to share any ideas we would love that, feel free to use the hashtag B2B principles, and if you like what you learn today you can download the white paper on her Institute, B2B Institute.org, we would be honored if you consider signing up for our newsletter, and if you can't get enough of this sweet content please feel free to connect with me and John on LinkedIn, we would love to hear from you. Okay, now we can get into it. Let's get into the research. Today what we really want to do is growth, and B2B marketing strategies that next mise growth. We are going to start off on a negative note which is always a good idea. I would say the marketing function is in trouble. The scope of the role has contracted from 4 Ps to one P, and in many B2B organizations marketing is seen as a mere sales support function, so I think you could say that whatever we've been doing for the past decade it hasn't really been working, and maybe now would be a good time to try something new. Maybe it's time to reevaluate the fundamental principles of marketing. John and I honestly believe that marketing is the single most important job in the business, and with the right principles in place may be marketers can become the growth engines of all companies. But where would we start? What might these new principles look like? Well, to answer that question we commissioned some new research from ?, Peter Fields, and the IPA. Some of you might be familiar with these names, the IPA is a trade organization in the UK and it sits on top of this massive database, it's 40 years of econometric data on hundreds of brands. ? And Peter field have spent over a decade analyzing this data to determine what marketing strategies correlate with the most growth, and when I say growth keep in mind I'm not talking about click through rates or engagement rates, I'm talking about market share revenue, and profitability, what Burnett and field call very large business effects. Honestly this is some of the only research in our industry that links marketing inputs with business outputs, which is one reason why Burnett and Fields's research is having a pretty massive impact all over the world. Historically Burnett and Fields research hasn't distinguished between B2B and B2C marketing, they had never done it B2B cut of the data until now, I'm overjoyed to announce to you that we here at the B2B Institute have commissioned the first ever cut of the B2B data from Burnett and field, this is really a seminal moment in human history so I'm so glad you could join us. But the IPA data isn't the only data we are going to reference today, we are also going to leverage another type of data, a very underrated type of data called common sense which is often in short supply these days. You're going to see about a billion charts and graphs today but I want to encourage you to be skeptical, don't just trust the data, think about the ideas, reason through the principle, and I think what you'll find is that all these recommendations make a lot of sense even without the data. So now let's discuss the principles of growth in B2B. What we want to prove today is that the key to growth is balance, the problem with modern marketing is that it's unbalanced. We are overly invested in a narrow set of strategies, the strategies you see here in red. We need to consider the other side of the equation, the strategies in green. We need to achieve a better balance between long and short, reason and emotion, brought a narrow targeting. And now I will turn it over to my esteemed colleague John who's going to walk us through the first principle. John? >>Wow. It was both optimistic and pessimistic, your intro. >>That's what we are going for, balance. >>Is like my favorite song, here comes trouble. For marketers though. But the good thing is we have some work here to help people get out of trouble. Remember we are talking about balance here, talking about short-term growth and long-term growth and that's with the first prince book covers. Now in our opinion this may be Burnett and Fields biggest idea the idea that there are two marketing that require different approaches to creative and distribution and measurement. One of the central mental models that Burnett and field offers explains that there are two types of marketing, there's what is called sales activation and what's called brand building. Now the first type of marketing is called sales activation, you can see lost audio on your screen here. Sales activation specializes in short-term growth, quick sales and leads, stuff you get right away. However it's important to note that those results often decay just as quickly as they arrived, so in the end activation campaigns really don't produce long-term results, they really produce short-term results.. Course in B2B we call this lead generated or demand generation but that's probably not an accurate description of how this process actually works. I think one of the important things to understand is that sales activation doesn't create demand, it captures demand but doesn't create demand. Now the second type of market is what we are calling brand building, you can see here on the screen brand building, now brand building is different, specializes in delivering long-term growth. However unlike sales activation brand building not only delivers long-term growth but also short-term growth. This represents an interesting lost audio. Brand building delivers both short-term growth and long-term growth low primarily long-term growth were sales activation principally delivers short-term growth. I would like to say if you were going to do just one I think he would do brand building because it gives you the short and long whereas sales activation really just give you the short. The fundamental value of brand building really is that it reaches future buyers creating future demand and ensuring a durable stream of future sales and profits because we must remember most sales will occur well into the future, that's why over time brand building really is the only type of marketing that reaches into the future, brand marketing becomes the biggest driver of business growth. Now fortunately you don't have to choose between brand building and sales activation, mother always told me as a child you can't have your cake and eat it too, turns out marketing that's not true, turns out you can have your sales activation and eat your brand building too. >>That's so catchy. People are going to start saying that. Like my mom is watching this so this is great. Mom, great job. And in general what you need to know is that you can do both, in fact they point to the 60/40 rule, but sensible and profitable marketing is really about balancing short and long-term growth, we can all agree balance is good. Lost audio maximizes short-term growth and brand building is long-term growth. These have to be measured and managed differently, we get in the different ways later in the webinar but keep in mind the mental model of sales activation brand building. Let's get to the second mental model from Burnett and field which is called the 60/40 rule, in fact if you look at the early Burnett and fieldwork it's a lot like Picasso's early work, they coined this idea of the 60/40 rule, it states that in B2C marketing the company's literal facets in the short-term and long-term spend 60 percent of their budget on brand building and 40 percent on sales activation. As Peter mentioned we did a cut of this data for B2B, this is the first time anyone has cut the data for B2B, we discovered the balance is different, I would call it the 50/50 rule. Why the difference? Generally sales activation is harder in B2B than B2C, and we see that through the length of the B2B sales cycle. There are many stakeholders and there may be functional product benefits that need to be communicated to you and your team and your bosses. To give a simple example of the difference between B2B and2C Coca-Cola doesn't need to spend time to explaining the functional benefits of soda, non-Microsoft need to put in a lot more work to close big deal. This isn't to say that activation is more valuable, it's just to say that it requires more resources. There may be some small businesses and entrepreneurs on the phone they will be delighted that we didn't just look at the blend, 5050 or 6040 we looked at it by maturity of business and what the data shows is that early growth companies often should spend more money on short-term sales activation, and they should do so for two reasons, number one, small businesses have to make money and keep the lights on, make payroll, make products. That's one of the reasons, keep the lights on. Numr two it turns out there's a novelty effect at play often for new categories and products where buyers will try the new product, sometimes early products benefit from the halo of being a new brand with novelty. But as the novelty fades companies must think longer term and must invest in brand building which critically reaches future buyers not just current buyers. And they must use that brand building to charge higher prices which is another idea we talk a little bit about in the future. Ultimately this is another way to think about how to grow by size of business. A lot of mental models so far, we've got another mental model for you which is the funnel, the funnel is maybe the most well-known construct in marketing, certainly in B2B marketing, it generally talks about top of final and bottom final, as you can see we flipped the final, we think it's healthy to flip the final and think more about growth over time, what we talk about here is short-term growth and long-term growth. The mental model be like isn't top of funnel and bottom of funnel, which some people ridiculously called tofu and both who come I don't like that, I'm more of an in market and out of market market myself. Why do we like this construct of in market market? We like it because we believe it's more customer centric and into specific ways, your customers don't think of themselves as being in the brand building phase are the sales activation phase, that's what you think of as a marker to stop the customer things, customer is either I'm in market to buy something or I'm not gonna buy anything, so that's number one. Be more customer centric in your framing in market out market. The second reason it's important as well is marketers have two customers, not just the customer justice? The seconds customer. I Carl that person finance, CFO, person who runs marketing. We believe in market out market maps more closely to how CFOs think as well, because CFOs think of current and future cash flows. All stocks and bonds are priced by Wall Street and the markets, and what they do is look at your cash flows over time and discount them back to the present and then they say okay they have this many cash flows in the future so I will give them the price of $140 on the market, in fact most of the money that underpins the current stock price, something like 80 percent of the cash flow that underpins your current stock price are generated 10 plus years into the future. The only kind of marketing that reaches people well into the future, priming them well before the need to buy your brand it, is out market. It is brand building, that's the kind of marketing we think maps not just the way the customer thinks but also the way the CFOs think. And if you think about most people that buy your product over time exist well into the future, the people that will buy that quarter or small percentage of all the people that will buy into the future. Let's give you a crisp example, let's say you are buying a cloud computing solution, there will be few people who will buy just this quarter, but if you think about the rest of the year, and then year to year three year four year five there's more buyers in the future, so as I said it follows that you will want to run brand building which reaches a broad audience and gives you the profits you want durably over time. You've got to recall of course that these are two different types of buyers come in market is very different from out market, they need a very different approach when it comes to creative distribution and measurement. That's what we get to hear, now if you're thinking about creative if somebody is in market give them rational messaging, 15 minutes to save 15 percent. Give them that rational message. However if someone is not in market and won't be in market for years they're not going to pay attention to a rational message. They don't care about saving 15 percent because they are going to buy anything, what they want instead is a creative, entertaining, emotional story, something like you see from Geico and all of its gecko advertising. Now when thinking about targeting if someone is in marketing sure have tight targeting to people, give them a rational message, however somebody's out market you don't want narrow targeting. It's just not going to work unfortunately, the reality is that future buyers could be in a different job or industry or seniority so if you tightly target you will exclude them, you won't reach them. So you won't -- you want actually broader targeting when trying to reach futures target with brand building. And finally want to think about sales metrics, sales mentors are important, ideas like cost per lead, it's coming down to a specific number come this is when you're thinking about measurements, the specific number you care about that's short-term the cost per lead lifetime value. I when you are thinking about brand building it's more about memory metrics, well into the future. So you don't want to use short-term metrics to judge the financial effectiveness of long-term brand building. That's a mismatch in time horizon. Mitch match customer experience. So when you're running brand campaigns to reach out market buyers you want to use memory metrics such as brand salience which I love it's got a very mathematical take which is the likelihood of a brand being thought of or noticed in a buying situation, it's just kind of the probability to that I think we should be using. I encourage you to read more about brand salience, it's an idea we don't cover a great depth here but the fascinating and wonderful way to make your marketing more customer centric and critically more financially effective. So that is balancing long and short-term growth. Peter, what do you say about this? >>That was so powerful, John. When you flipped the funnel like that I couldn't believe it, the finance people, the CFOs watching, they were gasping, I could hear them from here in the studio. It was incredible. >>I challenge you to flip the funnel yourself. >>Okay, I can. Spoiler alert, I'm about to flip the funnel again. In our second principle, same burst awareness which explores the balance between different brand marketing goals. What is the purpose of a brand? That's a big question in marketing today, everybody is talking about it on the conference circuit, let us give you our favorite answer, it's a simple, cynical take, the purpose of a brand is to help customers make fast and easy decisions. That's it. Brands are just mental shortcuts, whatever brand comes to mind quickly in a buying situation is the brand we choose. The technical term for this is mental availability defined in this lovely quotation from a professor, one of the greatest marketing minds of our time, highly recommended checking out some of her books, most brand marketers are very focused on increasing awareness, that's the goal for most brand campaigns. But increasing mental availability is arguably a much better goal, what you really want is to be easily thought of in buying situations, you want high share of mind to own as many relevant neurons in the buyer's mind as you possibly can. So I think honestly marketers need to remember that the top of the funnel is not monolithic, there are many different shades of mental availability and some are much more profitable than others. Awareness is actually the least valuable form of mental availability, if your brand has high awareness that just means buyers know it exists. You may have heard of Taco Bell, you may know it exists, but that doesn't mean you think about Taco Bell when you're hungry, which is much more important than she her %name recognition. Salience whih John talked a little bit about, salience is like a little up from awareness, your brand has high salience, that means it gets thought of easily in an actual buying situation. When you're hungry, how easily does McDonald's come to mind? And what you really want is a marketer, you want the brand to be thought of in as many different buying situations as possible, that's why if you look at McDonald's advertising you will see it's marketing itself is the right place to eat whether we're talking about kids, grown-ups, burgers, chicken, breakfast, lunch, dinner, McDonald's is aiming for broad neurological coverage in all kinds of buying situations. At the very top of the funnel there's something called fame. Fame. Famous brands have extremely high share of mind, they come to mind effortlessly. Apple probably the most famous brand in the world, think for a second about how much space Apple occupies in your mind, how many neurons they own. You know the name of all Apple products, you know the name of the current CEO, the past CEO, the location of the headquarters, the Apple brand is almost guaranteed to be thought of when you're buying a phone. Mental availability probably sounds like a very B to C idea especially since we been talking about McDonald's and Apple, but what the burnet and fields research shows is that mental availability is just as important in be to be as it is in be to see, whether we're talking about sugary beverages, burgers, commercial insurance, cyber security consultants, the brand that comes to mind easily is the brand that gets popped. Bought, sorry. Here we've listed some of the different campaign goals in the IPA databank, and what you'll see is that advertising designed to make a B to be brand more famous is the type of marketing that drives the most business growth, awareness also drives growth of course and it's definitely better than no awareness, but awareness is not a substitute for fame. Meanwhile interesting to note here, a lot of our clients are very focused on changing brand perceptions, but what you see here is that's about half as effective as a straight up awareness goal so in general I think B2B marketers need to worry a lot less about what buyers think about their brand and worry a lot more about when buyers think about their brand, honestly your primary goal, your primary goal is just to get your brand into his many consideration sets as you possibly can, which is different from trying to influence which brand gets chosen, it's just about getting considered, and famous brands are always considered. On this idea of fame which may sound a little abstract, it actually has really big implications especially when we're talking about creative. If the goal of your ad is just to get people thinking about your brand, then the creative canvas becomes much bigger and more interesting. Famous advertising doesn't need to make sense, it just needs to be memorable. Consider Geico, a car insurance company in the US. Now, does it make any sense for an American insurance company to have a talking Australian gecko is a mascot? Of course not, it doesn't make any sense at all. But after decades of consistent creative, does the gecko start to stick in your mind, reminding you that there is a brand called Geico that sells car insurance? Yes, that's exactly what it does, and once you're in market for car insurance are you going to think about Geico almost automatically? Yes, you are. The key to memorability is this idea of distinctiveness and consistency. First your advertising has to be distinctive, in other words it just needs to be a little weird like the gecko, think about people, you tend to remember weird people like my colleague John, right? Look how weird he is, right? You're going to remember that over a bland and boring person, and really the same holds true for brands, so you need to be distinctive, you need to be weird. Your advertising also has to be consistent. What else do you remember? You remember things you seen a billion times before like the gecko and that means you can't be changing your creative every quarter. Most B2B branding is boring and genetic, sorry, generic, not genetic, it's boring and generic, and honestly it's a bit of a national disgrace, it might even be an international disgrace, I really don't care how uninteresting your category is, if your ad is forgettable at the end of the day you're not doing your job. B2B marketers need to start aiming for fame. Here is a best in class example from HPE. In this LinkedIn ad, HPE introduces a big red IT monster that gets tamed by HPE's technology. Is a pretty bizarre video, which makes the ad hard to forget, and the IT monster is a reusable concept, they can reuse that for decades. Also crucially the ad creates a memorable link between HPE and the buying situation. This is what good B2B branding looks like. It's time long-overdue, but it is time for B2B marketers to start betting big on bold, creative concepts like the IT monster. If you want growth, aim for fame. John, are you going to start aiming for fame? >>Yes, the crew here told me that they can hear the people on the screen and they are all saying aim for fame, aim for fame. You've created an international space. >>All we need is one little webinar and we are transforming global culture. >>One thing worth I guess my mind is slightly blown by is this idea that advertising doesn't have to make sense. That in fact by not making sense you are more memorable and you make more sense. >>A liberating idea, a lot more fun. And more profitable. >>I totally agree, didn't see it coming. The gecko, Geico, flow, progressive, and our good old IT monster. All right, now that we are aiming for fame, let's move on to our next principle, which addresses something related here, which is the idea of reason and emotion, these are things that need to be balanced as well. Now we've got this wonderful, funny cartoon here, which plays on this idea of our people totally rational, purely rational, and B2B or just in business in general? We have this misconception everyone is so rational in business but let's put that to the test, let's ask all of you at home or at work where you may be to think about your everyday experience at work, think about the decisions you see people make in your office, to those decisions all seem perfectly rational to you? Or are there many decisions that might be not explained by ration but instead by emotion and feeling in that instinct? I think you'll agree that rational and emotional decision-making are both at play when at work. And as we discussed, B2B buyers are actually rational and emotional, you see that in a lot of the advertising, so if people are rational and emotional at the same time, as our current experience often explains at the office, you want to have both emotional and rational messaging in your marketing. You need to speak to the head and the heart. Interestingly and B2B the famous phrase in her history of B2B marketing is almost certainly this idea that nobody ever got fired for buying IBM, which I think we can all agree it is at least a much emotional as it is rational, it's probably even more emotional than rational. Really this just gets to the idea that there's a lot of fear and doubt that B2B buyers experience when making a purchase. So this wasn't a campaign that IBM ran, but people understood this idea of fair and so IBM was wisely pairing the sphere idea with rational ads, like the print ad you see at the right which communicated the features and benefits of the IBM personal computers. This sort of rational advertising gives buyers what they need to convince themselves and again people that are on the buying committee with them, all the information they need to say IBM is the right choice, is the safe choice for me, it's good for us. Here's another example, it's a 14-year-old, 14 year running campaign from the economist that blends emotional and rational messaging often in the same ad itself. To add on the left is communicating a very clear emotional benefit which is you will achieve higher status, whereas the ad on the right has more of the rational benefit, by it because it's good value. Is worth noting that you don't have to do one or the other, some of the best ads in fact blend both emotional and rational messaging in the same ad, the I never read the economist adhere on the left explains both those things, like don't, you know, there's a fee if you won't read it, you won't get the right job it's also rational, you do read it and you get the right job, it's blending the two together. You may be sitting at home or at work asking yourself how do I blend the two, how do I balance the two? We should start with the question we introduced a while back, this idea of in market and out market. If a customer is in market for a particular product or service and they are actively considering different brands than a rational advertising is going to be more effective in winning the sale, the Bennett and field research indicates that pretty clearly. If you are about to buy car insurance you don't want to hear from a talking gecko, you already know you are buying something, you just want to understand the prices and packages and you want to choose the right one, so rational messaging makes sense. On the other hand if the buyer is not in market than rational advertising isn't going to be very effective. You're not going to pay attention to the nuances of different car insurance packages if you don't even have a car yet. Impossible. Emotional messages on the other hand will be the thing you want here because they have the advantage of being relevant and entertaining to buyers even were not in market, were out market. Those emotional messages are often delivered in creative stories like the Geico and Deco or floor -- flow in progressive or we are farmers, but in general the story stick in your mind for years. If you think about the ads I just mentioned or the tune I sang, you will remember these ads often last forever. So when you are finally ready to buy, these ads often come to the forefront, making you think of the brand and getting you to buy the brand, that's how emotional brand building campaigns work talent to reach buyers well in advance of a purchase, before they have a car, priming them to buy it when they have a car and need to buy insurance. And most purchases and B2B are made infrequently, most concertgoers are not in market today, they're out market, that's one clear reason why emotional brand building delivers more growth over the long term than lead generation does with its short-term rational messaging, and that you can see her from the Bennett and field data. Ultimately in the end there are many emotions at play and you should really focus on the emotions lost audio feed >> >> Common emotional themes that we know exist in B2B advertising, you see all them on the screen now, this is a course by no means an exhaustive list, but as in life and as at work you must choose the emotions that work for you. Peter. >>That was such an emotional performance John, I'm a little choked up. You kind of remind me of Meryl Streep in a lot of ways. >>Which role? >>Probably the Dear Hunter, very evocative of that. >>That was a positive movie just like the positive message we are delivering here. >>It's like a natural thing to bring up. Let's move on quickly. We talked a lot about creative, now it's time to start talking about distribution and how best to target your ads. Which is what we are going to discuss in our next principle which addresses the balance between customers and noncustomers, perhaps our most controversial principles or just brace yourself, I warned you. At stake here is a fun the middle question which is how do businesses grow? Do businesses grow by acquiring new customers, or by getting existing customers to spend more money? Should B2B marketers focus on acquisition or on loyalty and retention? According to recent surveys of ours, 65 percent of B2B marketers believe that focusing on loyalty is the path to growth. But is that true? The short answer is no, it's not true. And I'm sorry. Bummer, don't kill the messenger. But unfortunately it's not true, it turns out businesses grow by selling to more customers, not by selling more to old customers. What you see here on the screen is three different approaches to growth and targeting in B2B. You can either target your existing customers, you can target new customers, or you can target both new and existing customers with awaiting toward new customers, the data is very clear, hyper targeting existing customers to increase loyalty is not what drives business growth. Acquisition strategies are much more effective, and the most effective strategy is actually just to reach both new and existing customers with a weighting torch new customers. With the rise of account based marketing, maybe the hottest trend in B2B today, a lot of B2B marketers we meet have decided they will focus their efforts on a small list of high spending accounts. >>Boo. >>What this data suggests is that B2B marketers should focus instead on breaking into new budgets and reaching as many potential accounts as possible. >>Yay. >>That's helpful, everyone is following along much better now. Because this is controversial we will point out we are not the only one saying this, Bennett and Field are not the only one saying this, these research just confirms the findings of an Institute in Australia by analyzing decades of sales data across hundreds of categories, researchers at Ehrenberg Bass have proven definitively that increasing penetration, the percentage of customers who buy your brand, is what ultimately drives business growth. Brand loyalty is less important, and in fact this is a bit counterintuitive, it's actually often a function of acquisition. Loyalty is a function of acquisition. The law of double jeopardy is what this principle is called, it shows that the brands with the highest penetration also have the highest loyalty. Small brands get doubly penalized, they have less customers and less loyalty. This is true in almost every B2C category and as you can see it's true in B2B categories too, let concrete suppliers and coronary stents, so if you really want higher loyalty you should focus your efforts on acquiring more customers. Why isn't loyalty more effective at driving growth? Let's just think this through in common sense terms and I would say there's three main reasons why. First of all, most customers are already spending what they can and buying what they need, and even if you can nudge those customers to buy more, the potential upside is usually much smaller than the upside of bringing on a new customer. Second, think for a second about the reasons why customers become disloyal. If you look into it what you will find is a lot of the drivers of churn have nothing to do with marketing or product and sales for that matter, churn is a natural process, customers retire, customers move, budgets get cut, priorities change, it just happens, guys, and it's often outside of your â– control.d you don't get any value out of the service, no amount of advertising is going to convince you to spend more with Netflix. The same holds true in B2B, right? The quality of the product and the quality of the sales support is going to have a very big influence, probably the biggest influence, and whether an existing customer spends more spend less. And in most B2B companies, the marketing department is not in control of product or sales. That's why beauty marketers would be better off focusing on what they can control, which is the noncustomer experience. Marketing drives the most growth when it's used for customer acquisition. Loyalty and retention are less important and better handled by the product and sales organization. And that's our most edgy principal, maybe. Are you feeling shaken up by that? I know it's a lot. >>It's hard for me personally and I'm sure hard for everyone at home to understand that penetration drives loyalty, loyalty doesn't drive penetration. >>It's different from what our mothers always told us growing up, my dad always said the opposite. Like my mom was like if you want to retain customers and grow accounts you have to focus on loyalty campaigns. >>She was long, Mrs. Lombardo was wrong. It's hard to believe. She was right about everything else. >>Even my mom is not perfect, it's a touching moment but a difficult one. We shall move on, we didn't even get into your funnel. >>I forgot in the fame one. >>You met the challenge but didn't take credit for it, very rare, Peter. >>But a lot of people are going to watch this episode 100 times on repeat and they will see it. >>A lot of loyalty. >>Let's move on to our next principal, which may be the most important one. It concerns the balance between broad targeting and narrow targeting. B2B marketers love to target narrowly, it's all about using data to hyper target specific narratives and layer on layer of targeting but we must ask is this the best approach to growth? Before we get too deep into the Beta be targeting strategies let's talk about an obvious point, a natural point, let's start with an obvious ? which is big brands like McDonald's are big brands because they reach and sell to a lot of customers. Brands like McDonald's and Microsoft literally serve billions of customers every day. You are now eating your burgers in the cloud, people. Conversely small brands don't have a lot of customers, that's precisely what makes them small brands. And as we seen in the previous principle small and big brand grow based on the size of their customer spaces, not based on loyalty. Here is an example you can see, these are the sort of buying committees that seem to be growing more and more every year. Let's say you are in the ad business, if you want to drive sales today you may need to narrowly target the marketing director or the CFO or IT manager, the folks you see on the screen here. However if you want to drive sales in four years you need to target the audiences who are going to be doing those jobs in the future, and of course those folks are very different. You need to target the agency director today, the finance manager today, the junior professional today, the person who isn't the decision-maker today but will be in four years. Don't take it from me alone, let's also trot out some of our wonderful LinkedIn data, the data shows that every four years, 40 percent of LinkedIn users change their occupation, company, or industry, so it's a lot of change that frankly can't be precisely targeted and controlled. Because there's so much turnover you do broad targeting that which is the folks were going to buy today but also the ones who will buy them tomorrow, as Peter said you want to reach the entire category, target the entire category, not just current buyers. But as a reminder you shouldn't go too broad, most people are not going to buy from you so you don't want to target everybody in B2B, you need the right balance, so the right balance is going to be a little different, it's going to look a little more like this, you've got to remember that the vast majority of professionals are not marketing directors, they will never become marketing directors, so it would be inefficient to target too broadly. You want to reach everyone in the category so we will give you another Beta see example. In B2C you want to target everybody, Joe goes if you are selling toothpaste you want to target everyone with teeth. Except for little kids or old people who sadly don't have teeth sometimes. So in Beta see you want to reach everybody, you probably will reach everybody so you might use TV advertising. But in B2B the economics of media look different, not everyone can buy cloud computing solutions, so you have to reach as many current or future cloud buyers as you can without being too extravagant, so you want channels that offer you proper segmentation and reach against her category. Reach is important, you can't influence the buyer if you don't reach the buyer. There's too much conversation about engagement and not enough about reach, but it's got to be the right reach. The sequence does matter and reach is always the first step in the sequence of reaching people and influencing them. This may sound painfully obvious to you and yet most of our clients seem determined to hyper target and reach as few buyers as possible. Boo. There are far too many conversations about micro-targeting tiny segments with laser precision. Unfortunately this isn't science. We wish that it were though. That theory doesn't hold up, so our research as well as other research from the Ehrenberg Bass Institute shows the category of reach is the single greatest productive growth, that means you want to reach everyone in marketing young and old, or everyone in IT young and old, yet most marketers have no idea what percentage of the overall category they are reaching today, obviously you need to start tracking that. Nor do most marketers have any sense for the share of voice they get against the category, and critically how their share of voice compares to their competitors. As a general rule, a good way to start thinking about this is what's called the share of voice rule and it simply means your share of voice need to be bigger than your market share, let me give you an example. Let's say you have a seven percent market share of cloud computing, your share of voice needs to be higher than seven percent in order to grow. Your share of voice could be 12 percent, 15, 20 percent, but the critical idea is you got to be reaching more customers than you currently have in order to grow. Peter and I have said that countless times today but the truth. The key to that trick here becomes what is called excess share of voice or ESOV, which is the difference between your share of voice and your share of market, we believe that ESOV is one of the most underrated metrics in all of marketing today. Excess share of voice is important because as I would like to say you have to win the mind to when the market. Let's go through this in a bit more detail. Because this is an important concept and we need to put a bit of numbers into making you make sense of it. So the Bennett and Field research shows that for every 10 points of excess share of voice to get about one percent increase per annum in your growth in market share. Market share to be totally clear means how many customers or sales you get is a percentage of the entire market, so market share means more customers. And ESOV is just as important Beta be as it is in B2C as you can see from the research. Targeting everyone in the category gives you growth. How broad is too broad when it comes to targeting? B2C Marketing obviously you want broad targeting but you don't necessarily need that here, let's look at the next idea just to put it in simple terms because the math sometimes can become locating to people. Excess share of voice, you have seven percent, you want to get to 17 percent, seven percent market share give you 10 percent ESOV if you growth, this is a number everyone needs start tracking. That is it for my final bit about broad and narrow, sometimes I went broad, sometimes I went narrow. >>A little of both which is honestly the right approach, and now everyone is talking about excess share of voice, people told me Google search results on ESOV our up, everyone is trying to calculate it. >>Aim for fame, broader reach, share voice. >>This is a good time to wrap up, we will get to Q and A but I want to recap what we have learned about driving growth. First I want to issue a public service announcement, John and I have always been saying this for about three years but we will say it again, you have to remember that growth does not occur in a vacuum. You are competing against other companies, and if you want to capture the most value then you need ideas that are both right and contrarian. If you are doing what all of your competitors are doing then you have no competitive advantage, by definition. Even if the right idea. Contrarian ideas are the most profitable ideas, an idea that's very well understood in finance, we often forget about it in marketing. Hopefully over the past 40 minutes or so John and I have proven to you that these ideas are right but now let me take a second to prove to you that these ideas are not just right, but contrarian, based on the results of a recent survey we did of over 4000 B2B marketers. Principal one, balancing long and short-term growth, according to Bennett and Field brand building is the greatest driver of growth in B2B but crucial you need to wait longer than six months to see the effects of brand campaigns. How many marketers do you think are willing to wait six months? John, would you like to guess? >>Four percent. >> Wow, that is incredible, you nailed it. Only four percent of B2B marketers measure impact beyond six months which is one of many tragic reasons why B2B marketers are chronically under investing in brand. Our second principle, aiming for fame, you've heard the aim for fame chance that's going on now, the crucial need to bet big on bold, memorable, creative concepts. Unfortunately the vast majority of B2B marketers are much too risk-averse and timid to ever achieve fame. 77 percent of us would rather test and learn on a bunch of little small ideas than make a concentrated investment in a big idea, even though big ideas are much more likely to break through when you're in a hypercompetitive media environment. >>Can I say one thing? >>Of course, John. >>Don't just test and learn, test and learn and bet big. A new addendum to test and learn. >>Your tests need to be big at a certain level to even have a chance at breaking through, most things are so small they are guaranteed to fail. >>Test and learn and really bit big? >>We will workshop this, we don't need to do it live on air. Let's move on to our third principle where we discussed the balance between emotional and rational advertising and how effective B2B marketing need to be both emotional and rational, but this probably won't come as any surprise, B2B marketers are about twice as likely to produce rational ads than emotional ads. Our fourth principle explain why acquisition not loyalty is the biggest driver of growth in B2B, of all of our principles this is pretty clearly the most contrarian, over 65 percent of marketers believe the opposite, that loyalty is the path to growth. Finally, we covered the importance of category reach, potentially the single greatest predictor of success in B2B, but only half of marketers believe that reach is important, most of us prefer narrow targeting to broad targeting even though broad targeting is the path to future profits. >>Yay. >>Yay. All of this presents you with a massive opportunity. Again the most profitable ideas are not just right, they're contrarian, and we believe at least in our minds these principles fulfill both of those requirements, and I would say as an industry that was a good time to start exploring new models for growth and restoring balance to our marketing strategies, which is the ultimate formula for growth. I will also have a very quick and light sales pitch for you here which is that we do believe LinkedIn is a platform is actually designed for this new growth model, something we will be working on proving out in the next few years. If you as a client like these ideas on what to partner with us on executing against some of them, please reach out. >>LinkedIn is the IT monster for you.. >>We will be your IT monster. >>The IT monster for you. >>Now we have some time for Q and a. What do we have on the pond? >>What do we have on the pod? The first question from the audience is, what do you think about Byron Sharp? And his ideas? >>Great, great. I think the law of double jeopardy, super controversial obviously, but seems to be proven out in the data. I'm guessing the questions aren't working on the machine and you are trying to add live here? >>Maybe. >>I can tell, we've worked together for very long time. >>What do you think? >>I think he's great. We can recite some of the questions we get asked a lot, I will play the role of the audience, John. >>Please. >>Every time we present somebody says, but how can I not be short-term when Wall Street is so short-term, the finance department is short-term, we've got quarterly earnings? How can we break out of the short-term crap? What would you say to me, John? >>I would make to you the future cash flows case for marketing, we talked about earlier, we flipped the funnel from bottom to top, in market and out market, most of the money that supports the stock price of any company, 80 percent of that money comes from 10 years in the future, so if that's how Wall Street thinks about judging your company, which is mostly on your future profits, you should think about judging your marketing or aligning your marketing to the future profits as well and brand building is good for future profits, sales activation is good for current profits, you need both, but the balance always needs to be tilted long-term, tilted brand building, tilted out market, tilted future cash flows, and so invest in brand building because brand building provides future cash flows. Are we doing that today though Peter? >>I don't think so but as the CFO it really resonates with me. I'm just going to change up my whole strategy. What else do we get asked a lot about? Pricing I think is a poorly understood concept, we talk about that a little? >>We can. We don't have it in here, but what did Buffett say about pricing power? >>He's a huge fan of the show, he's probably watching right now. Warren Buffett crucially says that the number one thing to look for in the business is pricing power. A good business can raise their pricing without losing customers, bad businesses raise it $0.10 and lose everyone. I think a lot of our clients are really obsessed with this idea of volume, all they care about is driving more leads, how many leads did I get this quarter, they almost never stop to ask themselves what I would say is a fundamental question, which is not just how many leads did I drive but how much were those brands willing to pay for our products and services? When I think a lot of the research shows, Mark Whitson makes this place in his mini MBA program, increasing pricing power is often a much easier way to boost the profitability of a firm then increasing volume, increasing volume is tough but price you just have to change a number, you can grow the profits 10 percent according to some exercises. I think marketers need to think a lot more about pricing power and the types of marketing that deliver pricing power, would you say that's like brand building or is that more sales activation? >>More of a brand building idea. >>Interesting, why do you say that? >>Some people would say the purpose of a brand is really just to charge higher prices, that's an alternate definition to the one we have but it's another very reasonable one. What you want to reach people well in advance of the buying process, and you want them to think certain things about your, know your Brandon think certain things about your brand, often those people to buy out of convenience not based on the cheapest price so if people are buying more out of convenience or ease that they are probably willing to pay the prices you charge, they probably aren't looking to compare to something else come I think we forget how many decisions are actually probably a little more ad hoc than we realize, and in that case brand building reaches the people, you think it's a strong brand, you pay the price they ask for. >>It's why marketers don't usually run sales activation ads, Cartier runs P were brand building, that allows you to boost your pricing power. >>I love luxury marketing. >>Many B2B marketers inaudible >>Let's say I take everything in this presentation and I say brand is really important, I get that now, it reaches future buyers, it gives me the ability to charge higher prices, generates more short and long-term growth, I'm all in on brand marketing. Brand building. But my colleagues who are in lead generation are able to go to the CFO and give one number, cost per lead, what metrics do I bring into articulate the case for brand marketing? What are some things we talk a lot about and care about? >>I think first of all this research helps link the marketing and put, which is branding, to financial performance, so not to sound a little too delusional but I think our research will help brand marketers make that case internally. In terms of metrics you should track, we recently sat down with a professor who made some interesting points about the three key things you need to measure to know if your brand marketing is working, she talked about category reach which we talked about, are you reaching all potential buyers, she talked about measuring distinctiveness which is interesting, the Geico gecko is weird, you don't mix it up with the mascots from progressive or State Farm, you need to measure your distinctive brand assets and make sure they are only linked with your Brandon not a competitor brand and that everyone has heard of you. You need category reach, distinctiveness, and the final piece is the idea of memory structures and owning the right neurons, this one is complicated but she showed us a simple tracker I thought were you can just say what are what she calls category entry points, what are the cues that lead to you buying in the category? >>I have to cut you off, you're running out of time. >>It would've been a great point, you would've loved it. >>Category reach, share of voice come over important. As a final reminder if you liked what you learned today would love for you to download the report which is it B2B Institute.org, sign up for the newsletter which is called B2B edge, and with that I'm John Lombardo from the B2B Institute, Peter Weinberg from the B2B Institute, don't forget to take our survey as well. We have a survey. >>Thank you. >>Wrong camera, right survey. >> >> >> >>
