The Secrets of Effective Branding in B2B Advertising

My name is Kate Newsted. I'm the marketing science lead at the B2B Institute at LinkedIn. And usually that means I have the nerdiest job title in the world, at least in the room. It also means today that I'm the perfect person to start you off with a little physics lesson. Now, don't worry, you haven't rocked up to the wrong stage. This is all about marketing. But, but we're going to start with the other sciences, with physics, right? And we all know that there are laws in the world of physics. Newton, for example, found the laws in motion. An apple laid at rest stays at rest. For every action one way there's a reaction the other way. And even if, like me, you could never understand, write down or name that crazy, crazy equation on the screen. We know from our high school sciences subjects and teachers that laws exist in the world of physics. But what most of us don't know is that there are also a whole host of important laws in the world of marketing. The laws of marketing explain how brands grow and how they decline. And they have really important implications for, for a lot of the decisions we make as marketers or as brand owners. For example, how we invest in advertising, what happens when we change prices, what sort of loyalty and retention programs we run, and our customer recruitment strategies. The Ehrenberg Mass Institute is credited with making the laws of marketing famous. These researchers and marketing scientists have a hand in shaping the brand and marketing strategies of most of the biggest brands in the world. And most of those are B2C brands. However, B2B marketers generally are less aware and less au fait with these laws of marketing. And that's a real shame because even though they're Grounded in the B2C world, they have a huge application for B2B brands as well. What you're going to see today is really specific examples of how you can use them to make your B2B business grow. And that's where the B2B Institute comes in. We're really concerned with how we take these laws and make them practical and, you know, turn them into reality for the B2B world. We collaborate and partner with industry experts, with institutions, with universities, including the Ehrenberg Bass Institute, including Khan, including Ana ipa and a host of independent researchers, for example, Fran Cassidy Lesbinet and Peter Field. And through our network, we publish at scale real research into advertising and B2B marketing. And, and we also provide white glove customized services for our top spending clients in LinkedIn. And our objective, why our institute exists and what we are most concerned about day to day is how to help marketers build renowned brands, how to turn your brand into a famous brand, how to grow your brand and invest in your brand. Because we know time and time again from all the research we do and all the independent academic research, we see as well that it's the big brands, the famous brands. That's how you win, right? That's what creates scale. That's what creates revenue and profit, and it's also what creates amazing marketing careers. So today we're going to talk all about how B2B brands, small brands, tech brands grow. If you happen to work on any of those kinds of brands, or even if you work in brands that are totally different from all of the above, you're guaranteed to learn some tips that you that you can put into practice. My colleague Ty is going to take us through the learnings you need to know to make your brands grow. Let's give it up and welcome Ty to the stage.

Hello, everybody. How's Inbound for everyone? Enjoying it? Really good to see you all here. My name is Ty Heath. As Kate said, I'm director at LinkedIn's B2B Institute think tank. We're on a mission to build famous B2B brands. The cool thing about this session is that you all, or maybe some of you all voted for this topic to happen here today. So I'm really excited to share more about it. So welcome again to the Inbound original stage. And I'm proud to say that I've been coming to inbound since 2012. So I've been here, I've been here for a while, folks. All right, so let's kick into the conversation. So this is really about small brands, but as Kate said, you're going to get a lot out of it, even if that's not you. How many of you are small, have a small brand? Small, medium sized business? Okay, cool, cool. How many of you are friends of small businesses? Every hand. Come on, folks. All right, but everyone loves a good underdog story. So these are some of our favorite movies here on the screen. You've got the Karate Kid, you've got Bend It Like Beckham, a great one, Hidden Figures, Creed. What we love about these movies and these stories overall is that they celebrate the idea of hard work, tenacity and clever strategy over brute force. We love the ingenuity of the stories and the way that they problem solve to get to their goal. So these are the things that inspire us about a good underdog story. And guess what? In the business world, small brands are the ultimate underdogs, right? And guess what? In marketing, we have our own underdog stories. So these brands you see, whether it's Airbnb, Warby Parker, Mailchimp, the cool thing about these brands is that what they lacked in size, they made up for with their creativity and also with their thoughtful media strategy. So I'm not here to debate the profitability or even look at the business model. What I'm pointing to is that these brands started from being unknown to being household names. I think we can all agree on that, right? Okay, great. I'm seeing the head nods here on that. So we feel this slide because there's a universe of challenges for small brands and large brands alike, right? So whether it's cash flow challenges, limited resources, brand awareness, these are all challenges that we're connected to. But here's the distinction. If you're a small brand, you're starting on first base, and if you're a large brand, you're over there on third base. So that's the challenge. The laws and the things we have to think about remain the same. But the question is, how do you overcome that lopsided world, the lopsided advantage that big brands have over small brands? Well, first thing to think about is that you have to understand the rules of the game. Once you understand the rules of the game, you can then play that game better than anyone else. So that's what we're actually going to look into today. So I'll say that advertising is a competitive sport where small brands compete directly with big brands for attention and market share. But if we're going to say what the rule of the game is. Memory. Memory is the rule of the game. Marketers are the memory business, actually. And so what we all have to do, whether you're big or small, is reach in market customers during a fleeting window of in market opportunity. So why is memory the game? I'm going to explain using this next slide here. So we're at inbound. We're all familiar with the funnel. It's one of the most recognized mental models in all of marketing. You know, the funnel, I'm talking about awareness, consideration, purchase. We're all familiar with that funnel. The challenge with the traditional marketing funnel is it's not particularly customer or finance centric. It leads us to believe as marketers that it's our advertising that moves people through the funnel. But we have a different perspective at the B2B Institute, and that is that people are either in market, they're ready to buy something from you right now or they're out market, they're not ready to buy. And if they're out market, they're not thinking about your brand at all. So we actually need a different way to think about how this works, one that's more customer and finance centric. So what we say is we take the traditional funnel, turn it on its side, stretch it out over time, and now I give you folks, the cash flow funnel. So I call this a money slide. This is a money slide, folks. And there's a rule that we call the 95.5rule. And in B2B, what that rule says is that 95% of category buyers are out market at any given time. So if you think about what that means, there's a 5% in market buyers. Those buyers represent your current buyers. Those are your current cash flow. That 95% that of out market buyers represents your future cash flow. So in that way, this mental model is more customer and finance centric. It's a good conversation to have with your finance people. Because what's missing here is if we're only investing in that 5%, we, we're actually putting a cap on our growth. And right now in B2B, 80% of our budgets are flowing towards those in market customers. What we're missing is our future buyers and future cash flow. The in market buyers, that represents lead generation, the out market buyers, that future cash flow, that's memory generation. And memory generation is a matter of brand investment. And so that's the opportunity. That's why memory is the game. So let's actually take a look at this using a fishing metaphor. I don't know if anybody fishes here. Yay. We've got at least one or two fisher fisher people in the audience. But what we're looking at here is the CRM category. And the fish on this slide represent the opportunity. And in any given quarter for this category, if we're focusing on those 10 buyers, we're missing those other 90 fish, our future pipeline, in this case, I should say our future fish basket. Right? So we're missing out on that future even more. Those in market buyers, once they're in market, what they do is they search the search engine in their mind for the brands they already know. And what we know to be true is that eight of those 10 in market buyers, they're only considering three brands. So they're searching, searching, and they're really only remembering three brands. That leaves us, the rest of us, to compete with the 15, 70 other brands for those two remaining customers. Anyone in Vegas can tell you those are not great odds to have to deal with, right? So even more, once those three brands are locked in to someone's mind, so they're creating their short list, they're creating their day one list, it's really hard to move them away from those brands. So the 92% of people are already locked in. So that leaves us with that one remaining fish to catch. And trust me, that fish or person is being blasted with free trials, white papers, ads. So it becomes really risky and also competitive to earn that customer's business. So this is what we're facing, right? Every excluded brand, leaving that one opportunity to capture that last remaining opportunity. So there are three stats to remember in this conversation that we need to overcome to win here. And the point is, if you don't come to mind the moment a buyer enters the market, then it's already too late. So 86%, that's the number of buyers that already have that day one list of brands. 3.4 is the number of brands that are in that set within their mind that they're considering. And then even in high consideration categories like business banking, many of them are still choosing, 92% are still choosing the brand that they already have on the day one list. So that's what we have to remember. But here's the good news. It's never too early to start preparing for your future. We can make decisions today that our future self will be proud of us for making. And one of those is thinking about how we start to build our brand investment. So what you're looking at on this slide is the life cycle of a business over time, from exploring and building all the way to sustained growth. And so the challenge is if you're not investing in brand, you're not achieving the reach. You're not having an opportunity to be remembered. The other thing that starts to happen if we're using lead generation in a lopsided way is our customer acquisition costs can balloon. And there's an inflection point that you can see on this slide at the $500 million revenue mark. And that's where we need to start to absolutely bring in brand to start to bend that cost curve down in that case. And that's where the idea of the brand investment comes in, to start to pull more weight for your business. And that's really the opportunity in front of us to explore because investors want those profits, we want those profits, but we have to also then manage our costs. Brand is how you start to do that Serena Williams is speaking at Inbound today. We're all very excited about that. We are not going to be able to step out onto the court and play tennis as well as her. Right. So the point I'm trying to make is that brand building requires building a muscle to do it. We're not going to be able to forehand and backhand right off the bat. We have to start building early to have that muscle to do it. Okay, so now that we've covered the background on why memory is the game that we're playing, I want to talk about where we are right now. Let's talk about the state of B2B marketing and consider how we got to this point where we it is so lopsided in terms of the way we invest. And so it starts with something called product led growth. Has anyone ever heard of product led growth? I see a few hands here. Oh, more than a few hands. So it's very, it was very, very prevalent in B2B tech. And so I have to start with this slide, of course, too. It's one of those gloomy and doomy slides about the state of marketing today. It's almost like required. I'm sorry, folks, but what we have seen is that the average CMO tenure has been on decline for a while and then even the tenure across industry by years. You know, tech CMOs have been plagued the worst out of the rest of their counterparts in the industry as well. The point being here is by learning these rules, we as marketers can start to reclaim territory because we're clear on the value that we create for the business and how to get that job done. So that's the point of these slides and also frankly, the point of the other research that we do at the B2B Institute as well. Well, so at the same time as the marketing tenure has been on decline, the product interest in product led growth has soared. And what this has resulted in, whether it's a coincidence or not, is an imbalance in power between marketing and product. So there's some rebalancing work and a conversation that needs to happen here. But what is product led growth? So let's take a look at that. So on one side you have the traditional go to market strategy, on the other side you have product led growth. On the traditional go to market strategy side of things, marketing and sales lead the way. We sell the product, we're out there, we're doing it, and then it's the ads that prime the customers to make the decision on the product led growth. Side, the thinking is the product is so good that it sells itself right, and then it's the demand gen that comes in and captures that demand. So the distinction between these two things is the role of that product plays. I'm not saying that one of these strategies is inherently better. What I'm advocating for is a more balanced approach to taking this on. And so what I want to point out also is that PLG worked until it didn't. What you're looking at is the NASDAQ cloud index over time. And for years, product led growth was the golden ticket. It was the special sauce. You know, it was a, there was a wave happening, VC investment was happening, IPOs everywhere. It was a boom, really abundant funding. It was a really, really big time. So PLG seemed like the way to go. Then in 2022, a market correction happened and that forced us to confront some things. So tech valuations plummeted, VC investment dried up and it stopped being about growth at all costs and more about profits, a focus on profitability. So that's what we're contending with. And then the conversation around PLG started to change. The hype deflated. So you have experts like Oliver J, who really invested in this strategy at Dropbox and Asana starting to change his tune on product led growth, saying there was hype in the Harvard Business Review, you have Theory Ventures also saying that product led growth is 5 to 10% less profitable and so on and on. The conversation about product led growth and then the thing that we have to think about is did we mistake the economic boom for the value of product led growth? What this really becomes is a conversation about rebalancing and thinking about the role of brand and how brand building also supports how we drive long term growth for our businesses. Okay, so, so that now with all of that, we've talked about memory, we're in the memory business as marketers. We've set the stage with the context of how did we get here? How did we get to this product led growth thinking, now we're going to get into the game, the game for underdogs. We're actually going to talk about the laws that we need to understand to actually play to win. Those are the double jeopardy law, love duplication of purchase, and the law of buying frequencies. So we'll go through each one in turn and like I said, we have to learn the rules of the game and then play the game better than anyone else. So the first law we're going to get into is the double jeopardy law. And this examines the relationship between the size of a brand and people's loyalty to the brand. So first of all, just the product led growth mindset says growth comes from the product just being so amazing and so great that you're able to achieve outsize retention. They'll just stay with you because your product is amazing. But what this law actually says is that brands grow by acquiring new customers, not just by retaining your existing customers. Okay, so here's the deal. And I know this might be counterintuitive, but the more people recognize your brand, the more likely they are to stick with you. There is a correlation. There is a relationship between the size of your brand and how loyal your customers will be. So let's take a look at this because we want to listen to what Professor Jenny Romaniak is saying. And she's saying that means there is one primary way to grow your brand and that is through customer acquisition, expanding the size of your customer base. Here's how it looks. So loyalty is a function of penetration. What you're looking at on this slide is the CRM category. On the left you have the brands and on the right you have penetration and you have retention rate. So big brands like Adobe, Salesforce and Microsoft, who also have high penetration, have high retention. On the flip side, small brands like Monday.com, freshworks and Pegasystems who have lower penetration also have lower retention. So you can see the correlation between these things. Small brands face a double whammy. You have less customers and those customers are less loyal. That's where the name, the love double jeopardy comes into play. Big brands, by contrast, are benefiting from the high recognition that they already have. So that's what we're facing. That's what we have to overcome. Let me show you this from a different angle. Let's talk about cloud. It's the same setup. So brands on the left and you have penetration and retention on the right here. So the double jeopardy law is revealing. These big brands like Google, Amazon, Microsoft, it's not that they have a better product necessarily, it's that they have more customers that they're able to generate this higher retention rate. If you look at Cloudflare and DigitalOcean, in order for them to achieve the same retention rate as Microsoft, for example, they would need to triple their penetration. Is this making sense so far? You're seeing the correlation here on the slide. Excellent. So the thinking here is that penetration drives almost all important buyer behavior. Love this quote of the thousand and one.