Last Updated on March 3, 2021 by Filip Poutintsev
Brand marketing is one of the most popular types of marketing. Years after years, companies spend billions of dollars on it. But what if I told you it’s ineffective most of the time and you are just throwing your money away?
The idea of brand marketing doesn’t work
It hit me when I was watching a TV ad about potato chips. I like potato chips, so I instantly wanted to buy some. When I went to the supermarket in the evening, I still remembered that I wanted some chips, but I forgot what the brand name was, so I bought the Lay’s instead.
I’m still not exactly sure what was the brand in the ad, but it wasn’t Lay’s. So the company spent money on advertising, people saw the ad, went to buy chips, but many of them bought some other brand. What a loss! Now, I didn’t buy Lay’s because of the ads. I bought them because they have oven-baked chips with 50% less fat, and as a person who is concerned about his health, I always try to pick the most healthier food if possible. To be fair, I don’t think I have even ever seen ads of Lay’s oven-baked chips.
Since marketing is my passion after this incident, I started thinking: this must be happening all over the world all the time. Companies spend billions of dollars on brand ads, but in reality, they are not advertising only their brand, they are promoting the whole product category and thus all their competitors as well. Of course, if you have high market dominance, most consumers will buy your product anyway, but if you are a small brand, it’s highly possible that majority of the profit driven by your ad will go to the pockets of your competitors. Thus in this situation instead of wasting money on TV ads, it would be much wiser to do in-store promotion and pay for the best shelf space in the supermarket.
Brand marketing can work only for luxury brands and status items. For example, if you see a Mercedes-Benz ad, you will not go to buy yourself a Toyota. However, it’s possible that if you prefer another luxury brand already, the advertisement can again be pointless. For not status nor luxury products, brand marketing is pretty useless. It may help at an early stage to build brand awareness, but when your product is known worldwide, the impact is non-existing.
The only place there brand advertising can be done wisely is the Internet. If you see an ad for H&M, clicking on it will get you to H&M online shop to buy their products. But this only works online. H&M will lose it’s advertising money if they can get people out of their home to go to the shopping mall, only to stumble upon Zara and shop there.
Why is brand marketing so popular then?
Because many people who work in marketing, don’t know what they are doing and simply copy others. The other reason is that brand marketing is the type of marketing where results cannot be measured. Thus the management board will never get any data that will show how the budget spend on brand marketing was completely wasted. Most executives, especially in large corporations, are very conservative and old school. They think that brand marketing is the most effective form of advertising, and since there can’t be any concrete data to refute their views, they keep believing in that and any ideas to remake the marketing plan will be met with scepticism. Grass root level employees don’t care about how about the company; they only care about their own career, therefore starting pointless arguments about how marketing should be done, does not interest them. They are given a fixed budget, which they must spend on advertising. Spending it on brand marketing is actually the safest way of doing things, as the management board will never dislike it.
It turns out that brand marketing is the most approachable form of marketing: everyone likes it, clients do not complain about it, and it creates the illusion of achievement. The fact that it’s incredibly ineffective is the fact that no one wants to hear or cares about.
