Podcast Summary: Business Effects of Brand Marketing with John James
Let's Talk Branding hosted by Stef Hamerlinck delves deep into the intricacies of brand-building, featuring insightful conversations with experts in marketing, branding, and design. In the episode titled "Business Effects of Brand Marketing with John James," released on November 11, 2024, Stef engages with John James to explore how brand marketing impacts business outcomes, the challenges of measuring these effects, and strategies to effectively communicate the value of brand investments to executive stakeholders.
1. Introduction to John James and His Expertise
John James sets the stage by sharing his diverse background in advertising, digital agencies, Silicon Valley growth management, and advisory consulting. His unique focus lies in the earnings outcome of marketing activities rather than mere optics or internal politics.
John James [00:26]: "I'm very much focused on the earnings outcome of all this activity as opposed to the optics or politics that kind of goes along with a lot of the marketing and sales function."
This emphasis on financial impact positions him as a sought-after advisor, especially in environments where marketing spend must be justified in tangible business terms.
2. Defining Advertising: Paid vs. Organic Perspectives
The conversation begins with John addressing common misconceptions about advertising. He references Byron Sharp and the EBI’s broad definition, which encompasses any commercial communication, including organic SEO and social media efforts.
John James [01:49]: "Advertising is quite broad. It's like any kind of communication from an entity that is commercial in nature. So that contrary to popular perception, could be organic SEO or organic social."
However, he notes that most people narrowly define advertising as monetary paid promotions, distinguishing it from organic efforts that carry hidden costs like time and opportunity.
John James [04:20]: "Advertising tends to be the more obvious cash burn costs that people associate with advertising."
3. Dichotomy in Advertising: Brand Marketing vs. Performance Marketing
The discussion transitions to the prevalent industry split between brand (top-of-funnel) and performance (conversion-oriented) marketing. John challenges this dichotomy by arguing that, from the customer's perspective, all marketing is viewed as an attempt to sell something.
John James [04:50]: "Does the customer think that way? The answer is no. Short answer to that. Does I just see it all as a company trying to sell me something or talk to me."
He delves into the historical roots of this split, tracing it back to the 1950s with Procter & Gamble's budgeting practices, which segregated media expenses based on commission structures. This division has permeated various sectors, including Hollywood, reinforcing the Above The Line (ATL) versus Below The Line (BTL) mindset.
4. Measurement Challenges in Brand Marketing
A core focus of the episode is the measurement of brand marketing's business effects. John distinguishes brand marketing from performance marketing by highlighting differences in measurement timelines and methodologies.
John James [10:37]: "The difference between the two is like measurement, time lag, so what period of time you measure the effect, cause and effect of that investment."
While performance marketing offers immediate, quantifiable results through metrics like clicks and conversions, brand marketing's impact unfolds over a longer period, often making it harder to directly correlate spend with revenue increases.
5. Impact of Digital Attribution Changes (Apple's ATT)
John addresses the seismic shift in digital marketing measurement brought about by Apple's App Tracking Transparency (ATT) update in 2021. This change severely disrupted the digital attribution landscape by making a significant portion of user interactions anonymous, thereby eroding the feedback loop necessary for optimizing performance marketing campaigns.
John James [14:26]: "Apple forced an update through iOS 14.5 back in 2021, which severed the connection of complete attribution."
As a consequence, many marketers face increasing ad costs without corresponding returns, pushing them to reconsider or diversify their marketing strategies beyond traditional digital attribution models.
6. Traditional vs. Digital Measurement Techniques
John advocates for a return to more traditional measurement methods, such as incrementality testing. This approach involves comparing sales before and after a marketing campaign, adjusting for variables like seasonality to isolate the campaign's effect.
John James [19:48]: "It's very simple... we put money in, we did this campaign, and then we measure the effect over a period of time. Sales went up 20%, therefore, was that worth it or not?"
He critiques the digital marketing ecosystem's over-reliance on granular, albeit now unreliable, data, emphasizing that this led to a false sense of certainty in campaign effectiveness.
7. Strategies for Convincing Executives to Invest in Brand Marketing
A significant hurdle identified is gaining executive buy-in for brand marketing investments. John emphasizes the importance of speaking the language of executives, focusing on clear, quantifiable business outcomes rather than abstract branding concepts.
John James [21:25]: "You have to work with them and go, hey, this is the way I would approach this. What do you think about this?"
He advises building crude but improving measurement models that align with financial metrics, facilitating more productive dialogues with CFOs and CEOs who prioritize bottom-line impacts over intangible branding benefits.
8. The Lifecycle and Timeline of Brand Campaign Effects
Addressing concerns about delayed returns from brand campaigns, John references multiple studies demonstrating that most returns are realized within a four to six-week period, contributing roughly 50% of the total expected impact.
John James [27:08]: "Most of the time you will get most the return from your investment within a four to six week period. That's about 50%."
He cautions against the common misconception that brand marketing requires extended periods to yield results, highlighting that beyond the initial window, the remaining effects taper off significantly.
9. Optimizing Marketing Channels and Budget Allocation
John underscores the value of channel concentration over diversification, suggesting that small to medium-sized brands can achieve substantial revenue milestones by mastering a single marketing channel. Spreading resources too thin across multiple channels often leads to diluted focus and suboptimal results.
John James [31:30]: "There's a lot of evidence that you don't need more than one. And you can get to $50 million ARR with that."
He encourages businesses to invest heavily in one channel to reach a critical mass before considering expansion, ensuring that each channel investment crosses a minimum threshold necessary for meaningful impact.
10. Building Effective Marketing Teams
The conversation touches on the composition of effective marketing teams, particularly in smaller organizations. John recommends a trifecta of roles: creative designers, campaign executors, and strategists or coordinators. This combination ensures that campaigns are not only creatively compelling but also strategically aligned and efficiently implemented.
John James [34:41]: "You need kind of all three sometimes as an agency, vendor, whatever."
As companies scale, the complexity of marketing efforts increases, necessitating adaptation in team structure and management approaches to navigate the evolving landscape.
11. Conclusion: Key Takeaways and Advice
John James concludes with actionable insights for marketers aiming to demonstrate the value of brand marketing. He advocates for:
- Incrementality Testing: Establishing baselines and measuring deviations post-investment.
- Probabilistic Thinking: Approaching marketing as a series of bets, understanding the inherent uncertainties.
- Pilot Programs: Running small-scale tests to de-risk larger investments in new marketing initiatives.
- Executive Alignment: Speaking in financial terms, aligning marketing outcomes with executive priorities.
He emphasizes the necessity of detachment from emotional investments in campaigns, encouraging marketers to maintain an objective stance to better communicate and justify their strategies to business leaders.
John James [39:19]: "We're hitting diminishing returns. Do you understand this? Yes. Okay. So we need to do something different do you agree?"
Notable Quotes
- John James [04:20]: "Advertising tends to be the more obvious cash burn costs..."
- John James [10:37]: "The difference between the two is like measurement, time lag..."
- John James [14:26]: "Apple forced an update through iOS 14.5... which severed the connection of complete attribution."
- John James [19:48]: "It's very simple... measure the effect over a period of time."
- John James [27:08]: "Most of the time you will get most the return... within a four to six week period."
- John James [31:30]: "There's a lot of evidence that you don't need more than one."
- John James [39:19]: "We're hitting diminishing returns. Do you understand this? Yes. Okay. So we need to do something different..."
Final Thoughts
This episode offers a no-nonsense exploration of brand marketing's tangible effects on business, eschewing marketing jargon in favor of straightforward, financially-oriented dialogue. John James provides a roadmap for marketers to bridge the communication gap with executives, advocating for robust measurement practices and strategic investment in brand initiatives. By focusing on incremental gains and aligning marketing objectives with business outcomes, organizations can harness the true power of brand marketing to drive sustained growth and profitability.
For those keen to delve deeper into John James' insights, he recommends subscribing to his private newsletter at hybridsy.substack.com. His approach underscores the importance of strategic alignment and measurable outcomes in the ever-evolving landscape of brand marketing.