Lessons In Marketing: How Marketers Can Build Brands Without Spending Too Much
A little less than two years ago, Austrian skydiver Felix Baumgartner jumped from a hot air balloon 39 km above the earth. He didn’t just change sky diving records — he also changed marketing directors’ notions on how to build brands. Baumgartner’s jump was conceptualized, paid for and managed by energy-drink company Red Bull. Organising it cost less than $15 million, but it was aired for free on 40 TV networks in 50 countries, set YouTube viewership records globally and generated at least $150 million worth of adequivalent publicity for Red Bull.
But it wasn’t just visibility. Red Bull sales went up past the $5-billion mark and profits rose too — remember you pay Rs 95 for Red Bull’s 200-ml canto and Rs 20 for Coke’s 330-ml. All this while Red Bull spent next to nothing on ads or media, and is the dominant leader in energy drinks with four times Coke’s market share.
Spain-based retailer Zara does even better. It’s grown to $20 billion in sales and the largest apparel brand in the world, but you’ll never see its ads in the glossies or on TV. This is because it has never needed to advertise.
The story is more common online. Dominant brands like Google, Facebook, Twitter and WhatsApp have never needed to advertise. Quick, when did you ever see an ad for them? In fact, WhatsApp at the time of its sale to Facebook (for $19 billion) said it didn’t even have a marketing person on the rolls.
Ad Spend and Brand Health
This is the new age of brand building. Smart marketers have figured out that they can grow top line and profits without having to spend much on ads and media, if they have the insight and intuition on how to be remark-worthy so that the public gets to talk about them and do the job that otherwise expensive 20-second commercials do.
And in every case — contrary to marketing consultant Kotler and the outdated norms of “shareof-voice” and “share-of-spend” — dominant brands have spent much less than the No. 2 and stragglers.
Ralph Lauren and Calvin Klein, a fraction of Zara’s size, outspend it to no avail. Bing spent a huge amount on ads but couldn’t budge Google a bit. WeChat enlisted Bollywood stars and big budgets but didn’t deter WhatsApp even the slightest.
Some Indian brands have learnt the art: Red-Bus — caveat, I was an investor here — grew to eight times’ MakeMyTrip’s size in bus ticketing without spending a dime on TV or print. CarWale — again an investee — grew past better funded competition by choosing not to burn their funding on expensive ads. Increasingly, a big ad spend is not a sign of brand health, but of brand illness. If your brand needs to pay to be on media and can’t earn its way there by its own remark-worthiness, then you’re simply not being smart enough.
As I’m fond of saying, your advertising budget is inversely proportional to your marketing IQ. What can you do to change this? Start by recognising the enemy. Consider this example.
Say I was a doctor and I didn’t really charge much of a fee for my prescriptions but instead took a kickback on the drugs I asked you to buy. Of course, I’d prescribe as much as I could get away with — but very soon you wouldn’t trust me one bit.
So why would you trust the agency system that works exactly this way? We spend Rs 35,000 crore on media every year — that’s about Rs 3,500 crore in undeclared kickbacks to media agencies above and beyond the fees that you give them. Remember it’s called an agency because it’s an agent. Creative agencies are the other half of the problem. When they can charge Rs 2 crore for a TV commercial and Rs 2 lakh for one on YouTube, you can imagine which one they recommend. Even though the viewership of YouTube or mobile video far eclipses that of every other TV channel in India. This piece is written by Mahesh Murthy.