Tech giants are daring to bet on brand

The first anniversary of the coronavirus lockdown marks the start of a second year of advertising experimentation. The past 12 months have forced every company to rethink its communications strategy, and, with a definitive end to the crisis not yet in sight, a lot of plans remain in flux.

Netflix and Airbnb have made two of the boldest moves during the pandemic. Both companies are disruptors that are using the scale of their platform and the strength of their brand to make fundamental changes to their advertising and marketing strategy. The question is are they outliers that can do this only because of their market-leading positions or will others follow them?

In Netflix’s case, revenues surged as people stayed at home, and the streaming giant shrugged off competition from new rivals, including Disney+, and slashed adspend by 23% last year. It has benefitted from the scale of its network as it found even before the pandemic that talking to subscribers on its own platform was becoming increasingly effective, according to Ted Sarandos, the company’s co-chief executive. “Our members spend a lot of time on Netflix every day. So it turns out the best place to talk to them about Netflix is on Netflix,”  he said.

Airbnb offers an intriguing contrast. The online property rentals company’s revenues collapsed because travel ground to a halt and it slashed marketing spend by 58%. 

Performance marketing on online channels, in particular, was cut to almost zero, yet the company still attracted 95% of the traffic that it did a year earlier. That showed “our brand is inherently strong”, because it is a part of “pop culture” and generates “as much share of voice as most of the other major travel companies combined”, according to Brian Chesky, its co-founder and chief executive.

“We’re not going to forget that lesson,” Chesky said, explaining Airbnb is making a permanent shift from performance marketing to brand marketing. The company’s marketing spend as a percentage of revenue will “never” return to pre-pandemic levels, he added – a bold claim that will be tested when travel takes off again and online competition resumes in earnest.

Netflix and Airbnb can talk up the strength of their brands because they have built big platforms and generate huge amounts of first-party user data – another reason that advertising and performance marketing on third-party sites might be of diminishing importance. They are prime examples of companies that are prospering in what Publicis Groupe has dubbed a “platform world”.

Most other companies can only dream of having the scale (or fame) of the tech giants and have invested heavily in data-driven marketing, especially in the past 12 months when ecommerce has boomed.

A chief marketer at one major advertiser says his performance marketing team has produced hundreds of thousands of different executions to target customers and is making big savings through the optimisation of that spend – to the delight of the CFO. But the CMO is worried about the fragmentation of the message and long-term impact on story-telling. “What are they doing to my brand?” he wonders.

Many marketers and their agencies face a similar conundrum as they juggle the twin imperatives of brand and performance and prepare for a surge in pent-up demand as lockdowns ease.

Perhaps the biggest lesson of the past year for brands has been the importance of empathy and kindness. We have always known that emotion is vital in building brands but Covid-19 has underlined the need to show they are responsible and they care.

Margaret Jobling, CMO of NatWest Group, talks about “a right-brain reset”, because of the pandemic, as brands shift towards more “broad, intuitive and empathetic” messaging and away from left-brain thinking that tends to be “narrow, goal-oriented and procedural”. 

As we look forward to recovery in the next 12 months, there should be no doubt that investing in brand is a platform for growth.

Gideon Spanier is UK editor-in-chief at Campaign

Read More: Tech giants are daring to bet on brand

2021-03-15 07:24:40

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