Actions and Detail Panel
How Brands Grow: join us to debate topics from this influential book
Fri 31 March 2017, 09:00 – 13:00 BST
‘It’s not like there is anything wrong with the intelligence of marketers, but like all professionals, they need some empirically grounded guidance.’ Byron Sharp in How Brands Grow.
We have a book club at Silence that meets every now and then to discuss books about advertising. Sometimes we host events around a book to get to know it better. At this event we'll be debating topics from Byron Sharp's irresistible How Brands Grow. If you can't make it, don't worry, we'll be broadcasting it live on our website.
Published in 2010, How Brands Grow reveals what Sharp describes as ‘the predictable patterns in how buyers buy, and how sales grow – things all marketers should know, not argue about’.
Born in New Zealand, Byron Sharp lives in Australia, where he works as Professor of Marketing Science at the University of South Australia. He runs the Ehrenberg-Bass Institute for Marketing Science, the world's largest institute for research into marketing with a team of over 60 academics working for companies like Facebook, Mars and Procter and Gamble, delivering what they describe as ‘the competitive advantage of evidence-based marketing’.
The Ehrenberg-Bass Institute's call for empiricism in marketing is not a new one but it is timely.
As early as 1923, the American adman Claude Hopkins, one of the founding fathers of our industry, declared that ‘the time has come when advertising has reached the status of a science’. He wrote this in his book Scientific Advertising: ‘Advertising is based on fixed principles and is reasonably exact. The causes and effects have been analysed until they are well understood. We know what is most effective, and we act on basic law.’
By the 1960’s, evidence-based marketing was out of favour. This was the decade when Bill Bernbach famously described advertising as ‘fundamentally persuasion’. And persuasion, said Madison Avenue, was an art not a science.
When How Brands Grow was published in 2010, there was something in the air: some marketers were starting to wonder if we’d thrown the baby out with the bathwater in our rush to digital. This was the year that Pepsi famously abandoned traditional media for the Pepsi Refresh Project, a disastrous social media campaign that delivered millions of interactions but led to a 5% drop in market share. The Ad Contrarian, Bob Hoffman, wrote that ‘social media has taken a huge hit - only zealots and fools will continue to bow down to the gods of social media.’
How Brands Grow was a call-to-arms for the sceptics: here was a book that was questioning our intellectual rigour, challenging our knowledge of how brands actually grow and calling for a return to the scientific method. In his 2015 article in The Financial Times, How The Mad Men Lost The Plot, journalist and adman Ian Leslie wrote this about How Brands Grow: ‘Most marketing books are long on airy assertion and short on rigour. How brands grow is the opposite. It is empirical, closely argued and, in its sober way, incendiary. Sharp marshals a vast array of evidence from many different categories – soft drinks, motorbikes, concrete mixers – and identifies universal laws of brand purchasing. To date, nobody has seriously challenged his findings, though plenty have ignored them’.
In 2017, the industry continues to debate this fascinating book. Marie Oldham, Chief Strategy Officer at VCCP Media, wrote this article in Campaign titled Challenge Byron Sharp and Grow Your Brand, arguing that ‘great work requires more than following universal laws and conventional thinking’. Marketing Week columnist Mark Riston responded with this article titled We Should Thank Byron Sharp, Not Attack Him, reminding us that How Brands Grow is ‘the only book on marketing in the last 15 years that you had to consume because of what it said and the implications it held for marketers, and because every CMO you met literally had it in their bag.’
Introduction by Lee Henshaw, Owner, Silence Media
EVERYBODY ELSE’S TOBACCO IS POISONOUS. LUCKY STRIKES IS…TOASTED
This is the greatest advertising opportunity since the invention of cereal,’ says Mad Men’s Don Draper in a pitch to cigarette company Lucky Strikes. ‘We have six identical companies making six identical products. We can say anything we want. Everybody else’s tobacco is poisonous...Lucky Strikes is toasted.’
In Chapter 8 of How Brands Grow, Differentiation vs Distinctiveness, Byron Sharp tells us that companies in the same sector aren’t that different to each other and that their customers don’t want them to be. Computers are computers, trainers are trainers, and crisps are crisps.
‘Buyers don’t need to see differentiation to buy a brand, or to keep on buying it,’ he writes. ‘Real-world competition is largely about competitive matching rather than avoiding competitors by delivering differences. Branding lasts, differentiation doesn’t. What marketers should worry about is whether or not their brands are distinctive’.
Does the panel agree that what attracts customers to a brand are the benefits of its category, and what interests them is the values that make it distinct?
BRANDS GROW THROUGH ACQUIRING NEW CUSTOMERS NOT RETAINING EXISTING ONES
Byron Sharp warns us against over-investing in marketing to loyal customers while neglecting new customers because, he says, targeting customers does ‘practically nothing to drive growth’.
He calls instead for 'sophisticated mass marketing' and points to the opportunities in digital: ‘The digital revolution is creating new opportunities to reach consumers in different ways, at different times – to be more relevant, and fit in better to their heterogeneous lives.’
You cannot use loyalty to drive growth, he argues, because greater loyalty from existing buyers cannot logically lead to there being more buyers. He goes on to say that there is no empirical support for the maxim that it is cheaper to retain a customer than to acquire one. Growing and declining brands have similar levels of defection - it is differences in acquisition which are key.
Does the panel believe that marketing to people who’ve already proved they like a brand is actually just spinning wheels and doesn’t help that brand grow?
IS MARKETING AN ART OR A SCIENCE?
In How Brands Grow, Byron Sharp complains that most of us working in marketing today are ignorant to the scientific laws that govern buying behaviour. He compares us to doctors who used leeches because they didn’t know any better, putting faith in untested theories and using ‘incorrect assumptions about how marketing works.’
He argues that marketing is a creative profession but that it's governed by a ‘framework of physical laws.'
‘Architects must design buildings that will not collapse under their own weight or blow over in a breeze; they cannot choose to ignore the law of gravity, or hope their building is immune to the laws of physics.’
Does the panel believe that marketing is an art or a science?
RADIOHEAD IS A BAND, APPLE IS A BRAND
The inspiration for this panel comes from Chapter 8 of How Brands Grow, which is titled Passionate Consumer Commitment. Sharp argues that the loyalty we have for a brand is nothing like the loyalty we have for a band or a football club, and that levels of brand loyalty rarely differs between brands in a category.
‘We’ve all been taught that brands vary tremendously in loyalty, with brands like Apple held up as loyalty champions. Loyalty doesn’t vary very much: all brands in a category experience similar purchasing frequency – customer loyalty rarely differs.’
‘Loyalty is rarely exclusive; it’s nothing like loyalty to a sports team or a country. Buyers typically have a number of brands that they routinely buy, so 100% exclusive loyalty is much rarer than marketers expect.’
‘That is not to say that Harley Davidson and Apple don’t have brand fanatics, but these customers are a small group, and their numbers are not much larger than the number of passionate fans of competitor brands’.
Does the panel believe that a brand must recognise that its customers are just ‘customers of other brands who occasionally buy you’ and that ‘they don’t think of a brand as special or even unique’?
HOW DOES ADVERTISING REALLY WORK?
‘Forty years of single-sourced-base analysis has delivered solid empirical evidence that advertising drives sales among those who are exposed to it,’ writes Byron Sharp in Chapter 9 of How Brands Grow.
Sharp reminds us that 2% of the world’s GDP is spent on advertising each year. He is clear about how advertising works – ‘It refreshes, reinforces or builds the memory structures that make the brand more likely to be noticed or come to mind in a buying situation’ – and blunt about the job it has to do: ‘Of course it should be expected to generate sales – that’s what advertising is for,’ he writes. ‘Don’t let anyone tell you otherwise’.
He concedes that the sales effects of advertising are hard to measure reliably because they are spread out over time, but argues this has led to ‘marketers invoking concepts such as brand equity, commitment and loyalty, often in a very mystical manner.’
‘Most advertising effects people who won’t buy the brand for weeks, so the sales effects are spread far into the future,’ he explains. ‘If we look below the surface and divide the consumers who were exposed to the advertising from those who are not, then we can see sales effects that were previously masked’.
‘To influence behaviour, advertising must work with people’s memories,’ he asserts. ‘This is the sales effect.’
Does the panel agree that Sharp’s arguments hold true, especially in a digital world where last-click attribution models are prevalent?
WOMEN LIKE YORKIES AND MEN LIKE DIET COKE
‘Consumers often behave as if they haven’t read the marketing plans for the brand they buy,’ quips Byron Sharp in How Brands Grow.
‘Sales growth won’t come from relentlessly targeting a particular segment of a brand’s buyers,’ he says. ‘It’s wrong to assume that a brand appeals to a particular type of buyer; most don’t and they shouldn’t want to’.
‘Brand managers prefer category definitions that make their brand appear to have a substantial market share – no one likes to be ranked seventeenth. Therefore, narrow category definitions are commonly adopted. These also make growth potential, particularly penetration potential, appear more limited than it really is.’
He goes on to present evidence that as many women buy Yorkie chocolate bars as men and that as many men drink Diet Coke as women despite Yorkie’s ‘It’s Not for Girls’ tag line and Diet Coke’s sexy gardener.
Does the panel agree that brands are wrong to adopt narrow audience definitions because they make growth potential appear more limited than it really is?