Seventy-one percent of executives plan to increase brand marketing spend in 2024, while only 46 percent intend to do the same for performance marketing, according to The Business of Fashion’s The State of Fashion 2024 report, published in partnership with McKinsey and Company.
“Today, brands have two key marketing challenges: firstly, how can they swing the pendulum back to brand marketing and make that case to their CFOs? And how can they pull attribution back to avoid the inflated ROIs they’ve been reporting and look instead at an incremental view of the business?” said Sona Abaryan, a partner at Ekimetrics and the lead of its luxury and retail business, in her opening remarks as host of the roundtable.
Indeed, the impact and effectiveness of performance marketing is reducing, driven by a convergence of factors. From the competitive dynamics of social channels and social fatigue to diminishing reach and engagement, as well as increased costs and regulation, 2024 will instead see an increased level of spending in the brand marketing space.
What’s more, prior to this, growth in social commerce and the broader digital commerce ecosystem in the past decade has provided marketing executives and finance teams with relatively ineffectual metrics, which many continue to use. For example, last touch attribution, alongside third party commercial insights from social platforms, are not incrementally valid and have trained chief financial officers to expect unrealistic return on investment across marketing activities.
To explore the strategic shifts needed to perform in challenging market conditions, Ekimetrics partnered with BoF to host an intimate executive roundtable, gathering marketing leaders from the American fashion industry at New York’s Hotel Chelsea.
Since 2006, tech-enabled data science firm Ekimetrics has worked with over 50 luxury brands as well as renowned companies such as Estée Lauder and Nestlé to pioneer the use of AI and advanced data science in the industry. Ekimetrics further explores how brands can leverage effective brand marketing through its white paper: The Role of Customer Analytics Throughout the Value Chain.
Held under Chatham House Rule and moderated by BoF’s head of content strategy Robin Mellery-Pratt, the event assembled marketing leaders and experts, including: Musa Tariq; Nabil Aliffi, chief brand officer of Neiman Marcus Group; Emily Essner, chief marketing officer of Saks Fifth Avenue; Nicci Hunter, Versace’s vice president of marketing; Barbara Nguyen-Willeford, Aritzia’s vice president of brand marketing and communications; Valerie Leon, Givenchy’s president of The Americas; Julie Beynon, Givenchy’s vice president of communications and marketing; Erin Cerminara, vice president of global communications and brand marketing at Anine Bing; Doug Jensen, Estée Lauder’s senior vice president of global data and analytics; Kelsey Ragsdale, Gucci’s digital media director; Jonathan Goodman, executive vice president of commercial, North America, at Ganni; Lauren Edelman, Victoria Beckham Beauty’s CMO; and Carolina Alegria, head of US marketing at Vestiaire Collective.
Below, we share condensed, anonymised insights with the BoF community and wider industry.
Balance short-term performance with long-term vision
“I think the main challenge that most businesses have is: how do you understand the long-term? What metrics are important to think about long-term, how do you capture them and how does that connect to the metrics that you see very easily in the short term, like the number of sales you have of a capsule collection? How quickly it sold out? Those really short-term commercial objectives,” said one attendee.
“But how does any activity actually create any difference over time? How do you drive activations in the short-term with the likes of Margot Robbie versus America Ferrera and the different audiences that they respond to, and how do you keep that connection between that consistency, salience, clarity of what you are trying to achieve in the vision and how that then cascades into each of those individual activities.” they added.
“The risk is that you are doing all of these things on the ground and you are doing them because there are opportunities,” said another guest. “We see the opportunity in this audience. We see the opportunity with the segment. But if you don’t have that clarity or if you haven’t even articulated that longer-term vision, then that is where you can start getting the disconnect. Actually, you’re not creating something that ladders to a greater purpose, you’re just driving a short-term response that doesn’t go anywhere.”
A degree of measurement distinguishes brand and performance marketing
“I think there’s this presupposition of a distinction between brand and performance marketing, whereas I believe brands should view them as being on a spectrum,” suggested one guest.
“Just when I think about the tactics of brand marketing, they are things that can be measured [but] you’re going to measure them in a different way, you’re going to have different KPIs. In the end, I almost wonder if we are holding ourselves back by thinking of them as actually two distinct things. That’s why full-funnel measurement is such an important lever for success.”
I almost wonder if we are holding ourselves back by thinking of performance and brand as actually distinct things. That’s why full-funnel measurement is such an important lever for success.
“It reminds me of how earned media and performance marketing work together — for instance, if you have all the tailwinds of earned, it makes performance really effective,” agreed another guest. “I think it’s critical to have both people who organically advocate for your brand and also those who you pay to talk about you. You can’t do one without the other. If you say: ‘Here’s a person, I’m paying them a lot of money to build my brand equity or talk about my brand,’ the likelihood of a consumer believing you is really low. However, paired with people talking about you and validating what you believe as a brand in their own words — that’s where I think there’s magic.”
Examine the dominance of financial metrics — and their limitations
“There is a tension between the CFO and wider marketing strategy,” said another executive. “We have to prioritise ‘speaking CFO’ as the first point of action.”
“Today, I think there is a mindset shift at play. Many marketing chiefs were drawn into this profession because they like to be creative. Now, understanding the data, metrics and science has been key. Historically, CMOs spent most of their time speaking to creatives but today, they engage with people who understand data and finance — that’s a significant shift.”
“Of course, we can’t ignore the bottom line, but brand affinity and strategy do take time to shift and evolve, and that’s why considerations around better measurement have to come first,” said another guest.
Consider customer lifetime value to be a misnomer
“LTV is a misnomer because it’s not a lifelong relationship — it doesn’t span generations. We’re looking at it over one, two, or perhaps five years. Our records go back 15 years — we actually have a very conservative view of who is a new customer versus who is an existing customer — but it’s all about that longer view.” said an attendee.
“Without that view, you’ll never be able to justify brand marketing spend. The reality is, when you are selling luxury [items], it can take time — six or nine months, maybe even a year — for that sale to come to fruition.”
“We focused on brand equity studies and those are pretty slow-moving things. You do them, they take a while, and then you get the information from a year ago and measure it against the year prior,” side one executive.
“They’re really interesting, though, when you think about the sea of behaviours that are hard to quantify,” added another guest. “It’s that feeling of: could this sponsorship plant a seed with a consumer and create the desired long-term connection? I’ve been thinking a lot about how brand equity studies could be more agile. How can you compare it every quarter?”
Re-prioritise the voice of the customer in decision-making
“As brand or marketing leaders, our job is to translate the business strategy into what the customer sees. I always like to simplify to our executive team by saying: ‘The customer doesn’t care that you’re missing your forecast. They’re coming in and simply want to see good product and have good experiences’,” said one guest. “Sometimes the voice of the customer is not always in the room where those decisions are being made.”
We have to prioritise ‘speaking CFO’ as a first point of action.
“In a tech company, marketing and product wouldn’t just go and invent a product,” said another attendee. “They would really speak to marketing. Marketing knows the customer better than anyone else. Marketing are actually who tell Apple, ‘Okay, we need a bigger iPhone screen. Do we need different buttons? What colours do we need?’ It’s actually incredible how much marketing influences a product.
“Traditionally, if you think about marketing back in the day and the four and five Ps, product was one of them. Yet actually, interestingly, when I worked with fashion brands, it’s so incredible how these two things are disconnected,” they concluded.
Reframe influencer marketing KPIs
“Smaller brands do not have the luxury of working with different talent to reach different markets — the approach and strategy has to tick as many boxes as possible,” said one attendee in their opening comments.
“One past campaign we worked on hit all our goals in terms of social impressions and engagement, but it didn’t translate into sales. Some voices in the business thought it was our greatest success — our finance team would probably think ‘never again’”.
“When brands only measure sales as the outcome of influencer marketing content, they will always have a hard time finding an effect,” responded another attendee.
“The industry had to learn that influencers were not designed to drive sales, but rather awareness, desirability, consideration. That kind of measurement requires a multi-stage approach. This is how you engage with brand versus performance. If influencer marketing drives desirability, today we can actually see whether it drives consideration, and then see whether it drives sales. It’s one holistic way to look at it so that we can rely less on the last click attribution.”
Incorporate the VIC sales experience as a tenant of brand marketing
“As a brand, we have moved significant budget out of the marketing world and put it into the selling cost world – fully dedicated to client experience. But that micro focus on physical brand moments has brought a lift to our business. It stems from wanting to see our brand through the lens of the consumer. What do they want to do with us? How do they want to experience our brand?” said an attendee.
These businesses need really strong leadership that has united all these different teams towards the same objectives, the same goals.
“I think that’s what brings in the customer to your brand. Channels are extremely important, but let’s not forget it’s a full business ecosystem,” added another guest.
“If your customer comes to your shop and the products are not in stock, or there’s a long queue to get in or they didn’t get quite the right attention from the sales assistant, it all ties back to the whole ecosystem of the business, and you need all that to work as well. If the rest of your operations are not in place, there’s little point in investing in great marketing.”
Incentivise internal alignment to drive action on data
“We should be asking: ‘do we have an aligned incentive and vision for the brand?’ These businesses need really strong leadership that has united all these different teams towards the same objectives, the same goals. An evidence-based approach helps to achieve that alignment,” said an attendee.
“We still use those terms ‘brand’ and ‘performance’ and are trying to move our organisation to a place where we think about brand marketing — but connecting them has been a challenge. It’s an interesting mindset shift for the whole organisation,” they added.
“The current sticking point is the disconnect between brand marketing and performance marketing [aesthetics]. Some performance marketing assets deliver good results, but don’t feel as in keeping with our brand positioning. For 2024, via a new shooting plan for our campaigns, my goal is to try to figure out how to align internally and build truly effective assets we can be proud of — optimising that performance marketing space for the brand itself.”
Discover the Ekimetrics white paper on effective brand marketing: The Role of Customer Analytics Throughout the Value Chain.
This is a sponsored feature paid for by Ekimetrics as part of a BoF partnership.
