The pivot back to the brand is the main theme highlighted in the Economy chapter of WARC's Marketer's Toolkit 2020, an annual report that assesses the influences on marketing strategies for the year ahead.

A survey of marketing executives conducted as part of the Marketer's Toolkit 2020 found that short-termism is the number one industry issue. 70% of respondents agreed that brands have over-invested in performance marketing. Additionally, 40% predict increased brand investments in 2020 versus 32% who see higher performance budgets.

David Tiltman, VP content of WARC, says, "Brand building is back and is set to be a major trend for 2020. After years of focus on digitally-enabled performance work, a growing number of brands are reviewing their approach to long-term brand-building amid claims that the industry has become too focused on the short-term."

"Whilst we've found plenty of evidence that this will be the year when marketers re-invest in their brands, we've also found that there are significant hurdles, including internal culture, marketing skillsets and the need for better brand metrics," adds Tiltman.

The Economy chapter of WARC's Marketer's Toolkit 2020 considers the following issues:

Marketers are reprioritising 'long-term' brand-building amid a crisis of short-termism

According to the study, the efforts of researchers such as Les Binet and Peter Field to refocus brands on the long term are bearing fruit. Binet & Field famously argued that a 60/40 investment split between brand and sales activation was the 'rule of thumb'.

The study indicates that many CMOs acknowledge they are way off those numbers and increasingly recognise that they have over-invested in short-term marketing tactics (or 'performance' marketing) at the expense of their brands.

At the same time, fresh research is underlining the crisis short-termism is creating. Field debuted new research (with the Institute of Practitioners in Advertising) during a WARC session at Cannes Lions last year, arguing that short-termism had undermined the link between creativity and effectiveness.

Orlando Wood, chief innovation officer for the System1 group, says, "There are five practical ways that advertisers can make their work more effective:
  1. Entertain for commercial gain,
  2. Think dramas, not lecture,
  3. Play with culture, don't mirror it,
  4. People are characters, not 'props', and
  5. Local richness beats global blandness."
Digital-first brands are pivoting to brand-building to scale their businesses

According to the study, much has been said about the need for established companies to learn from the new wave of 'digital-first' or 'direct-to-consumer' businesses that are disrupting their categories.

But digital-first brands, as they grow beyond their early adopter audience, are now discovering that the same rules of sustainable long-term growth apply to them as to traditional business models. In the United States, the Video Advertising Bureau noted a 60% increase in TV spend by direct-to-consumer brands.

In the United Kingdom, e-commerce marketplace eBay — which had dedicated 90% of its budget to performance marketing for more than decade — had upped brand investment from 10% to 35% over four years and saw a "dramatic" improvement in brand consideration and the growth of organic traffic.

There is a tension between what brands are saying and where they will spend

Although respondents are concerned about the impact of short-term strategies on their brands, the survey reveals the gap between intention and action. Money continues to pour into marketing channels best suited to performance marketing or short-term impact.

There is a positive outlook for search and online display in the survey, while 'classic' brand-building channels, like TV and out of home, look more negative. Brands appear to view online video as key for brand-building in 2020, with more than 80% anticipating greater spend on that channel.

Gill Zhou, VP of marketing, communications and citizenship of IBM China, says, "Many times the marketing department is seen as a cost centre, so CMOs save money to increase output, but it is not enough."

Culture, skills and metrics are barriers to brand-building

Survey respondents identified the general business culture of short-termism and a squeeze on budgets as significant challenges to brand-building. Another issue is a loss of confidence among modern marketers as to their ability to build brands.

An IPA/Financial Times study that was released mid-2019 found that almost one in three senior marketers rated their ability to build brands as average to poor. 

Respondents also point to metrics. In particular, the need for them to have better signs that brand-focused work is having an impact. Also, metrics need be presented in a business language other members of the C-suite can understand.

Fifty percent of respondents said that customer experience (CX) will remain a focus for brands in 2020, but 71% say this is harder to measure than advertising. Simon Cook, managing director at Cannes Lions, says: "Being creative while retaining consistency of brand is key to unlocking the benefits of brand-building, from forging emotional attachments to driving long-term brand equity and sales influences."

Test-and-learn may be key for companies looking to reinvest in brand. The study indicates that marketers should take note of an experiment by Australian insurance giant IAG. To test the case for long-term brand investment, it will spend 80% of its budget on brand-building activities in a targeted part of Australia for the next two years.

WARC's Marketer's Toolkit 2020 is a definitive, evidenced-based and practical guide for marketers to plan for 2020. The survey comprises results from almost 800 client and agency-side practitioners around the world.

Additionally, the survey is combined with insight from a series of interviews with chief marketing officers, backed by evidence from WARC Data, case studies and expert opinions.

The study covers five drivers of change: society, tech, economy, industry and policy, which are covered in depth. WARC has collaborated with sister Ascential brand Cannes Lions. The report is available for download here

WARC has also conducted an interview with Les Binet who is group head of effectiveness at adamandeveDDB and a leading researcher on marketing effectiveness. The interview focuses on the practicalities of long-term brand building, how to convince the CFO and smart ways to measure marketing impact in 2020. The interview is available to read here.

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