The ROI of Brand Is Real but Slower Than a CFO Wants to Wait

Brand spend does pay back, but the return lands on numbers other than sales, months or years later, and no attribution model hands back the ROI of brand as one clean figure. Judge brand on a campaign's weekly clock and it will look like a cost.

So when a CFO or CEO asks what brand spend returns, the honest answer is to treat it like any other uncertain investment: size it to what the business can afford to lose, and agree the evidence and the review date before anyone spends money.

A formula would be easier to present, and a sharp CFO would take it apart in the first meeting.

Brand fails the ROI test for reasons a CFO is right to raise

Start with the sceptic's case, because most of it holds. Brand's return is slow and spread across several numbers. It also resists clean attribution, so even when brand works, nobody can point to the line item that did it.

Those are good reasons to put brand lower on the list, and they explain why many teams do.

Attribution tilts the numbers further against brand. Analytic Partners, a company that sells marketing measurement, said in a release posted on Adweek Wire that last-click and simple attribution "overstate the role of clickable activities by 2-10x, on average." Adweek doesn't edit Adweek Wire posts, so the claim is the vendor's own.

The same release says those models understate activity people can't click on, such as video, "by just as much or more."

Budgets tend to follow whatever can be reported, since a weekly figure is easy to build a story around. Brand has no weekly figure, so it loses the budget contest even in years when it's earning its keep.

Brand's return shows up in traffic you don't pay for, later

So measuring return on brand investment starts with two numbers other than sales: the share of traffic that arrives direct or unpaid, and what the business pays for each visit it does buy. Neither moves in the week the brand money goes out.

Airbnb cut its combined brand and performance marketing spend 58%, from $1.14bn in 2019 to $482m in 2020, the publication Campaign reported. Performance marketing took most of the cut, falling $541m, while brand fell $121m.

Co-founder and CEO Brian Chesky said more than 90% of Airbnb's traffic in the last quarter of 2020 was direct or unpaid. "We can take marketing down to zero and still have 95% of the same traffic as the year before," he said.

Airbnb is a consumer company and a household name, and the cut came as the pandemic collapsed travel, so traffic held under unusual conditions. It's a consumer case, and it doesn't show that cutting performance marketing is safe. CFO Dave Stephenson said Airbnb would keep using performance marketing "where it makes economic sense to do so."

Stephenson later said Airbnb had moved its marketing toward brand in 2019, before the pandemic. When spend fell the next year, most visits still arrived direct or unpaid. That's where brand ROI shows up: in traffic a business no longer has to buy, well after the spending decision.

Analytic Partners makes a broader claim in the same Adweek Wire release. It says its ROI Genome, built on "more than 750 brands, 45 countries," finds brand "almost always outperforms performance marketing, doing so 80% of the time." The release doesn't explain how "outperforms" is measured, so the 80% figure comes without its method.

Funding brand takes a leap of faith that careers rarely reward

Funding brand asks someone to back a return they can't show yet, and the incentives on both sides push against it. The business wants a number this quarter. The person signing off wants a result they'll still be around to claim.

Often, the person asked to make that call has left the job by the time brand pays.

MediaPost reports CMO tenure figures from two sources. CMO Huddles and Findem, looking at "13,000 people at U.S. companies with 100 or more employees," found current CMOs have held their jobs a median of 3.0 years. Spencer Stuart puts average CMO tenure at S&P 500 companies at 4.1 years.

The two figures measure different groups in different ways, a median across many firms and an average at the largest, so each stands on its own.

Tell the CFO brand is a bet, and size it like one

Say plainly that brand's return can't be shown with a campaign's precision. Promising more than brand can show is a reliable way to lose finance's trust. A precise return promised up front sets a test the evidence can't pass, and the next budget conversation starts from that miss.

Then size the bet. Treat the brand budget like other uncertain investments: pick an amount the business could lose without real harm if the bet doesn't pay.

Before any money goes out, agree two things with the CFO. First, which numbers count as evidence, such as the share of traffic arriving direct or unpaid and the cost of each paid visit, and write down where each stands today. Second, the date you'll sit down together and compare them against that starting point.

With the date fixed, the CFO knows when the bet gets looked at again, and can decide then whether to add to it or stop.

Report those signals on their own slower schedule, apart from the weekly campaign numbers. For the wider question, see our guide to brand marketing versus performance marketing.

A bet this slow belongs to leadership

At Airbnb, the CEO and the CFO made the shift and defended it. Chesky framed the spend in plain terms: "We think of brand marketing as education and an investment."

A year later, Marketing Week reported Stephenson's defence of the shift. "In 2019, before the pandemic, we shifted our marketing strategy to be more brand-driven," he said, adding: "We made that shift and it has proven to have been the right shift, not only in 2019 but in 2020 and 2021."

When the call sits with the marketing leader alone, one person carries a risk that belongs to the business. Say so to the CEO and CFO, so leadership owns the decision and the risk that comes with it.

Who should own brand and who should own demand is covered in our guide to brand versus demand generation in B2B.

A smaller firm can still place a smaller bet

The strongest objection goes like this. Airbnb could afford the bet because it's a household name. Most B2B firms can't, and a CFO is right to fund what can be proven.

The objection is fair, and it explains why so many teams cut brand. It describes a return that's slow and hard to prove, and that is still a return.

What Airbnb does show is that someone at the top had to choose the bet and stand behind it. A firm without Airbnb's name can still place a modest bet, scaled to a loss it could absorb, with the evidence and the review date settled first.

If you're heading into that conversation with a CFO or CEO and want to think through what the bet should look like for your brand, get in touch with us.

Whether the bet is worth making depends on what the business is trying to build, and how long its leaders plan to stay to see it.