Why Have Most Advertisers Suffered From Slow Brand Growth Rates Since 2009? Ten Major Reasons

Brand growth rates were robust up to 2008. Since then, brand growth has not recovered. There are many reasons for this. Advertisers, holding companies and agencies share the responsibility

I have, for more than the past decade, thought long and hard about the problem of advertiser growth since 2009, when 2/3rds of major advertisers saw their sales growth rates fall to well below the nominal GDP growth rate of 4.7% (2.4% inflation plus 2.3% real growth).

I think that the reasons for poor growth can be summarized as follows (in no particular order):

1. Agency weaknesses. Agencies have been weakened by the financial holding companies, whose relentless downsizings since 2004 have significantly reduced agency capabilities and the quality of agency work.

2. Poorly-conceived media and creative Scopes of Work. I document and measure SOWs as part of my consulting practice, and a review of more than 1,500 creative SOWs over the years shows me that the massive migration away from brand-building deliverables to social / digital adaptations has not delivered enough value. The new “marketing religion” that personal targeting is a superior form of marketing can be shown to be mostly nonsense, but in spite of all evidence, CMOs have bought into the concept because it is so low-cost.

3. Inappropriate and mis-directed agency purpose. I have yet to see an advertiser brief a newly-engaged agency to “help us figure out how to grow again.” Instead, agencies are briefed to “deliver Scopes of Work on time and at the lowest cost possible.” Agencies are not engaged to solve the brand growth problem. Neither Procurement nor search consultants are handling this appropriately.

4. Poor brand strategic plans. I review brand strategic plans at major advertisers, and I am highly disappointed at the poor quality of thinking. There seems to be no genuine attempts to admit that there are growth problems that need to be solved. As a general rule, the strategic plans focus on such subjects as “how do we become more digital, etc.” The plans are not very strategic. In any case, rarely are they shared with agencies.

5. CEO and CFO loss of faith in marketing, characterizing marketing as a cost rather than an investment. CMOs have been downgraded in status and are reluctant to promote marketing or ask for higher-cost media / creative to turn things around. CMOs have become implementers of cost-reduction strategies rather than brand-growth strategies.

6. Serious reduction in new product developments and launches. My research shows a very serious decline in new product development and launches after 2009. In the past, new product launches (particularly by CPG companies) were an important source of sales growth. This can be shown to have changed dramatically.

7. Change in consumer buyer behavior. Past growth (1960-2008) relied heavily on Baby Boomers as the dominant consumer growth consumers -- and they grew up with mass market TV advertising, which created brand equity and band loyalty. Millennials and Gen Z consumers have not had this exposure, and they do not tend to buy branded products.

8. Rise of private label brands at major retailers. The growth in size and importance of major retailers has allowed the retailers to become trusted brands in their own right, and their private label products can credibly compete with advertised major brands. Major advertisers strive to serve the retailers but have not been effective at protecting their own brands from market share losses. The price gap between branded and private label products has been large, indeed.

9. Advertising to Millennials and Gen Z. The assumption that these important consumer groups can only be reached through digital / social may bias advertisers from thinking more creatively about how to get them to embrace legacy brands. In any case, efforts to get these groups to buy branded goods has not been very successful.

10. Internal politics and MMM tools within major advertisers. There is too little open discourse about “we have a growth problem that is a tough one to solve.” Even MMM products are used to communicate to CEOs and CFOs that “all the evidence shows that our marketing is doing a great job at engagement at low cost,” ignoring the fact that sales are going nowhere. There’s too much “CYA” by Marketing.

These 10 areas can be classified under the title “Scope of Work Management Principles and Opportunities.”

The existence of these problems provides an open door for advertisers, holding companies and agencies to expand their capabilities and mission.

What seems to be missing is C-Suite leadership.

Now’s the time to seize the opportunity.