– The B2B Institute, LinkedIn’s marketing think tank, and the Ehrenberg-Bass Institute at the University of South Australia have published a report making the counterintuitive case that B2B advertising works primarily not by reaching people who will buy today, but instead by reaching people who will not buy today.
The ‘Advertising effectiveness and the 95-5 rule: most B2B buyers are not in the market right now’ report suggests that the number of potential B2B buyers in any given period is significantly smaller than most marketers believe. In the paper, Professor John Dawes argues the time between purchases for most goods and services is relatively long and, as a result, most buyers are not looking to make purchases today. For example, companies change service providers, such as their principal bank or law firm on average once every five years. That means only 20% of business buyers are ‘in the market’ over the course of an entire year; around 5% per quarter – or put another way, 95% are not in the market.
According to the paper, the fact most buyers are not “in the market” has important implications for how advertising works. Professor John Dawes, Professor of Marketing at the Ehrenberg-Bass Institute, the University of South Australia, who authored the report, said: “The 95-5 rule means that the way advertising ‘works’ isn’t by stimulating people to buy. How can it if most people who see an advert aren’t going to buy the product, service, or solution for perhaps a year or more? Therefore, the way it works must principally be by building a memory link for the brand in buyers’ minds. This memory link will be activated when the buyer does come into the market. Advertising impressions, accumulated over time, affect our memories, so advertising has to be designed to create distinct impressions about your brand in people’s minds to be activated later.”
Dawes also corrects a common misconception in B2B advertising today – the idea that marketers can target only in-market buyers: “Yes, do some targeting of people who are ready to buy, but if that’s all you do, you will never build the widespread mental availability needed to become or remain a big brand. To grow a brand you need to advertise to people who aren’t in the market now, so that when they do enter the market, your brand is one they are familiar with. They must mentally associate your brand with the need or buying situation that brought them into the market. That way you increase buyers’ purchase propensity, and if you can do that across enough buyers, your market share will grow.”
The report suggests B2B marketers should spend the majority of their budget on brand building – running broadly targeted, long-term campaigns focused on building memory links, which is the opposite to what many B2B marketers do today.
Jann Martin Schwarz, Senior Director, Global Head of The B2B Institute, said: “This important research from one of the world’s leading academics in the field suggests that B2B marketers need to radically rethink their approach. They need to think more about long-term brand building, instead of focusing too much on short-term wins chasing in-market buyers. B2B brands of all sizes will need to reassess how they raise awareness and build memorable connections to a brand, an investment that this report proves is essential to driving growth.”