BCG research reveals high cost of cutting brand marketing budgets

By Zion Rufus

Providing valuable insights into the future of brand marketing and the role of emerging technologies, a Boston Consulting Group (BCG) research has revealed a crucial finding for Chief Marketing Officers (CMOs): every dollar removed from the brand marketing budget today will necessitate a $2 reinvestment in the future to recover lost market share.

Highlighting the importance of sharpening brand investments and prioritizing strategic occasions, David Ratajczak, BCG managing director, senior partner, and member of BCG X, emphasized the need for precision branding and the integration of emerging technologies to enhance marketing strategies.

Ratajczak explained that the BCG’s recent work has uncovered tremendous opportunities for clients to refine their approach to branding investments. One key finding is that investing in a brand for one demand occasion might not align with the strengths of another occasion.

Therefore, CMOs must carefully consider which demand occasions hold strategic significance and concentrate their investments accordingly. This approach allows brands to focus on areas where they have a right to win while potentially scaling back in areas where they already dominate or face insurmountable challenges.

The concept of precision branding revolves around allocating investments to the most impactful areas, guided by well-defined milestones and measurements over multiple years. Ratajczak emphasized the importance of having the fortitude and confidence to execute this strategy effectively.

Meanwhile, as artificial itelligence (AI) emerges as a crucial tool to not only reach but engage target audiences, Ratajczak noted that precision branding will also enable brands to tailor their messages and content to different demand occasions and audiences.

This need for personalized content can be effectively addressed through generative AI, which reduces the cost of delivering various versions of messages and creative elements. The promise of precision marketing campaigns, driven by rigorous scientific methodologies and supported by AI-generated scalable content, offers brands a targeted and efficient approach.

CMOs are encouraged to adopt a strategic approach to brand investments, identifying areas where they have a right to win and concentrating resources accordingly. The integration of AI enables brands to deliver personalized content and engage with audiences in a targeted and efficient manner.

Ratajczak also highlighted successful examples of precision branding, including industry giants like Apple and Amazon.

These household names have consistently invested in branding over the years, reaping the benefits of their strategic long-term investments.

Additionally, the digital landscape allows brands to leverage precision branding and digital tools to carve a niche market for themselves, even in areas that were previously deemed uneconomical. This shift enables brands to become well-known in specific areas of expertise by engaging with niche audiences.