5 minute read
For more than 50 years, despite seismic shifts in media diversity and consumption, marketers have been able to rely on a rule to help determine how much money to invest in advertising to meet specific growth targets. The rule, called the “Share of Voice (SOV) Rule”, says the following:
“Brands that set their share of voice (SOV) above their share of market (SOM) tend to grow (all other factors being equal), and those that set SOV below SOM tend to shrink. The rate at which a brand grows or shrinks tends to be proportional to its ‘excess’ or ‘extra’ share of voice (ESOV), defined as the difference between SOV and SOM.”
The SOV rule is most elegantly articulated in a 1990 article in Harvard Business Review by John Phillip Jones, called “Ad Spending: Maintaining Market Share” and is backed by additional research from The Ehrenberg-Bass Institute and researchers Les Binet and Peter Field. The collective research shows that a brand tends to grow market share in proportion to the Excess Share of Voice (ESOV) achieved in the marketplace.
The SOV rule therefore provides a simple formula for working out how much your advertising budget needs to grow, in order to grow your bottom line.
Playing within the rules
While this formula is well-known in B2C marketing circles, it is little known in B2B marketing. New research from LinkedIn’s B2B Institute has shown that the SOV rule applies in B2B markets just as it does in B2C markets. Les Binet and Peter Field analysed effectiveness data from the Institute of Practitioners of Advertising databank and found an ESOV of 10% leads to market share growth of 0.7% per year. Interestingly, the SOV rule appears to have an even stronger effect in B2B than in B2C, where 10% ESOV drives 0.6% annual growth.
The clues for how to do so are hiding in plain sight in the full research report that Binet and Field prepared for the B2B Institute.
The formula for punching above your weight in B2B
Here are five key principles for building the SOV that you need to exceed your SOM – and drive business growth:
Principle 1: The SOV formula works for everyone, even small firms
If you’re a smaller business looking to grow, then the SOV rule still works in your favour. Let’s say you’re a challenger business with only 1% of the market. In that case, you are still likely to grow, even with only 2% of your category’s ad spend. And as your company gets bigger, you can invest increasingly bigger budgets into advertising to accelerate growth over time. It is worth noting that small companies with genuinely innovative products often generate strong word of mouth, accelerating additional SOV beyond their share of category ad spend, but that effect diminishes over time.
Principle 2: Balance brand and activation
Marketing spend translates into SOV most effectively when you have the right balance between long-term brand building and short-term sales activation (e.g. lead generation). The B2B Institute report shows that the optimum B2B marketing mix involves spending roughly 50% of your budget on brand and roughly 50% on activation. Balanced marketing tends to generate performance 4x better than purely short-term, sales activation strategies like lead generation.
Part of the reason that balanced marketing campaigns perform so much better, is the impact of brand campaigns, which compound over time, build on the brand memories and associations a brand creates. Activation campaigns, on the other hand, typically start from scratch with a new offer or approach each time.
Principle 3: Expand your customer base
If your marketing only targets existing customers then it won’t translate effectively into SOV, since you’re not investing in reaching new customers. Binet and Field’s research shows that the most effective marketing strategies are ‘reach’ strategies that target the entire category, reaching new prospects and old customers alike.
Simply put, reaching more category customers equals achieving more SOV.
Principle 4: Maximise mental availability
The most effective campaigns prioritise building ‘mental availability’, which is the extent to which the brand comes readily to mind in buying situations. The ultimate aim is brand fame: being the brand that comes to mind for the most category buyers in the most buying decisions.
Building a famous brand requires reaching all category buyers to get people to recognize and talk about your brand. One of the best ways to get reach beyond your size is to produce advertising that’s different from everybody else in your category. It will be extremely difficult for a small brand to cut through with advertising fundamentally similar to everyone else in the category. However, if you can surprise people, make people laugh, or awe people, you have a better chance to compel them to remember and talk about your brand. These types of ideas don’t tend to come from creative briefs that stress the need to communicate product benefits like precise steering or better systems integration. These types of ideas come from creative briefs where the chief priority is to be talked about.
Principle 5: Harness the power of emotion
Emotional campaigns (ones that try to make prospects feel more positively about the brand) are more effective in the long term than rational campaigns (ones that try to communicate information). This is because emotional content tends to embed more deeply in our memories. When it comes to maximizing SOV, emotion is a powerful part of any brand campaign because it is not only important that you see an ad, but also that you remember the ad (and the brand).
Maintaining SOV to maintain SOM
The five principles listed above are core to marketing effectiveness for any brand – big or small. Brands must achieve high share of voice, high category reach, high mental availability and do so in campaigns that blend emotional brand building and rational sales activation. The companies – and marketers – that are able to invest in these principles can expect to grow their businesses – and their careers.
