Brands are returning to brand building, says Google

Marketers are pumping more money into brand building advertising as brands recover from the early effects of the pandemic, according to Google.

Many brands sacrificed brand spend in wake of the pandemic last year, cutting budget and focusing on short-term tactical activity.  Almost half (43.9%) of UK-based marketers said in a survey conducted by Marketing Week and sister title Econsultancy, they planned to reduce budget commitments in the second half of 2020, compared to the first six months.

Speaking in an earnings call to mark Google-parent company Alphabet’s fourth quarter results, SVP and chief business officer Philipp Schindler, acknowledged there had been “substantial pullback at the outset of the pandemic” in brands spending on Google services but this began to recover in the third quarter.

The technology giant revealed ad revenue surged from $37.9bn (£27.4bn) in 2019 to $46.2bn (£33.8bn) at the end of its fourth quarter of 2020. Google’s combined advertising business, with YouTube accounted for 81% of fourth quarter sales, up 23% year-on-year. The company reported a “significant acceleration of brand spending on YouTube”, the video streaming platform saw advertising revenues surge 46% to $6.9bn.

“Marketers realised that even if there was a pullback in consumer demand in the short-term, they needed to keep their brands in front of people to stay top of minds when spending picks back up”, adds Schindler.

Schindler’s assertion is in line with various global brands who are moving  back towards brand building, a recent example being Chinese smartphone brand Huawei, which shifted the focus of its global marketing team to brand building to deal with the changes brought on by the pandemic.

Google highlighted L’Oréal as a shining example in adapting to the drastic change in consumer shopping behaviour. Schindler says the brand made a “sharp pivot to e-commerce” and YouTube tool True View which is skippable ads that marketers are not charged for if skipped.

“By making existing video creatives more timely and actionable, their Kiehl’s US brand drove record visits to their site from YouTube, four times more per dollar. They’re also partnering with us to bring AR experience for their cosmetics across Google Services, including YouTube and Search. I could go on and on. Companies are rapidly adopting.”

Last month, Guive Balooch, global vice-president of L’Oréal’s technology incubator, warned brands to resist the urge to cut investment in innovation, arguing new services and innovation must be found in challenging times.