Many professional investors use a "barbell" strategy when constructing their portfolios. The barbell strategy was popularized in the early 2000's by Nassim Nicholas Taleb. Taleb has been a derivatives trader and a hedge fund manager, but he is best known as the author of The Black Swan and several other books regarding randomness, probability, and uncertainty.
The essence of the barbell strategy is investing simultaneously in extremely low-risk assets (such as U.S. Treasury bills) and extremely high-risk assets (like stock options or IPO's), while avoiding middle-of-the-road choices. The assets at the ends of the barbell have very different characteristics, and the investments are made with very different objectives in mind. Proponents argue that over time, a barbell strategy increases the odds of achieving superior overall returns.
The Barbell Strategy for B2B Marketing
A barbell is also an apt visual metaphor for B2B marketing. As the following diagram shows, the two components of the B2B marketing barbell are brand marketing and demand generation marketing. We now have persuasive evidence that companies must excel at both to produce superior marketing results.
The barbell metaphor is appropriate because brand marketing and demand generation differ in several major ways. Most importantly, they have fundamentally different objectives.
The objective of most brand marketing programs is to evoke changes in the minds of potential buyers. For example, such programs are often designed to:
- Make potential buyers aware of the brand (company or product)
- Cause potential buyers to remember or think of the brand when a need or buying situation arises
- Cultivate favorable perceptions of the brand in the minds of potential buyers
In contrast, the objective of demand generation programs is to elicit a behavioral response from potential buyers who are engaged in - or are at least ready to begin - an active buying process.
These dissimilar objectives call for different marketing tactics and messaging, and the following table highlights some of the important differences. For example, because brand marketing is primarily intended to influence the feelings and perceptions of potential buyers, the messaging usually needs to have a more emotional appeal. Demand generation messaging, on the other hand, usually works better when it is more rational.
Many companies have traditionally used separate teams for brand marketing and demand generation. This approach enables them to develop the specialized knowledge and skills needed to perform both marketing disciplines more effectively. Unfortunately, this approach often leads to the development of organizational silos that result in a disconnect between the company's brand marketing and demand generation efforts.
In a recent article
, four McKinsey & Company consultants argued that this disconnect can have important negative implications. They wrote: "For many companies, this split is inhibiting growth aspirations. Budget and impact conversations often become contentious: performance marketers tout their ability to drive clicks while brand builders argue for longer-term investments . . ."
Some marketing thought leaders have argued that the solution to this problem is to integrate brand marketing and demand generation to create a single, so-called "full funnel" marketing discipline. The risk with this approach is that the specialized knowledge and skills required to excel at each discipline will be diluted.
The better solution is to improve the coordination of brand marketing and demand generation programs by improving the relationship between the two teams. Once again, a barbell provides a useful visual metaphor. Every barbell has a bar, and the following diagram depicts the major components of the bar that connects brand marketing and demand generation.
As the diagram shows, there are four keys to elevating the relationship between brand marketing and demand generation teams.
Recognized Interdependence - Brand marketers and demand gen marketers must recognize that the two functions are deeply interdependent, that they need each other, and that coordinated efforts are essential for success.
Shared Understanding - Marketers in both disciplines need to have a shared understanding of the fundamental factors that make up the marketing environment. This includes the brand purpose, the positioning of the brand (i.e. core value propositions), and the structure of the market (size, competitive landscape, customer buying processes, etc.).
Ongoing, Self-Directed Collaboration - Brand marketers and demand gen marketers need to work collaboratively on an ongoing basis, and this collaboration needs to occur naturally and spontaneously, at all levels of both functions, whenever and wherever it's needed.
Linked KPI's - Because of the significant differences between brand marketing and demand generation, it's not feasible for the two functions to use the same exact set of performance metrics. However, the two functions should share some KPI's, and it's particularly important to measure the impact of brand marketing on the performance of demand generation programs.