Why being small is not a strategy

Let's not kid ourselves. Small brands shouldn't want to stay small, says the joint chief strategy officer of Abbott Mead Vickers BBDO.

There’s a lot of chat at the moment about plucky little brands.

You know, those funky, social media enabled, design led craft beers. Those chickpea and lentil savoury snacks. The chia seed energy flapjacks. The coconut water. That gin from the distillery round the corner. All that stuff.

You’ve seen these things blowing up everywhere.

And a theory begins to form in your mind.

Small is beautiful.

People are turning away from the corporate mainstream brands.

They’re attracted by greater choice and innovation available elsewhere.

This has probably been driven by lower cost of entry to brand building – now brands can live on Facebook and Instagram, brand building can be scalable, starting small and growing organically (in every sense of the word, for many of these brands). And word spreads due to the power of social media, so origin stories and authenticity are far more important, so people have something to advocate and talk about when they’re putting their reputation on the line to tell their friends (and ideally something pretty to post on Instagram).

It adds up, doesn’t it?

Feels very on trend.

Certainly worth exploring.

But then when you do, you start to find out that it doesn’t really add up.

Because in most markets, the data still tells you that the biggest brands are, well, the biggest brands. These funky little challengers are just minority interests.

People don’t like to hear that, because they love the David and Goliath story. And certainly don’t want David to become Goliath.

They ask testy questions at conferences that present data about big brands – "these rules don’t apply to my brand, because it’s small – what experience do you have working with small brands?".

Subject that to a little logic for a minute – is it really a decent strategy to be small?

You are stuck with fewer sales and fewer profits.

You can’t attract much investment.

You can’t do very much.

And nobody went into business to have fewer options, to be boxed in.

Again and again, it’s clear that in most markets, the best way to succeed is to be big.

The best way to have really efficient and effective marketing is to spend a lot of money on marketing. Once you get that flywheel moving, then there’s no stopping it.

And sadly, experience also tells us that the best way to be bigger than you are at the moment is to spend an unprofitable amount on marketing. To invest ahead of your station. Kidding yourself that you can grow rapidly by choosing Facebook instead of TV because you’re small suggests that media markets have become wildly inefficient (which is not how markets normally work). You’re largely paying for reach. If you’re paying less, you’re reaching fewer people with your message, you’re not going to grow very quickly. By all means, use Facebook, but if you want to grow, you’re going to need to spend a lot of money with them.

Now there are of course many people who would say that I don’t get it. That I’m a dinosaur. Not in tune with the new economy. In thrall to the tropes of old media. To which I offer them Amazon, wildly unprofitable for many years because they spent unreasonable amounts of money on…marketing and innovation; Uber, still wildly unprofitable because they spend unreasonable amounts of money on…marketing and innovation. I could go on.

Once you’re big then the game changes.

Your marketing works a whole lot better.

And then you get even bigger.

And then it happens again.

You’re not in business to be small are you?

You’re in business to be big.

So your strategy needs to be to get bigger.

It’s called ‘investment’ for a reason.

Being small isn’t a good strategy.

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