How family businesses go to market

The prevalence of family businesses in the IPA Effectiveness Awards 2024 winners is quite remarkable: four out of the five Gold-winning cases feature brands owned or controlled by families, and three more picked up Bronzes.

A freak set of data in a world where publicly quoted businesses are supposed to be the masters of brand marketing? I think not.

In a world where other advertisers grift relentlessly to win short-term sales, this year’s Specsavers paper reminds us that: From Hovis to Weetabix, the IPA Effectiveness Awards have highlighted the value of rediscovering advertising ideas. This case proves the value of not forgetting one.

Indeed, check your prejudices at the door and you will find much privately held brand and advertising endeavour – in these pages and beyond – to inform your own efforts, whatever your ownership model. An inconvenient truth, perhaps, for those with full-blooded belief in the public stock markets and their quarterly reporting rhythm!

McCain, Yorkshire Tea, Laithwaites, and Specsavers are among those flying the flag for family-controlled companies this year, and we will return to each in due course.

But first: some context and some definitions.

It’s easy to caricature family businesses (and even privately held companies more generally) as subscale, domestically focused players in a world of fat multinationals.

Some, of course, do fit that description but flourish anyway. Some have broken free of those chains and shrugged off that billing: Specsavers, for example, is the world’s largest privately held optical business, operating across 11 countries. Others are giants, and a full roll call reminds us that many of the businesses we actually consider ‘public’ (in that we can buy or sell shares in them) still remain under family control.

Fabled brands and brand owners like Walmart (the world’s single biggest employer), Berkshire Hathaway (the company through which renowned investor Warren Buffett buys and holds stakes in companies including Duracell, another IPA Effectiveness winner this time), Ford, BMW, Dell, Samsung, LVMH, and LG all appear in the top 20 of the 2023 Family Business Index, compiled by EY and the University of St. Gallen.

Further down the list you will find the likes of AB InBev, Nike, Mars (still 100% owned by the Mars family), L’ Oréal, Tata, Porsche, and Aldi (still 100% owned by the Albrecht family).

From their humble or at least unremarkable beginnings, then, it’s obvious that family businesses can grow in scale and flourish, despite – or perhaps because of – typically going their own way rather than pursuing the playbook of publicly quoted companies.

Family businesses don’t just have a distinctive ownership structure but tend also to do business differently, with - it turns out – apparently advantageous consequences for their marketing investment strategies, habits, and returns.

The Boston Consulting Group, for example, has noted that: During good economic times, family-run companies don’t earn as much [as those with a dispersed ownership structure]. But when the economy slumps, family firms far outshine their peers. The simple conclusion we reached is that family businesses focus on resilience more than performance. They forgo the excess returns available during good times in order to increase their odds of survival during bad.

Whether this truth holds universally or not is a moot point: at least some of the brand owners listed above would self-identify, I’m sure, as performance-orientated. Likewise, different leadership chapters might also throw this analysis out, at least for a while: at the time of writing, Nike, for example, seems to be beating a hasty retreat after an ill-judged deviation from its fifty-year brand path.

From their humble or at least unremarkable beginnings, then, it’s obvious that family businesses can grow in scale and flourish, despite – or perhaps because of – typically going their own way rather than pursuing the playbook of publicly quoted companies.

Nonetheless, several of BCG’s ‘seven traits of family-run firms’ are worth pausing on, as it seems plausible that they pull through directly into marketing strategy and behaviours.

First of all, family businesses are frugal in good times and bad. Indeed: ‘After years of studying family businesses we believe it’s possible to identify one just by walking into the lobby of its headquarters.’

Second, ‘family businesses tend to invest only in very strong projects, miss some opportunities but [avoid] cash black holes.’

Third, they ‘aren’t energetic dealmakers’, preferring organic growth and what’s been called elsewhere ‘the disciplined pursuit of doing less’.

Last, they retain talent better than their competitors do, with a ‘culture of commitment and purpose’ rather than relying on financial incentives. A commitment and purpose that can often be traced right back to the founders or founding spirit of the organisation.

In short, family businesses ‘focus on the next generation, not the next quarter… [embracing] strategies that put customers and employees first’.

Even without further embellishment, these traits and that focus would seem to lend themselves to the kind of marketing playbook and superior marketing payback evident right across the IPA Effectiveness Awards’ long life: of brand leadership earned and sustained over time, rather than bought; of long horizons; of continuity in all its guises.

Certainly, this year’s crop of IPA winners underscore much of the above.

Generalising only a little, the brands in question (and other privately held businesses on the 2024 winners’ board like Mars, Müller, and Vanguard) do three notable things:

1. Set long-term objectives (and so prioritise brand over activation)
2. Advertise cautiously at first, then commit fully behind winning ideas
3. Hold their creative course

These ‘effective advertising traits’ seem to flow naturally from the business culture described above, and chime with the more general findings of the IPA over the years: that superior profit returns accrue to exactly these behaviours and habits.

In a world where most advertising money is spent on advertising with short-term goals, where CMO tenure is brief and where campaigns chop and change with equally undue frequency, this cluster of outperforming brands is a data set to cherish in its own right.

Let’s unpick and explore each in more detail.

Family-owned businesses set long-term objectives

It’s striking how many of our 2024 winners pride themselves on the long-run contribution made by advertising investment. Even their language is revealing:

• ‘Ten years on, we’re ready to tell the story’ (McCain).
• ‘[We’ve been] slowly brewing success over seven years’ (Yorkshire Tea).

But these aren’t just businesses that have waited patiently to tell their story: they have each stood at the strategic crossroads and deliberately chosen ‘long’ rather than ‘short’.

For McCain – faced with the rise of own label alternatives and of discount retail more generally – the choice was especially stark. The short option was to double down on price promotions and drive volume. Instead, McCain and its agency set out to do the very opposite: to go long and invest in ‘brand’ to reduce price elasticity: In 2014, we adopted a Lodish and Mela mindset. We would stop managing the brand over quarters and start building it over years.

Yorkshire Tea, likewise, flew in the face of the ‘milk it or sell it’ advice typically meted out to small- to medium-share brands in low-growth markets and chose to target brand leadership instead, an audacious objective that ‘would need a consistently famous, well-branded, long-running campaign’.

Family-owned businesses advertise cautiously at first, then commit fully

True to the earlier caricature of businesses that prioritise resilience and mitigate risk rather than chase ‘performance’, the IPA Effectiveness Award-winning family businesses demonstrate admirable caution getting to a campaign they have confidence in before reaching for the advertising splurge gun.

Bouncing back from a post-COVID-19 sales slump, the independent wine merchant Laithwaites’ recovery is ‘the story of how a 53-year-old business developed the courage to invest in long-term brand building’. Activity preceded, informed and validated by not just one, but two sophisticated regional tests, tests obliged to ‘prove the value while simultaneously delivering the value of brand advertising’.

Even an advertising big dog like Specsavers, where ‘two decades of consistent creative approach had made the brand famous’, trod warily when contemplating the inversion of its long-running campaign idea to support the brand’s home visits offering.

The tactical flip from ‘Should’ve gone to Specsavers’ to ‘(Nah…) They come to me’ was only rolled out after due evaluation not just of advertising copy but also of the business’s ability to meet the demand it might create.

Family-owned businesses hold their creative course

Once family businesses have winning campaigns on their side, they double down admirably … and not just in terms of budget. Their default setting becomes consistency rather than change, refreshment not reinvention; subscribers, knowingly or otherwise, to the advertising school of thought that ‘familiarity breeds favourability’.

In a world where other advertisers grift relentlessly to win short-term sales, this year’s Specsavers paper reminds us that: From Hovis to Weetabix, the IPA Effectiveness Awards have highlighted the value of rediscovering advertising ideas. This case proves the value of not forgetting one.

The authors of the Yorkshire Tea entry concur, stressing ‘the importance of repeatable formulas in long-term brand building’ (and indeed of media consistency mirroring creative consistency).

In summary, and given our understanding of brand building as an investment, it’s perhaps no coincidence that so much of the best practice above echoes the principles of the world’s most famous investor, Warren Buffett.

Buffett’s Berkshire Hathaway vehicle likes to find branded businesses with pricing power and go long, undistracted by (riskier) alternatives.

The Sage of Omaha once summarised his disdain for short horizons, distractions and discontinuity with a turn of phrase that family businesses seem to instinctively understand, and that brand owners of all stripes might choose to pin above their desk as a reminder of the danger of change for change’s sake: When the phone don’t ring, you’ll know it’s me.

This is an extract from Advertising Works 27 - the book is available for purchase

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The opinions expressed here are those of the authors and were submitted in accordance with the IPA terms and conditions regarding the uploading and contribution of content to the IPA newsletters, IPA website, or other IPA media, and should not be interpreted as representing the opinion of the IPA.