1-800-Flowers.com is weaning itself off buying clicks, Megan Graham reports this morning for the WSJ Leadership Institute. 

The floral-and-gift delivery company said this month that it is changing its marketing strategy by putting more into its brand position with consumers and reducing its heavy focus on driving transactions.

“Last year, our marketing efforts were heavily focused on bottom-of-the-funnel activities, primarily focused on driving transactions, and we did not have the systems or infrastructure in place to effectively drive customer retention,” CEO Adolfo Villagomez said during an investor call this month. “The most important asset we have, it’s our brand. And unfortunately, we hadn’t invested in the brand for a while. We are reversing that.”

What’s so bad about driving sales?

“We were buying transactions for $40 and making $20 margin on each transaction,” Villagomez explained on the call. “Then you would say, well, that’s great because we are acquiring a customer. That’s true if you retain the customer. But if you don’t retain them, then you are just wasting dollars.”

A stronger brand also makes lower-funnel ads more efficient, the CEO suggested.

Megan’s seen this kind of story before, so I asked her about the echoes.

This reminds me of your coverage last year, when Bath & Body Works said it would boost its brand marketing after deciding that overreliance on discounts and promotions had eroded customer loyalty and pricing power. Why does this keep happening?

Megan: I think it comes down to marketers being so responsible right now to prove the value of what they’re spending on. And I do think when brands first ramp up their bottom-of-the-funnel spending, they love the results they get and figure, why not just focus here? But those amazing results frequently tap out at a certain point if they neglect investing in the brand—and the ads get less and less cost-effective.

It sounds like the picture gets pretty clear at a certain point. Do corporate leaders get support when they try to make the change, or are they still under pressure to focus on the lower funnel?

Megan: I remember in 2019 writing about how Booking had attempted to lessen its reliance on Google ads. The company had been moving ad budget into TV commercials and other brand-building efforts as it was observing decreasing performance marketing ROIs.

It was interesting listening to analyst commentary on the earnings call that summer, with analysts pressing Booking executives on why they weren’t seeing results from the brand marketing more quickly. The Booking bosses pushed back and said brand advertising is always going to be important for anyone in the retail business and that it just needed time to improve.

I think that was a very public example of how the Street likes to see more immediate, more easy-to-attribute results from marketing. It’s a very tough line for execs to walk.

There’s tension between marketers’ desire for control and Google’s expanding AI-generated ad formats, Patrick Coffee pointed out in the newsletter yesterday as we discussed the tech giant’s new offerings in AI Mode and traditional search alike.

Google provides a guardrail tool to help address any concerns, Patrick noted, “but the company also says your ads won't be any good if you try to put too many restrictions on the AI creating them.”

Readers had thoughts.

AI models may be more familiar with everyday consumer come-ons than the communications strategy required in specific business-to-business sectors, said Emma Draughn, marketing coordinator at the architecture firm HagerSmith Design:

And Jacob Teeny, associate professor of marketing at Northwestern University’s Kellogg School of Management, argued that brand leaders may be conflating the control they need with the control they never had:

Victoria’s Secret is changing its stock ticker to VSXY as part of a push by CEO Hillary Super to usher in “a new era of sexy” for the brand.

The company has been rolling out new products under its “Very Sexy” line, including double push-up bras with more padding to provide extra volume and lift, the Journal’s Suzanne Kapner writes.

“Sexy has always been part of our DNA,” Super said in a letter on Victoria’s Secret’s website. “What’s changed is how intentionally we are owning it. Not by telling women what sexy should be, but by reflecting it back to them in a way that feels authentic, expansive and modern.”

Victoria’s Secret’s current ticker is VSCO, a reference to its more buttoned-up corporate designation: Victoria’s Secret & Co.

More on ticker branding:

Victoria’s Secret isn’t the first company to try to get intentional with its ticker symbol. Anheuser-Busch InBev trades under the ticker BUD, a nod to Budweiser. Petco’s ticker symbol is WOOF, Six Flags uses FUN and investors know Dave & Buster’s as PLAY.

On at least one occasion, a company decided it liked its ticker even more than its actual name. Tricon Global Restaurants, the parent company of KFC, Pizza Hut and Taco Bell, had traded under YUM for more than four years when it decided to officially become Yum! Brands.

But clever tickers can go bad, too. “UGLY” seemed fun when the used-car retailer Ugly Duckling Corp. went public on the NASDAQ; less so when its shares later tanked.

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