After the first Commercial Note argued that ecommerce is retail - and that contribution margins have converged toward retail-level - the most obvious gap was brand and digital marketing. I didn't acknowledge either. That was deliberate. This is the acknowledgement.
Brand and digital marketing are central to ecommerce. Every business of a meaningful scale has to invest in both. Brand is where pricing power lives. Where customer loyalty compounds. Where the ability to charge full price while competitors discount comes from. The businesses that sustain margins over time are the ones customers choose to return to without being re-acquired through paid media on every order.
But the most important observation about brand investment is not about creative quality or channel selection.
Most brand failures are not creative failures. They are commercial planning failures.
Brand investment is speculative. And this is not a criticism.
Speculative means the return is real but uncertain, the payback window is long, and the compounding effect is non-linear - flat early, steeper later. Some brands enter at a premium, build equity with a niche audience, and use that equity to expand as production scales and unit costs fall. The brand is what earns the right to grow into the broader market. That requires holding the investment long enough for the compounding to take effect.
You cannot plan to strike on the first campaign. What you can plan for is the ability to keep investing when the first one doesn't land. And the second. And the third. That is how most brands are actually built - not through a single breakthrough, but through sustained investment over months and years, most of which produces no immediately measurable return.
Attribution makes it harder to defend internally.
Attribution has always been imprecise. But the complexity has compounded as customer journeys now span multiple channels, devices, and time periods.
Every platform attributes as if the sale was theirs. A customer discovers a brand on TikTok, searches for it on Google, clicks a retargeting ad three days later, and completes their first purchase on the brand's website. The website attributes the conversion. The same customer then places their next order on Amazon - where the free delivery threshold is lower - and Amazon claims that one.
On the brand side: a campaign runs, produces no measurable response within its attribution window, and is deemed ineffective. Six months later, an unpaid influencer shares that content and performance spikes. The attribution system reports it as a response to current paid activity. The original investment is never credited.
The practical consequence is predictable. Businesses measure what they can measure - short-term paid media ROAS - and cut what they can't. Brand spend is the first to go when cash tightens. Before it has had time to compound.
The commercial planning failure.
When brand spend is cut before it has had time to compound, the business does not just reduce future investment. It writes off much of the investment already made.
But the deeper problem is not the cut itself. It is why the cut was even an option.
Brand spend is not inherently discretionary. It becomes discretionary when the business approves it as a budget line but not as a clearly defined and aligned business commitment.
A budget exists, but the investment logic does not: what the spend is meant to build, over what time horizon, what level of short-term underperformance is acceptable, and what would justify stopping the investment. So when pressure arrives, there is no commercial logic protecting the investment and Brand goes.
That is the failure. Not that brand was cut in a difficult moment, but that it was never translated into a planned commercial commitment with a defined size, sequence, tolerance for underperformance, and payback window.
Pricing is where the planning failure becomes concrete.
Pricing sits at the intersection of several inputs that don't naturally sit with the same team. Brand teams typically own two of them: the positioning the business wants to hold in the market, and competitor pricing and positioning. Both are necessary and both require real expertise to get right.
But correct pricing also requires commercial analysis grounding the recommendation in operational reality. The true cost of goods - including packaging at the quality level the brand positioning demands. Channel costs for the specific audience and product segment being targeted, which can vary materially between DTC, Amazon, and B&M retail. Fulfilment costs at the volume the audience sizing actually supports. The audience sizing itself - whether the volume assumption behind the price point is realistic given the market the brand is entering.
Without that commercial grounding, the pricing recommendation can go wrong in either direction. Underprice, and the contribution margin is insufficient to fund the brand investment the business is supposed to be making. Overprice, and the brand misses the audience it is trying to build with.
Both are commercial planning failures. The product may be excellent. The positioning may be precisely right. The creative may be strong. But if pricing wasn't taken at the intersection of brand intent and commercial reality - validated against the full operational cost structure and the audience the brand is actually addressing - the business has already compromised its ability to fund what comes next.
This is the pattern that repeats. Brand and commercial functions working from different inputs, making separate recommendations, with no shared framework for validating the decision against what the business can actually sustain.
The commercial test for brand investment.
The question is not whether to invest in brand. Every business has to invest in some way. The question is whether brand investment has been correctly planned, sized against internal and external reality, and built into the commercial architecture from the start - with full awareness of what brand's specific nature and timeline actually demand.
Has our commercial architecture been built to sustain what brand investment actually requires?
That includes pricing decisions validated against the full cost structure. Contribution margin clarity by channel, so brand investment can be sized against what the business actually generates. Working capital discipline, so the commitment can be held through the periods when brand hasn't yet returned anything measurable. Catalogue architecture, so the product range supports the brand positioning rather than undermining it with margin-negative lines that drain the working capital the brand investment depends on.
These are not alternatives to brand building. They are what make the commitment sustainable.
Brand and marketing are the engine. The commercial structure is what keeps the engine on the road long enough for the investment to compound.
