Episode 222: Why Britain is measuring the wrong economy, with B2B Marketing’s James Farmer

Speaker A: Foreign.

Speaker B: And welcome to a very special edition of our B2B marketing podcast. My name is Kavita Singh. I'm head of Growth Solutions content at B2B Marketing and today we are going to be discussing the newly released series the B2B Nations Series Volume 1 on the United Kingdom. For context, B2B Nation is a long term global research program examining national economies through a B2B lens. If you're curious about the UK's strongest path to long term growth then stay tuned. While we will be discussing the UK in today's podcast, future editions will be examining other areas such as the US and India as well. Now onto our podcast episode we are joined by none other than James Farmer, the co founder of B2B Marketing and Propolis. Hi. Hi James, how are you doing?

Speaker A: Very good, thanks very much. Thank you very much for having me on this podcast, Kavita.

Speaker B: Yeah, no, really great to have you on and obviously I know you quite well. But do you want to introduce yourself and um, tell us a little bit about Your role at B2B Marketing and how this report kind of came about?

Speaker A: Yeah, um, so like you said, I'm the co founder of B2B Marketing and Propolis. And uh, for nearly two decades we've been living inside what we call the B2B economy. And over that time um, I've become increasingly aware of the disconnect between how Britain and other economies talk about their economies um, and where their actual value is created. The deeper we looked um, the clearer it became that Britain is not simply a consumer economy. It is an extraordinary strong B2B nation. So the vast strength behind UK is its business to business transaction. And that's what occurs within the shores and the great export. And within um, this report we looked at the kind of key export expertise and systems and finance, law, technology, standards, intellectual capital, um, advisory capacity and just the uh, trusted relationships that um, are sold at a global scale. And the key bit is yet culturally and politically we rarely talk about that. And uh, I guess putting the report together in the first place almost started from a point of frustration that we're still measuring national success through consumer sentiment and retail activity when uh, so much of Britain's global relevance sits in the, in its uh, B2B capacity. Now this, this report wasn't written just as a kind of, from a marketing perspective. It was written as a kind of competitive uh, competitiveness report.

Speaker B: Yeah, really interesting. I mean if someone's curious about the report now and they haven't read it, what's sort of the core thesis and you know, why do you think it matters right now?

Speaker A: Quite simply, the central thesis is simple. Britain is measuring the wrong economy. And the headline figures is that nearly half of UK output, 48% is B2B and B2C accounts for surprisingly only 35%. Um, and that last piece is uh, the direct government spend, not uh, the total tax revenue or tax take from the government what it spends directly itself, which makes up the last 15%. And then it, the report looks about that actually interacts on a trade position. So as a net, um, B2B runs a major surplus. Um, the UK runs a major surplus in B2B around about 118 billion, while the consumer side carries a major deficit of around about 150 billion. And that that difference gives us our overall annual deficit of around 32 billion. And that really matters because it shows that Britain's strongest route to growth is not simply trying to stimulate more domestic consumption. The UK is an import dependent economy. So uh, stimulating consumption increasingly means stimulating someone else's, another country's production base.

Speaker B: Wow, really interesting. I mean as you're rattling on all these different stats, I haven't heard that much about this being spoken about, so seems quite interesting. Um, you know, as I was reading the report, I know we're quite a meta industry. One of the skills we focus on in our commercial marketing framework is insights and understanding macro market trends. So you know, reading the report kind of made me think about that specific skill. What does this report help marketers understand that they might be kind of missing out on today?

Speaker A: Everyone's talking about it. I mean, um, you know, AI changes all production economics at the same time. We've got this kind of geopolitical, geopolitical changes. Those changes impact supply chains, inflation, buyer behavior. Um, as a consequence of all this, trust is becoming more valuable. Um, expertise becomes more valuable, reputation becomes more valuable. Um, and what the report encourages marketers to do is zoom out. Marketing, uh, is simply not, um, competing for leads. They are operating inside a new competitiveness system. Marketing is not just about demand gen, it's about positioning expertise in global markets. Not just the UK brands per se, but where the activity occurs. Um, so this sort of commercial marketeers piece is about marketers increasingly thinking more like strategists than just communicators.

Speaker B: Yeah, no, definitely, I 100% agree with that. Uh, I think, you know, one of the report's biggest ideas is that the UK should explicitly adopt, you know, B2B nation as its primary economic model. So can you explain a little bit about what that actually means, I know you touched on um, I guess you know, sort of using B2C as an example beforehand.

Speaker A: So it means recognizing explicitly that Britain grows through enabling business capacity, not simply through stimulating consumption. That's, that is the key premise. And it's not about abandoning consumer markets. I mean they're incredibly important. It's just recognizing where the UK's strongest competitive advantages already exist. So um, for decades a uh, lot of economic thinking has assumed that if you stimulate demand, growth follows and that's consumer demand and that's your sort of basic Keynesian economics. Um, but for an import dependent economy like Britain and there are many others in the west, that model has limits. So if you stimulate consumption you may create activity but you also risk worsening that trade deficit and adding increasing inflationary pressures, um, which don't end up growing economies and making people. Um, it doesn't mean that a trade deficit is always bad. Countries can run deficits for long periods. But you're looking for serious growth strategies. Simply increasing domestic consumption is not enough. The fastest route, ah for Britain is to sell more B2B M. And Britain's strongest export potential is not mass consumer goods, it's B2B capacity around finance, law, technology and, and that increasing is technology and AI science standards, advisory, creativity, education and you know, so you know we, you know we've, we've seen this sort of piece of um, you know, America testing tariffs and industrial policy, talking about reshoring, so tracing extra national security. But you know in fact that has come with uh, genuine difficulties. And the fact that if Britain, the UK wants uh to grow it's, it should, should lean in on its already uh, what it possesses globally. It's, it's B2B capacity and it's, you know it's, it's this, this hidden opportunity. In plain sight.

Speaker B: Yeah, absolutely. I mean if nearly half of UK output is already B2B, why do you think business and media conversations, you know they focus quite heavily on consumer brands and consumer metrics which as you said is important. But why do you think that is?

Speaker A: I mean almost, it's the same when, when we set up B2B marketing, uh, you know, hidden in plain sight. Consumer brands dominate our culture. You know, everyone can see them, we, we interact with them. B2B dominates the machinery, the activity behind the economy which almost nobody can see or nobody sees as a whole. I mean um, there is a, the large majority of all people work within B2B industries. They, they probably don't even recognize it. So you know the report gives sort of language to something which is already true. B2B is not a niche or secondary. In fact it is Central to the UK's competitive position. You know governments, um, talk about national shopping baskets relating to economic confidence, not B2B output and growth. So um, you know, strong consumer demand comes as a consequence now ah, of a strong B2B economy not driving consumer growth to see the aggregate increase. That doesn't work anymore.

Speaker B: Yeah, I think it's interesting because you know we obviously work in B2B every day, so it's quite important to us. But I think it's one of those things where when you explain it to a friend explaining B2B, it does feel like something that's kind of hidden in plain sight. You know, something that might not feel B2B actually is B2B. So I, I definitely agree with that. Um, I know the report argues Britain's real exports are things like trust, expertise, systems and standards, which I think know you previously mentioned. How does that change the role of marketing in B2B organizations today?

Speaker A: I think making predominant, it makes marketing far more strategic, more necessary. Um, Britain's exports are increasingly intangible in a way. Um, their marketing ultimately is simply not promoting products. It's building confidence in expertise and reliability standards, credibility and ultimately in new markets. And AI will provide heaps of opportunities within that um, as well as obviously the consequential risk as well. But you know, in complex B2B market, uh, markets, buyers are ah, often purchasing risk, at risk reduction um, as much as capacity. And they're asking can I trust this firm, this, this system, the advice, this platform. And that changes the role of brand. You know, brand is not decoration. Brand becomes a signal of operational reliability. And so from a market point of view it has to make uh, the invisible expertise visible.

Speaker B: Um, I know you've mentioned AI a couple of times. Can AI actually increase the importance of trust, reputation and brand in B2B rather than reduce it? We talk about AI as a huge enabler, but I think there's a lot of conversations around, um, mistrust and kind of um, almost disrupting reputation. So yeah, I'd be interested to know, you know, AI's role in that.

Speaker A: Yeah, I mean, God, I mean it's AI such a massive subject of which, you know, there are big players out there, doomsayers. I mean actually in the report that talks about the AI capital paradox. But I think the impact of AI, I think will massively increase the value of trusted brands. You know, when, you know, when content becomes Infinite and synthetic buyers need stronger trust signals, not fewer. You know, AI will lower the cost of producing information. Um, it doesn't automatically lower the cost of establishing credibility. And I think that's the key point. And you know, Interestingly, you know, 10 years ago we were talking about content overloads. You know, AI can impact that tenfold, you know, 100 fold. Yeah, and that's actually going to undermine content further, you know, and m. And that is especially true in B2B where buyers buying decision making is, is highly complex. It's about high value and uh, it's often about mitigating high risk. You know, nobody buys a major service simply because the on the content they read, they buy confidence. Uh, and in an AI saturated world, trust may become this, you know, the scarcest premium assets and that will be uh, owned, should be owned by marketing.

Speaker B: Trust is sort of the outlier there. And that sort of AI saturated world. Definitely. You know, in an AI enabled economy, then who is sort of best positioned to win? In B2B marketing, you know, what capabilities will matter most?

Speaker A: The winners will be organizations that combine human expertise, proprietary insight, trusted communities, and then AI enabled execution. The future is not humans versus AI. I mean that is, that is a, a route, the race to the bottom. It is about trusted organizations using AI intellectually. You know, companies sitting closest to customer intelligence and uh, market understanding will have enormous advantages. And AI will make execution faster, but judgment becomes more important, not less. And the capabilities that matter most will be customer insight, data connectivity, commercial interpretation, brand trust, authority and content, not volume, um, community building and, and then organizational speed, um, you know, AI commoditizes activity, marketing elevates judgment.

Speaker B: I like that quote. Yeah, that's really good. Um, while we're talking about, you know, who's positioned to win, I think it's important to also mention that the report also highlights sectors like professional services, finance technology, life sciences, creative services, um, you know, position them as sort of hero industries. Which of those sectors has the biggest untapped marketing opportunity right now, in your opinion?

Speaker A: I actually think, you know, the biggest opportunity is not just one individual sector. It is broader, uh, but it's bigger. Um, it is part of a, ah, reinvention of marketing itself inside B2B organizations. I mean for years, you know, marketing often sat downstream from strategy, you know, focusing on campaigns, content, lead generation, events and communications and not to undermine that at all. Uh, but in an AI economy, marketing must become one of the organization's central intelligence functions. And the organizations that win will be the ones that sense Customer changes fastest and reconfigure around it fastest. And this almost brings us back, you know, to the kind of 4P's price, product place and then promotion. Now this is, this you know, seemingly is old fashioned but it's, it's more relevant today than ever. Um, um and um, you know, products will change faster, pricing will change faster, routes to market will change, customer expectations change faster. And marketing should become the connective tissue helping organizations respond to those changes. Um, you know, AI will, you know, finally start joining together that fragmented martech stack. You know, um, for years marketers have um, been promised connective systems but the reality has often been disconnected data, uh, broken workflows and APIs that never quite deliver. Uh, too much of marketing time has been spent manually moving data between systems, building reports, reconciling platforms and stitching together customer understanding. AI can change that. That was never the role of marketing to do that. It's a consequence of the tech boom. Attribution modeling becomes much more mainstream or come online properly. Marketing increasingly will be able to stick their necks out, become measured much more by outcomes, not isolated uh, activity metrics. You know we, you know we've got you know, a little bit caught up on our own numbers. You know Rory Sutherland has talked brilliant about this in the past, um, about marketing developing some kind of Stockholm syndrome around financial measurements. You know marketing started accepting someone else's definition of success. Leads, volume metrics, short term reporting, supporting proxies. But many of those metrics are going to become obsolete and the future is not um, activity optimization, it's about outcome optimization. And um, you know the future CMO is not defending marketing spend, they're helping architects commercial performance. That sounds very lofty but um, you know marketing must remove and it's already begun to the center of the business and in a real genuine operational control. And that's what I will enable that to happen.

Speaker B: Yeah, absolutely. I think, I mean I agree with everything you said. I think marketing for years was sort of operating under sort of an outdated model where yeah things like leads and MQLs, um, and different uh, metrics for what they were measuring when now we're kind of in an era where it's much more focused on uh, revenue alignment pipeline, just metrics that ultimately matter for the full organization. Um, you know from the beginning we were talking about the commercial marketer as ah, sort of that strategic infrastructure. You know looking ahead are agencies and marketing teams evolving fast enough from execution partners into sort of those strategic growth partners.

Speaker A: There's uh, a huge amount of positivity. I mean, marketing people are sometimes thought as, you know, the creative people in these creative minds that differentiate marketeers from other elements within organizational structures. If marketing starts owning their own future, which they're starting to do particularly, you can see it in the agency market, particularly some elements and those key heroes, uh, sectors, uh, in house. Um, the best commercial market is now sit close to revenue strategy, customer intelligence, AI implementation, and then latterly, pricing customer experience and then growth planning for a business. And, ah, that's a very different role from simply producing campaigns. Um, now marketing teams and agencies are becoming more confident. They have to become much more confident much more quickly. They need to stick their necks out and move away from these old metrics that they were given and start thinking about commercial outcomes. The future CMO looks far closer to a chief growth strategist than a communications lead. And the best agencies will not just execute briefs. They will help clients understand markets, customers positioning, risk, trust, and growth. I think it's very exciting.

Speaker B: It is exciting. Yeah. I mean, um, we have a couple minutes left. If the report is right and you go back to your core thesis, what's one mindset shift that business, uh, leaders need to make over the next five years?

Speaker A: Okay, Kavita, what about this for a final thought? Um, if marketing was all about copywriting, AI would be terrifying. But marketing is about understanding markets, customers, value, pricing, trust and growth. AI does not reduce the role of marketing. It actually makes it more important.

Speaker B: Fantastic. Well, that about wraps up our podcast. Um, and I think it's a great note to leave on. If you'd like to hear more interesting insights and reveals, we highly recommend checking out the full report, the B2B Nation Series, Volume 1 on the United Kingdom. We'll be leaving a, uh, link to this in our podcast description, so do check it out. In addition, thanks so much, James, for coming on today's episode. Super appreciated for your time. Finally, we want to thank you for tuning in. And please stay tuned for another episode of the B2B Marketing Podcast. Thanks so much. It.