Brand marketing vs performance marketing. One of the classic contests of our industry; a debate that causes heated exchanges and biased arguments.
Recently, the prevailing sentiment has been anti-performance. Especially after iOS14, the Facebook outage, and reports that behemoths like Uber and Airbnb switched off a big chunk of performance spend with zero to little impact, performance marketing’s impact is being questioned. The great Rand Fishkin went as far as to wonder whether it’s an “analytics scam”.
It wasn’t always like this. Performance used to be the darling of marketers, especially during the golden era of lower CPMs and less competition in Paid Search. Marketers would flood Linkedin with posts mocking the “old way” of doing marketing without measurement and make lists of why performance/growth marketing is superior.
This post isn’t about finding a middle ground between the two approaches. It’s making a case that the dichotomy shouldn’t even exist in the first place.
Why the dichotomy exists and the view from the 2 marketer perspectives
Ultimately, the dichotomy between brand and performance exists because the day-to-day work and the mindset of a marketer that’s focused on each practice differs:
The Brand Marketer will see performance activity as “cheap”, short-term, and compromising to the brand.They’ll be annoyed by the performance marketer’s testing mindset, and will look to impose constraints on what can be tested. They will care more about delivering a consistent message and developing the brand for the long-term than meeting short-term targets.
The Performance Marketer will see brand marketing as fluff and not impactful enough. They’ll struggle with the priorities being set by them, and will also be annoyed by the fact that brand marketers impose constraints on what they can or cannot test.
Why it’s a false dichotomy
At its core, it’s a false dichotomy because it’s not supported by your audience. People buy from brands, and performance advertising is one of the marketing activities that enable a brand to reach and engage with their audience.
The truth is, a brand drives performance and performance marketing informs brand perception. Let’s dive deeper into this statement:
How does performance marketing inform brand perception?
First of all, a performance ad is often the first touchpoint between your brand and a potential customer. People discover new brands daily through Google searches and Paid Social advertising aimed at prospecting audiences. Moreover, performance advertising serves as a continuous touchpoint with your audience, in the form of retargeting.
Ultimately, the prospect experiences any activity as a representation of the brand. Both a promoted post and an organic social post will be received as communication from the same source. The human brain won’t “discount” a performance post when forming its perception about the brand.
That leads us to the conclusion that performance marketing is another way of delivering the brand. But it’s actually more than that. For most digitally-native businesses, Performance Marketing is actually PIVOTAL in building the brand – a performance ad will typically have at least 100x the impressions of an organic social post or a PR placement (and that figure goes up for successful ads as they tend to run for prolonged periods of time).
Does Brand Marketing really drive sales?
Absolutely! It does - the baseline. What are the “baseline sales”? Well, what happens to your conversions when you turn off all performance marketing? In this hypothetical scenario, all the conversions that will still come through will be because of the brand you’ve built. These are the non-incremental conversions (not all conversions attributed to performance are incremental).
It's a question that became a lot more relevant for me when I joined Bleach London last year. It’s an exciting brand that has been active for 10 years and has its own hair salons, very distinct product line on both Retail and Ecommerce, and a very strong organic social presence. They had never done performance marketing before I joined.
Organic Social was the backbone of our day-to-day marketing activities and we had 345k followers on Instagram on the day I joined (Rihanna being one of them!).
The organic social campaigns visibly impact the sales - if not in volume, certain activations result in certain SKUs sales increasing. This was a lot more evident in periods when we had low performance spend. A series of instagram posts about e.g. violet hair would result in an obvious uptick of sales for our Violet SKUs.
The strong organic channels also have a direct impact on the performance advertising we do, as we leverage the social engagement audience for Retargeting. Even if we didn’t directly do that, though, the effect would still be there as there are undoubtedly people discovering us from organic social that end up converting through our performance campaigns.
This can be expanded to a 360 view of what influences buying behaviour. Whatever you can’t directly attribute to a performance channel, email or other trackable activity, is likely due to brand.
(Context: Moiz means that a great brand will achieve lower CPAs, not that a great brand needs to reduce its marketing spend)
A theoretical exercise to prove brand ROI
Okay, Michael – I understand that investing in your brand is important, but how do you go about turning this broad statement into actual business decisions? How would you fight for a brand budget and link it to the business’ bottom line?
One way I’ve found useful is utilising the “% attributed to Paid” metric (sales attributed to paid divided by total sales) when forecasting.
Since this is a theoretical exercise, we ignore the impact brand has on paid conversions and conveniently just split conversions into organic and paid – even though this is never a clear split.
With scenario based thinking, you can compare your current % with the (lower) % you believe you can achieve by investing in Brand.
Utilise identical Paid CPAs for the two scenarios, and show the difference a higher mix of non-paid conversions makes in Blended CPA and Blended ROAS.
For example: If the Paid CPA you can achieve is £30, the blended CPA if Paid accounts for 100% of your conversions will also be £30. If, on the other hand, Paid accounts for 50% of your conversions, the blended CPA will be £15
Measure the brand ROI by dividing the uptick in Revenue numbers in Scenario #2 by the proposed brand marketing budget
Example of a forecasting model I built together with Ines Ures, ex-CMO of Deliveroo and Treatwell:
Get the Model in Google Sheets
(Using Performance Marketing Spend, Paid CAC, AOV, % attributed to Paid and a breakdown between New & Returning Customers are enough inputs to forecast)
My advice to the Brand Marketer and the Performance Marketer
Even though I come from a performance marketing background, my academic background is in marketing too - I first learned about marketing the “classic” way. For that reason, I’ve always seen performance marketing as part of the promotion mix for a marketing plan, and not a transformation to marketing itself. This notion has been supported by my experience so far.
My advice to both parties starts from the same principle for both parties: understand that what you are doing is a means to an end, not an end itself. Your jobs are part of the same assembly line and ultimately deliver against the same target.
To the Brand Marketer:
1) Your role is also a commercial role and must be tied to the business’ bottom line
The fact that you’re not measured by immediate impact shouldn’t divert your focus from your end goal. You are not building a brand for the sake of building a brand, you are building a value-generating asset.
Building a brand is a commercial outcome. There’s a reason why Brand Equity exists and is measured in dollars: a brand is a moat, an asset and it means that people are willing to pay a premium for your product or that they are likely to pick it among alternatives precisely because of the brand. While it’s not a short-term endeavour, the nature of branding is commercial.
2) When it comes to your relationship with performance advertising, shifting your mindset from an abstract “what’s good for the brand” to “how can I build a brand while enabling performance marketing to do their best work in a brand enhancing way” will only make you a stronger brand marketer.
For example, when the performance marketer asks for more freedom to test things, place your constraints in a way that does allow for significant tests to take place.
Especially with paid social, you want to avoid being “too polished” and rigid and understand that certain paid social formats work because they actually look native to the platform. You should 100% adjust those formats to how you think your brand should be communicated, but bear in mind that you are advertising fleeting content that’s going to be consumed on a mobile screen, and can be skipped with the flick of a finger. Not everything your brand puts out needs to be polished as if it’s a billboard in Times Square!
Furthermore, what you have on your mind as “best for the brand” isn’t necessarily true – performance advertising can help uncover that. Also, looking at short-term effects of your activity, albeit not your guiding light, can provide solid indication on whether you delivered a message that connects with your target audience.
If you are running a bigger above the line campaign, you should be using learnings from your performance marketing campaigns to fail-proof your investment.
If your budgets are smaller and don’t run any long-term Branding/Above The Line campaigns, that means that your branding is mostly going to be consumed through the performance channels. Adapt your tone of voice to the medium you serve while staying true to your tone of voice.
To conclude: don’t delve into short-termism, but don’t discount short-term either.
3) And nope, Performance Marketing isn’t a scam (sorry, Rand).
To the Performance Marketer:
1) Nope, Brand Marketing is not fluff nor ineffectual just because you don’t see a large uptick in purchases after a brand activation. Keep in mind that the characteristics of the brand (or lack thereof) are impacting your performance metrics, whether you realise it by looking at your daily dashboards or not.
2) Let go of your ego! You are not more valuable than a brand marketer because you can report on sales after a successful performance marketing campaign. Your campaign is successful only because the brand enables it to be!
3) Nope, brand constraints on your performance advertising are not nonsensical – your performance marketing activity is a core component in brand building and you’ll have to connect the dots to the end goal. The end goal isn’t seeing beautiful numbers in Facebook Ads, it’s contributing to the company’s revenue. Yes, a creative test that goes off-brand might drive sales up for a period of time, but this will come at a cost to the long-term goal of building a successful brand.
Heck, it will even make your performance marketing less effective over time! Like Babak Azad has said in his Ecommerce Playbook (a must read!), all marketing activity must be done in a brand-enhancing way, exactly to avoid this risk.
To the CMO:
1) If you can only focus on one thing, focus on the alignment of incentives. It’s more frequent than I thought possible that the two teams sit in their own little silos, without communicating enough with each other or working towards the same overall goal. It’s even more frequent that the way the two teams are measured makes them compete with each other! Audit your team’s incentives and understand whether there are any conflicts of interest with the current setup.
2) Put your marketing plan on a single page and define priorities for every quarter to increase visibility across everyone’s activity.
3) Encourage synergies between the brand marketers and performance marketers and reward them for actually delivering on those synergies.
Hope you enjoyed this one.
Remember the dichotomy between “traditional” and “digital” marketing? It’s fading away, and rightfully so. I’m suggesting that this should also happen with the Brand vs Performance dichotomy.
Excellent thought piece - I made very similar experiences. In 2019 when Adidas announced a redistribution of budgets towards brand it was embarrassing how black and white the opinions were. Some announced "The return of the brand" while others condmened this shift in strategy. Data suggests that successful companies always have something between a 40:60 to 60:40 mix between brand and performance. It depends also very much on the stage of the company. Especially start ups are rightfully more drawn towards performance as ressources are limited and they are trying to survive. But in the long run, there is no success without a strong brand.