Explore the balance between brand and performance marketing in this insightful article. Learn how to navigate economic uncertainty and optimize your strategy.
Marketers are constantly faced with the challenge of balancing brand marketing and performance marketing, an age-old dilemma which has been thrust back into the spotlight as 75% of advertisers find their budgets are increasingly scrutinised following the pandemic and subsequent economic uncertainty.
Brand marketing focuses predominantly on longtail results such as brand awareness, perception, and loyalty. Whereas performance marketing is geared towards driving immediate sales and measurable ROI.
In whatever form, it’s essential that marketing continues in times of economic uncertainty, maximising whatever budget is available to find the right balance between achieving both short-term gains and long-term growth.
Upper-Funnel Branding, Lower-Funnel Performance
Branding and performance operate at opposite ends of the marketing funnel and therefore engage the consumer in different ways.
Brand marketing is all about creating a strong emotional connection with consumers. It involves creating a brand identity that resonates with the target audience and evokes positive feelings, such as trust, loyalty, and aspiration. The goal is to increase the consumers’ Lifetime Value and create a perception of the brand that is authentic, unique, and differentiated from competitors.
85% of marketers say their external messaging reflects corporate values, and today’s consumers expect the brands they buy from to be aligned with their own moral values, especially the younger Gen Z demographic.
Where previous generations may have thought differently about the value exchange with a brand — a trade-off between price and quality — the way Gen Zers now evaluate the worth of a product or service is more multifaceted. The notion of ‘value’, then, is expanding beyond monetary cost.
Further down the funnel, performance marketing is focused on generating immediate results, using data-driven strategies to optimise campaigns for maximum ROI. This includes an array of digital marketing tactics — such as e-marketing ads, search engine optimisation (SEO), and affiliate marketing — with the goal of meeting specific business objectives such as generating leads and driving sales.
In a digital world, it is even more crucial that marketers are focussing on performance as consumers become increasingly sophisticated in their online interactions. As a result, consumers are more likely to engage with brands that offer relevant and personalised experiences.
At the lower end of the funnel, the ultimate goal is conversion so more precision is needed to achieve this. Enticing deals and information offered by an ad should be tailored to deliver an effective message at the right time to drive the most conversions. Consumers are looking for specificity at this point.
Add to this the evolving definition of ‘value’ and it becomes clear that full-funnel marketing is still needed to achieve effective, well-balanced campaigns. It is important to gain a deeper level of consumer understanding around brand messaging in addition to tailoring marketing efforts at the lower end of the funnel. Without the brand story, marketers won’t find their consumers as engaged at the lower end.
No One-Size-Fits-All Strategy
KPIs should be agreed at the start of the marketing strategy, determining which area of the funnel is a focus. If a business has high conversion, but only for single purchases and wants to increase its rate of repeat purchase, the objective should be to build brand loyalty — focussing on higher funnel. Equally, high browsing rates but low conversion means that lower funnel conversion should be the focus.
There are other factors to consider such as product vertical — how high-end luxury brands are perhaps less impacted than mid-range brands, due to their customers’ varying levels of resistance to economic hardship.
Regardless of where in the funnel a marketing strategy is focussing, brands still need to track the effectiveness of their campaigns. It’s critical that brands do not lose sight of the KPIs. Marketers must continually monitor these indicators and look at success across the funnel — what is working and what needs optimising. This can only be done with a digital-first approach, if true attribution is to be achieved.
In addition to overall business goals, marketers must consider wider influences, such as macroeconomic factors. Engaging consumers during a cost of living squeeze means being mindful of messaging. In a shifting landscape where demands and motivations are constantly changing there’s greater importance on adopting a data-led, test and learn approach.
To truly leverage a data-first approach, marketers must be prepared to adjust their strategy and have the tools in place to run a flexible campaign. What worked last year might be ineffective this year and by relying on accurate data insights, brands are more likely to boldly adapt an approach that is failing and increase overall effectiveness.
To ensure marketing strategies are accurately informed, marketers should take into account both online and offline data. Combining these two types of data sets provides a better overview of the business.
For example, if a customer enters a physical store and provides their email address, it makes perfect sense for it to be added to e-marketing ad campaigns or be used to send personalised discount codes to. This is what effective engagement with loyal customers looks like.
With the focus on cost-effectiveness, the marketing mix modelling (MMM) is a surefire way to analyse sales success; using aggregated, historical time-series data to model sales performance as a function of advertising variables.
Marketers can then identify offline and online attribution by accurately assessing which variables have been the most effective over a given period. Demonstrating success is indeed important, however, there’s no optimal media mix or strategy that applies for every brand or campaign.
Branding versus performance marketing is a complex conundrum that must consider macro factors such as economic state and market demand, but also a brand’s characteristics, such as its level of maturity, available budget, and product vertical.
Balance is therefore key. An over-investment in performance marketing could see brands neglecting long-term growth, brand identity and loyalty, whereas a brand focus could risk conversion.
Rather than thinking of long or short-term spend, another approach is to consider who is being targeted, what stage of the journey the brand is at, and what kind of product are you selling?
But ultimately marketers must take a flexible, adaptable approach. By using a mix of marketing tactics that focus on all parts of the funnel, marketers can create a sustainable and profitable strategy that delivers both short-term and long-term results; while staying agile in times of change.