This is one of the classic debates in our industry....something I come across mostly with any brand we work with. This has got more heated recently post the iOS 14 change, where large advertisers switched off their performance campaigns with zero to little impact. Prior to this, performance used to be loved by marketers, especially during the golden era of lower CPMs and less competition in Paid Search.
Let us see this through 2 different perspectives - the brand marketer and the performance marketer.
Brand Marketer - performance activity is “cheap”, short-term, and compromising to the brand. They care more about delivering a consistent message and developing the brand for the long term than meeting short-term targets.
Performance Marketer - brand marketing is fluff and not impactful enough. They detest the “old way” of doing marketing without measurement.
People buy from brands, and both brand & performance advertising are marketing activities that enable a brand to reach and engage with its audience.
The truth is, a brand drives performance, and performance marketing informs brand perception. Let’s dig deeper into this statement:
How does performance marketing inform brand perception?
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. For most digitally-native businesses (D2C, SAAS, etc.), Performance Marketing is actually instrumental in building the brand – in terms of volume, performance ads will typically have at least 100x the impressions of an organic social post or a PR placement.
How does brand marketing attribute to sales?
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. 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 retargeting campaigns. Whatever you can’t directly attribute to a performance channel, email or other trackable activity, is likely due to brand.
Here is a template/framework that will help you calculate this to from a forecasting angle.
| Q1 (Past) | Q2 (Current) | Forecast |
|---|---|---|---|
Performance Marketing Spend | | | |
Total Revenue | | | |
Revenue from New Customers | | | |
Revenue from Returning Customers | | | |
Total Orders | | | |
Orders from New Customers | | | |
Orders from Returning Customers | | | |
AOV | | | |
AOV New | | | |
AOV Returning | | | |
Blended CPO | | | |
Blended CAC | | | |
Attribution to Performance Marketing | | | |
Orders from Performance Marketing | | | |
New Customers - Performance Marketing | | | |
Paid CPO | | | |
Paid CAC | | | |
Orders from Non-Perf (Organic, Email, ATL/BTL) | | | |
New Customers from Non-Perf | | | |
(use spends, CAC, AOV, split between new and returning customers as inputs to forecast - Credit - Ines Ures, ex-CMO of Deliveroo and Treatwell, Michael Lorenzo at Bleach, London)
Things a Brand Marketer must understand and do:
1) Brand marketing is also tied to the bottom line. It may not be in short-term but definitely in the long term. That is why Brand Equity exists and which is why a customer is willing to pay a premium to buy your product. While it’s not a short-term endeavor, the nature of branding is commercial.
2) Treat Performance Marketing as your ally. Sometimes, you will have to compromise on your polished guidelines for your brand to give that flexibility and nimbleness to your performance marketing programs. 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.
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.
Things a Performance Marketer must understand and do:
1) 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 realize it by looking at your daily dashboards or not. Try running a performance campaign for a brand launch and you will understand why it falls flat in your face until a brand campaign comes to prop it up.
2) 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.
The final onus is on the CMO to bring the two teams together rather than have them in silos. At the same time audit the incentives of each group and see if there is any conflict of interest in your current setup. Put your marketing plan on a single page and define priorities for every quarter to increase visibility across everyone’s activity. Synergies will need to be acknowledged and rewarded periodically to encourage this tango between the two teams.
I hope this will help you create an awesome brand in the near future and grow to its true potential.
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