Should You Focus on Performance Marketing OR Brand Marketing?

So this is a debate that surrounded boardroom tables when planning your marketing strategy year after year. Should your marketing plan focus on building your brand, or driving sales for the here and now? That’s what we’re going to discuss on today’s podcast, and we’re going to hopefully give you some tactics to kind of work out what’s going to work best for your business.

Hi, my name is Jordan McFadyen from the Marketing Mindset podcast from Done By Nine. And this podcast challenges you to become the smartest marketer in the room. We’re going to talk about ways that you can move away from random acts of marketing and really start to build your long-term marketing strategy.

And today we want to focus on those two: performance-based marketing versus brand-building marketing as well. It’s a really interesting one, and a lot of different businesses kind of have no idea what the difference is between the two. And also about that blend, about where you should be focusing between both options as well.

So firstly, for the uninitiated, what’s the difference between the two? Performance-based marketing, let’s start there. That’s measuring some of those short-term business goals, the short-term revenue wins, essentially. It’s about sales. It’s getting conversions, getting people across the line. Easy to measure as well, with return on investment. When we’re talking about performance-based marketing, we’re talking about clicks. We’re talking about conversions. Obviously, sales, people buying. The main focus is your return on investment. How much dollars are you putting into a Facebook campaign, and how many dollars are you getting out? It’s pretty much the bones of it.

As an example, e-commerce, let’s say Shopify, we’ve got a campaign based on abandoned carts. So if people leave something in their cart and then head away, what type of a return on investment is it when we get those people back to finish that purchase, and to actually continue and actually make that sale and that conversion? So with performance-based marketing, you’ve got a very detailed audience as well. You do with brand as well, but with performance-based marketing, it’s a really clear audience that you’re going for. And once you find that audience, you really double down on those people. And it’s all about sales and making that return on investment. That’s performance-based marketing.

When we have a look at brand-based marketing as well. So with brand-based marketing, obviously, with any business, organisation or anything, sales and revenue is the key here. But with brand-based marketing, you’re less concerned about the sales happening right now and the conversions happening right now. You’re focusing more on building that positive brand in the mind of all the different consumers, building trust and authority, following those guidelines that Google give us as well. How can we actually build your brand so that it’s trustworthy, it’s seen and it’s everywhere? That’s what brand-based marketing is. So that’s kind of the difference between the two.

But the question then becomes, do you use both, performance marketing versus brand marketing? And the answer is technically yes, and you probably are doing it right now. And we’re going to run through shortly some ways that you can actually test that with your own marketing strategy right now.

So in a recent report from Marketing Week, it revealed that 14.9% of all marketers focused solely on brand marketing, versus only 8.6% of marketers who focused on performance-based marketing, which seems like a massive gap. But then when you dive down a bit even further, they start to have a look at where the skews and where the blend is. Because even though you might have more of a focus on brand-based marketing, obviously you’re going to need that performance-based marketing in the background, kind of making sure that we are actually driving those sales as well.

So when we think about your organisation and some of the results from that survey, and if we go back to Marketing Week, what that research says is when it comes to actually finding that right balance, that right blend, 27.6% of the sample blended both brand and performance, with a skew towards brand marketing. So performance is still in there, but it’s more focused on that brand marketing, versus the other way, which was 23.7% of those people had a skew towards performance-based marketing. And then if we have a look further, 22.1% blended both brand and performance equally, so a bit of both, 50-50, into where they invest within their actual organisation.

And look, there’s a lot of pressure for marketing teams and agencies, and as business owners and as founders, to justify your marketing efforts and your investment, especially when it comes to our short-term business performance. But the challenge that you need to be thinking about right now is whether you need to set that blend between your performance-based marketing versus the brand-based, whatever that organisation needs are. So that’s your big question that you need to kind of work through: where the organisation, where your business is at right now, and where the performance-based or brand-based marketing is going to help in the long run.

Just as a bit of an example, to give a tangible example, I was thinking about Airbnb. Obviously a massive company, but still I think it’s an interesting story that they, in 2021, obviously it was COVID and their business was going through a lot of different change, but they essentially had to cut their sales and their marketing spend by literally about 28% year on year. And they said that they decreased primarily on their performance-based marketing. So at that time, when they needed to make a call, they dropped their performance-based marketing, which made sense, because a lot of people couldn’t travel at that time. And they went all in on their brand-based marketing.

So what they did is they started to change how they looked at their marketing as well, and what the role of marketing played within the organisation. And so essentially their marketing turned into education, as opposed to a way to buy customers. So as an example of that, they ran a campaign, it was called the Made Possible by Hosts campaign. It was literally aimed at education. It was to educate guests about the benefits of being hosted and to host, and to inspire more people to become hosts at the end of the day.

And it was focused on that, as opposed to come and buy, or come and rent, or come and list your property with us. It was more around how can we educate people around the benefits of using Airbnb to list a property. And obviously they focused on building that trust and that authority and that trustworthiness. And I think it really worked with Airbnb, obviously, clearly worked with them, as they’re a massive company that slowly have become literally like a noun and an adjective in themselves.

But for you, I guess, what we need to do is we need to think about how we can set that budget and that balance between performance-based marketing and our brand-based marketing. And it really does require careful analysis of your marketing objectives, your target audience, obviously, your current marketing mix, your return on investment goals, your ongoing testing and iteration to really optimise performance. What you’re going to do is you’re going to need to revisit your strategy and really think about how you can ensure that the goals that you’ve set are focusing on both building your sustainable brand that’s going to continue to have a name in the marketplace, but at the same time, blending that to ensure that sales are still coming through the door.

So here’s a bit of a checklist that I want you to run through today, which I think is going to help you work out what that mix is for you and your business. So the first one is really sitting down and defining your key marketing objectives. So again, are you looking to drive immediate sales and conversions right now, or are you more needing to focus on building long-term brand awareness? If it’s a bit of both, blend it 50-50. If you really need the sales now, you might go 70-30. So really have a bit of a think about where those marketing objectives are. And this is what you need to plan when you’re actually building out your strategy, so that you can understand what activities you need to do to be able to hit those goals at the end of the day.

The next thing I want you to think about is thinking around that current marketing mix. So what is your current marketing mix right now? Assess how much of your budget is actually allocated to performance marketing versus how much is actually allocated to brand marketing. Identify all the gaps that you’ve got where you may be overspending or underspending. And this is an interesting one just to think about as well, as kind of thinking around how you can actually bucket the different campaigns and the different things that you’re doing right now into whether it’s performance-based or brand-based marketing.

So for example, a lot of companies now will focus on, we’re spending this much on Facebook, or we’re spending this much on LinkedIn or on Google Ads. But instead, think about the objectives that each of those campaigns within Facebook are actually doing. Chances are you’ve probably got a brand-based campaign and a conversion-based campaign right there. So think about what that mix is and where that budget is currently sitting. So that’s where you do need to think about your current marketing mix. And instead of focusing on the different platforms and what you’re spending on a platform, think about what the objectives are within that platform, and what bucket that then falls into.

The next thing I want you to focus on is your target audience. Going back, understand their behaviours and what they kind of need from you at any one time. Your audience is different from my audience and other audiences. Is your audience more likely to respond to direct response tactics like SEO, search engine marketing, and paid social media advertising? Or are they more likely to engage with more brand-building tactics, more education-based topics, more seeing your brand on a billboard, or on a digital billboard, or anything like that? Where’s your audience sitting? What type of content resonates with them, and what do they need to see as well?

The other thing I want you to do is redetermine your ROI goals. Now, obviously, you can’t do this all the time, but the next time you’re actually working at your goals, this is a great chance to do it. For performance-based marketing, you’re obviously always going to be looking for a positive return on investment on each campaign. Brand marketing, think about what those goals are. You may be looking for more qualitative measures, such as brand awareness or perception of the brand in the marketplace. Social proof, whether people are actually talking about you, or things like that as well, can be really good ways of determining your ROI.

And the last one, which I get so surprised that a lot of businesses still don’t do this enough, and this is one thing that we try and educate our clients and customers on as much as possible, is testing, reiterating just how important it is to test and evolve and change. Literally, I had this conversation with a client a few days ago who was literally hoping that within a couple of months they would be able to have that secret sauce of what their marketing needs to do to be able to carry on. And while that’s awesome to have as a bit of a goal, it’s just not attainable. There’s no silver bullet in marketing.

Things are always changing. We always blame it on the algorithms, but sometimes it’s not even the algorithms that are changing. It’s your customers and your consumers and the way that they actually consume content. Or it’s the changes within your own business, within the services you provide, within some of the messaging and the values that you have as well. So there’s always changes, and we always need to be testing, and we always need to be trying to get better at the end of the day as well.

Think about ways that you can optimise, and optimise based on performance. Think about changing your budget allocations as much as needed between performance-based and brand-based marketing. Monitor those key metrics: conversion rates, click-throughs, your brand sentiment, how many reviews you’re getting, what people are saying about you out in the marketplace. These are all really important things that you need to have as your key metrics, so that you can actually determine what is working better for your brand right now, the brand-based marketing or that performance-based marketing.

And like I say, there is so much pressure for marketing teams, agencies like myself, owners and founders, really, to justify marketing efforts and justify their marketing spend, especially when it comes towards the marketing that’s directly focusing on results, on short-term business performance. So you’ve got to make sure that it’s really clear about how much of your budget is allocated towards that, versus how much is actually allocated towards long-term brand building. And the challenge you need to set yourself is whether your blend between performance-based and brand-based marketing is actually working. Ask yourself, are you actually focused on short-term sales versus long-term brand authority or not? And what tweaks and changes do you actually need to make?

So hopefully that’s given you a bit of a thought starter about, A, the difference between the two, but also how we need to think about evolving and changing our business based on where the business is currently at, and bucketing our marketing strategies into those two kind of buckets.

If you’ve got any questions or you want to look at any more resources, you can find all the other podcasts from Done By Nine at our website, donebynine.com. And also all our blogs and resources can be found there as well. And obviously, if you want to talk to myself or a member of the team, you can contact us via our website as well, donebynine.com. Thanks for joining us here today. We look forward to seeing you in the next episode of the Marketing Mindset podcast.