When the world feels as chaotic as it does right now, the antidote is often as simple as getting back to basics, core beliefs and values – like logging off, connecting with your community, and focusing on the things that truly matter.
It’s the same in business. The ever-evolving, always-on media landscape can sometimes throw businesses and marketers, making you second guess what you’re doing, why you’re doing it, and who you’re doing it for – it can create a false sense of urgency, unease and trepidation that can either paralyse you into inaction, or push you to make rash decisions that might not serve you, your brand or your budget.
As an agency that has championed the importance of building brands for the past 30 years, we often need to stop and remind ourselves why starting from this foundation is so important – that’s why it was refreshing to read a recent industry report that confirmed what we already instinctively knew – that brand-first marketing works.
The Multiplier Effect report – launched at an Advertising Council of Australia event last month – was developed by some of the world’s leading advertising minds, and called on marketing managers to embrace the power of brand in their marketing strategies.
According to the report, touted as “A CMO’s guide to brand-building in the performance era” marketers hunting for the best return on investment (ROI) have been putting too many of their precious budget eggs into performance advertising rather than brand building.
Performance marketing, or “pay-per-click” is digital advertising that seeks to achieve measurable actions, like clicks, leads, or conversions, and is costed based on outcomes achieved – while it’s a powerful tactic that allows you to set clear objectives for your advertising, target key audiences, and measure ROI, the report states that too many marketers are doing it in a vacuum.
In fact, the report reveals that over-reliance on performance advertising can lower ROI by 20-50%, while a balanced mix of performance and brand marketing can boost ROI by 25-100%, achieving an average 90% lift.
Combining insights and data from the WARC (World Advertising Research Centre), Analytic Partners, System1, Prophet and Bera.ai, the report makes the case that advertising is most effective when brand and performance marketing are fully integrated.
These findings are not new. An article written by Jim Stengel, Cait Lamberton and Ken Favaro in the Harvard Business Review back in 2023, revealed similar insights about the importance of a “balanced” marketing budget.
“Over the past 20 years, performance marketing has become the dominant approach companies use to connect with consumers,” they write. “It’s easy to see why the approach is so compelling: It enables companies to run highly targeted marketing campaigns that deliver measurable ROI.
“But many executives worry that performance marketing is crowding out brand-building activities – aimed at enhancing customer awareness of, attitudes toward, and affinity for their companies’ brands.
“Pitting brand building and performance marketing against each other in a competition for budget and attention unnecessarily damages the effectiveness of both,” they conclude.
Ultimately, in order to achieve ROI without losing the essence of what your brand stands for, marketers need to find a balance between the two – and that means bringing brand back.
Getting the foundations right
We know that many businesses have spent the last few economically uncertain years seeking a quick fix to meet their sales budgets – leading marketing departments to chase clicks rather than connection.
This has, in many cases, come at the expense of brand building.
Instead of working on the foundations of a brand – reviewing core messaging, refreshing visual identity, developing creative campaigns that focus on storytelling and awareness, and investing in content that builds loyalty – many have been lured into the short term digital sales funnel with very little meat on their bones.
Derived from the insight that 90 per cent of brands that outperformed their competition did so by integrating their brand and performance advertising, The Multiplier Effect report suggests a re-think by recommending marketers allocate 40-60% of their advertising budgets to brand marketing, to drive equity between brand and performance.
The take home advice from WARc’s Asia Pacific Managing Director Edward Pank, reported by Danielle Long in The Australian is that chief marketing officers need to abandon the separated silos of brand and performance teams and integrate the two techniques to achieve both short and long-term impacts.
“Brand, or “equity-led” advertising can drive short-term sales as well as in the future, while performance advertising can reinforce the brand while operating efficiently,” the article states.
“The report urges CMOs to break down silos between brand and performance teams, reclaim core marketing fundamentals (including pricing and customer experience), and leverage these elements as strategic growth drivers.”
As business owners ourselves, we understand that investing back into your business can be challenging in times like these – but the nature of business is to manage uncertainty while taking measured risks.
And while the level of uncertainty we’re facing in the world right now tends to work against normal strategic risk management, the clear messaging from this latest research is that in times like these it’s important not to under-invest in your most important and hardest won asset – your brand.