How to Drive Financial Growth by Integrating Brand Building and Performance Marketing
In the fast-paced world of marketing, where digital strategies reign supreme, businesses have grappled with a challenging dichotomy: the choice between brand building and performance marketing. Historically, these two approaches were seen as opposing forces, each vying for a share of the marketing budget. Brand building was the long-term investment aimed at crafting a company’s identity, while performance marketing was the more immediate, revenue-generating counterpart. The struggle to “balance” these two approaches has intensified, with performance marketing often taking center stage due to its ability to deliver measurable returns on investment (ROI).
Over the past two decades, performance marketing has surged to prominence as the dominant method for businesses to engage with consumers. It involves paying for specific results from marketing campaigns, such as sales, leads, or clicks, carried out through third-party channels like search engines and social media platforms. The allure of performance marketing is clear: it allows companies to execute highly targeted campaigns with quantifiable ROI.
However, a significant concern has emerged among business executives. They worry that the emphasis on performance marketing has led to the neglect of brand-building activities essential for enhancing brand awareness, customer perception, and brand affinity. Phrases like “We are great at performance marketing, but our brand sucks” or “Performance marketing had taken over our marketing budget, and we lost our brand narrative” have become all too common. The tension between brand building and performance marketing has intensified, jeopardising the effectiveness of both strategies.
To address this challenge, companies need a new approach — one that integrates brand building and performance marketing while prioritising brand equity as the North Star metric. Brand equity, a composite of familiarity, regard, meaning, and uniqueness, serves as the measure of a brand’s strength in the market (FMRU metrics). By creating metrics that link brand-building and performance-marketing investments to brand equity and, consequently, to financial outcomes such as revenue, shareholder value, and return on investment (ROI), companies can harmonise these two critical marketing strategies.
Here are the key steps to achieve this synergy:
- Create and Connect Brand-Positioning and Activation Metrics
Successful brand building starts with positioning, which defines a brand’s competitive edge. This involves aligning purpose, emotional attributes, functional benefits, and experiential qualities. To measure the effectiveness of brand positioning, connect it to activation levers encompassing product, price, place, people, and promotion. Structural equations modeling (SEM) helps quantify the impact of positioning on activation.
2. Develop a Composite Metric of Brand Equity
Measuring brand equity involves evaluating familiarity, regard, meaning, and uniqueness. Combining these four elements into a composite metric provides a holistic view of brand strength. This comprehensive approach accounts for the emotional connections consumers have with a brand, influencing their choices, consumption, price sensitivity, and loyalty.
3. Make Brand Equity a Key Performance Indicator (KPI) for Performance Marketing
Align performance marketing efforts with brand-growth strategies. Continuously monitor changes in brand equity alongside conversion rates from performance-marketing campaigns. If conversion rates rise while brand equity metrics decline, assess the campaign’s impact on brand growth and make adjustments as necessary.
4. Establish the Link Between Brand Equity and Financial Metrics
Finally, link brand perception metrics (e.g., FRMU metrics) to financial metrics such as revenue, shareholder value, and ROI using elasticity modeling. This statistical technique quantifies how changes in brand perception affect financial outcomes.
Conclusion
By implementing this framework, companies can optimise their marketing strategies, making them more accountable for brand building and performance marketing. The integration of these two approaches ensures a holistic approach to marketing that enhances brand equity and delivers sustainable financial growth. As brand metrics become more financially measurable, companies can hold decision-makers accountable and drive informed marketing strategies. Ultimately, this approach dispels the myth of a trade-off between brand building and performance marketing and empowers businesses to achieve the best of both worlds.
What is your experience? Have you encountered any challenges that you need to overcome or have already overcome when it comes to integrating performance marketing and brand building strategies?
