Want more efficient performance campaigns? Sometimes, less is more

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Known.is

3 min readMay 12, 2022

Known’s buyer scientists on striking the balance between brand and performance.

A photo of an orange bullhorn on an orange background — Photo: Oleg Laptev/Unsplash

If you’re like most marketers, you’re focused primarily on performance campaigns, and metrics like cost per acquisition, conversion rate, and return on ad spend dominate the conversation around how those campaigns are doing. As a media agency with a team of data scientists devoted to optimizing campaigns, we fully understand and appreciate this way of thinking.

But what if evidence showed that to improve your performance against these metrics, you actually need to reallocate a significant portion of your performance marketing budget towards brand marketing?

For many brands, that’s exactly what is happening now.

Two months ago, Airbnb reported its “strongest ever” fourth-quarter results, with revenue reaching $1.5 billion, exceeding the same quarter in 2019 by 38%. Simultaneously, the brand reported a decrease in overall sales and marketing expenses, and attributes this improved efficiency to a rebalancing of spend from performance to brand marketing. “We made that shift and it has proven to have been the right shift, not only in 2019 but in 2020 and 2021,” said the company’s CFO Dave Stephenson¹. Airbnb now looks at the role of marketing as one of “education,” not “to buy customers”.

Airbnb joins a growing list of brands, including Adidas, Huawei and eBay, who have openly acknowledged the need for a more thoughtful and strategic approach to balancing brand and performance marketing. We’re seeing this in our client base as well, with brands in myriad industries recognizing that their over-emphasis on performance has led to suboptimal ROI over the long run — much like a farmer overly focused on picking fruit as opposed to planting new crops.

But why has performance marketing been the industry darling for the past two decades? The answer is quite clear: measurability. As reporting cycles and CMO tenures have tightened, there has been increasing pressure on marketing leaders to prove ROI in short time spans. The proliferation of digital channels and the wealth of data they provide has provided an easy means for hard-pressed marketers to demonstrate impact.

What is equally clear now, however, is that this over-reliance on a subset of media channels, and the endemic tendency to optimize all channels towards lower-funnel metrics, is misguided. An increasingly rich body of research supports the assertion that for most brands, the optimal balance for maximizing long-term sales and profitability actually leans in favor of brand-building.

According to research² from the Institute for Practitioners in Advertising, the optimal ratio for the average brand is 62% brand to 38% performance. The unique ability of brand marketing to build mental availability and prime consumers for purchase is unquestionable. Counterintuitively, less performance marketing often means better performance against KPIs.

That being said, it must be noted that the 62:38 ratio is generic. To fine tune it to a specific brand, a number of other factors must be taken into consideration, such as category, brand maturity, and pricing. At Known, we use a combination of the latest research, our own experience running both brand and performance campaigns in virtually every industry, and a deep understanding of our clients’ business objectives and the audiences they wish to target, to arrive at the optimal balance.

Once this balance has been set, it’s vital to establish a clear measurement framework and ensure that brand campaigns are truly being optimized towards upper-funnel KPIs. A holistic approach to optimization that leverages both intra-channel and cross-channel brand lift studies will drive intelligent spend allocation that maximizes brand performance. Finally, it’s critical to break the wall between brand and performance teams and leverage internal case studies to demonstrate the synergistic effect of running brand and performance campaigns concurrently. Stay tuned for more on these topics, or contact us directly to learn more!

Want more efficient performance campaigns? Sometimes, less is more

Read more from Known on media buying.

Written by Anuj Saxena