Should All Marketing Be Performance Marketing?

Should all Marketing be Performance driven? Given the current uncertainties in the market for pretty much any industry, companies tend to lean towards safety. 

Marketers are looking for the best use of their fluctuating budgets and understandably would like to have great value for money, guaranteed availability and convenience in advertising. In our blogpost we share with you why it's extremely dangerous to focus solely on performance marketing and what you should do instead.

The Concepts of Performance and Brand Marketing

Before we dive deeper into the question of how much performance driven your marketing ideally should be - let’s first have a look at some definitions. Yes, this might sound boring - but bear with and keep on reading. It will help you to understand where your business is currently at and how well you actually understand the concepts of performance and brand. 

For starters, why is performance marketing actually so popular? Because it seems incredibly easy to track and evaluate the results. Afterall the whole intent of performance marketing is to use digital channels to generate a measurable (trackable) desired interaction with a user. This can be a click-through to your webpage or a conversion in your online shop among other metrics. Further, you decide upfront to pay literally based on the performance of your ads - be it pay per click or pay for a certain amount of impressions.

With this, performance marketing enables you to calculate “exactly” what your marketing efforts earn for your business and seemingly enables you to plan for future results. You will see later in this blogpost why this is a dangerous concept to fall for. 

What’s on the opposite end of performance marketing? Anything more ambiguous, less measurable, more uncertain but yet very useful for your business. We’re talking all things related to brand marketing! 

See, branding is a very traditional marketing approach that has proven to be incredibly valuable in the long term by moving your brand to top of mind when customers make their buying decision. It includes activities such as out of home banners, print and TV advertising, PR, sponsorships and I’m sure you can think of many more examples. 

The common belief about brand marketing is that it’s not measurable and really hard to tell how much exactly it contributed to the revenue.

The common belief about brand marketing is that it’s not measurable and really hard to tell how much exactly it contributed to the revenue. Just think of the popular phrase about one half of your marketing budget being wasted - you just don’t know which half… Yeah, this refers to the difficulties with measuring results which should come from branding.  

Given the current geopolitical uncertainties and extreme volatility in almost all industries it’s absolutely understandable why marketers currently lean towards performance marketing - after all you can report concrete numbers and have the impression to simply buy the needed results. 

Read along to see the cases for and against performance marketing as a core strategy. We share with you when to rely on it and when to rather turn to branding and even measure results coming from it. 

Why a Pure Performance Strategy Is a Safe Way to Lose Revenue

As shared above, performance marketing is defined by its focus on activities with pay-per-click or pay for impressions character. It lets you allocate your budgets towards numeric goals and measurable interactions with your desired target group. 

This is why it’s very common for companies to forgo brand marketing and focus on performance instead. Having ready to use reports with plain ROAS (return on ad spend) and CPC (cost per click) numbers lead to believing you have everything under control and know exactly how much your activities earn. 

How well measurable is performance marketing in reality?

But how well measurable is performance marketing in reality? Platforms like google and facebook always have had and always will have a tendency to report results in their favor to make you spend even more money with them. 

In addition, there is last-click attribution set as default in common analytics tools such as google analytics. The last-click methodology gives full credit for an interaction to the last touchpoint in the customer journey, completely neglecting any prior interaction your customer had with your brand through marketing before buying. Clearly, this will report wrong results leading to wrong conclusions letting you put all your precious marketing spend on sales you probably would have got anyway. This was the case with adidas who very generously shared their experience of putting too much money into performance marketing. 

Read our blogpost to learn why last-click is the last thing to be applied in marketing. 

As you can see correct measurement is not guaranteed with performance marketing and requires further effort to make it really work for you. Working with an independent attribution vendor or software will certainly help with this. 

However, there are even more things to consider when it comes to a purely performance driven strategy. You can barely scale and increase the effectiveness of your marketing since saturation effects will lead your results to drop over time. It’s not easy to activate clients without any brand preference and you certainly don’t want to settle for the type of client who only buys on sale. 

Performance marketing benefits from exact targeting. Given current tracking regulations (you can read more about them here) however, targeting becomes increasingly difficult by the minute. With third-party cookies doomed to be gone by 2024 instruments like cross device tracking and retargeting become less and less available. 

Therefore you really need to engage your target audience in an early stage of the funnel so that when they reach the buying decision stage, they have your products top of mind. This way you won’t have to rely on prompted purchases through ads only - instead, they become a nice add-on to sales you have been carefully nurturing upfront. 

As Philip Kotler so famously stated: “If you’re not a brand - you’re a commodity. The price is everything and the low-cost producer is the only winner.” 

Why Focusing on Brand Only Benefits Your Competitors

The reasoning above might sound as if you actually don’t need performance marketing at all, except when you would like to additionally boost your conversions. This is actually quite far from the truth.

What would happen if you skipped performance marketing and put all your budget on brand activities only? You would miss the chance to take advantage of seasonal effects such as Christmas and black week sales. 

Even worse - you would educate all consumers on a certain subject but lose those with a smaller wallet to your competitors since they would prompt a purchase with performance advertising. See it as filling up the funnel at the top but then leaving all the warmed up prospects to be closed off by your competitors - what a shame! 

Yes, your brand does give your business an identity and personality. Its intent is to build an emotional, deeply rooted feeling of trust, quality and many other desired traits for your customers. Ultimately it aims to create long term loyalty and make your products an obvious choice.

To achieve this, it needs a lot of time, PR effort, budget spend and patience. If you don’t have either of these, let's say because you’re in an early stage of building your business or you lack resources, it can get tough to generate enough sales. 

How To Strike the Right Balance Between Performance and Brand?