Performance Marketing vs. Brand Marketing

1. The differences between Performance and Brand Marketing
2. When should Brand Marketing and when Performance Marketing be used?
3. Special case Start-ups
4. Finding the right mix
5. Conclusion

Our guest author Klaus Giller explains the differences between Performance and Brand marketing in this article and gives you specific examples to watch out for.

There is no topic as passionately debated in marketing as Brand Marketing vs. Performance Marketing. This article is designed to help you understand:

• What are the differences between Performance and Brand Marketing?
• When should Performance Marketing be used and when should Brand Marketing be used?
• What are the dangers of one-sided Performance or one-sided Brand strategies?
• How do you find the right mix of Performance and Brand for your company?

The differences between Performance and Brand Marketing

What is Performance Marketing?

Under Performance marketing, you can understand the implementation of marketing activities with the aim of triggering measurable customer reactions in real time. These customer reactions could be clicks, email sign-ups or even direct sales.

What is Brand Marketing?

While Performance-Marketing focuses on short-term maximization and optimization of customer reactions, Brand Marketing stands for long-term branding in the consciousness of target groups. This anchoring of the brand in the consciousness of customers is measured with metrics, which are observed over a long term. This includes things like brand awareness, brand recall, and brand image.

Differences: Brand vs. Performance

Example of a Performance Marketing campaign:

When thinking about Performance Marketing, most of you probably think of Google Ads or affiliate marketing. Indeed, these are two classic examples of Performance Marketing. Another, interesting example of Performance Marketing are waiting lists for product launches. A prime example of a successful waiting list is robinhood.io from GoDaddy Webhosting, which had almost 1 million user sign-ups before the app's launch.

The Landing Page for the robinhood waiting-list was very simply designed, but with a strong and clearly defined Value Proposition: “The world’s only $0 commission stock brokerage”. The goal of the waiting-list was to entice as many users as possible to sign-up (triggering immediate customer reactions) ahead of the actual product launch in order to generate as many downloads as possible at the launch. The campaign's success was measured by the collected email addresses and the traffic measured in real time through Google Analytics.

Interesting fact is that robinhood.io completely abstained from paid advertising to draw traffic to the landing page. Besides a press release, there were no significant marketing activities. The innovative factor of robinhood.io, in combination with cleverly used gamification elements, was sufficient to make the campaign go viral.

Robinhood

If you don't want to rely on the viral factor, you can combine waiting lists with other Performance Marketing channels. Like Google Adsor Facebook Ads.

Example of a Brand Marketing campaign:

You're sure to know this message: "Every 11 minutes a single falls in love over Parship". During my time in Berlin, I was literally pursued by the Parship posters going from Wilmersdorf to Pankow. And although the fashion-conscious, love-waiting supermodels looking down on me from poster walls really got on my nerves at some point, I can't shake these posters until today.

Parship has anchored itself in my consciousness and when I think of dating apps, the first thing that comes to my mind is Parship. That's exactly what Brand Marketing campaigns are all about: the primary goal is not to quickly and efficiently get many users to register, but to anchor the brand in market consciousness. Accordingly, the success of Brand Marketing is not measured by short-term metrics like conversion rates or cost per acquisition, but by long-term metrics like Brand-Awareness or Brand-Recall.

Parship

When should Brand Marketing and when Performance Marketing be used?

One thing upfront: it's not an either/or decision. Successful companies serve both types of marketing.

• Performance Marketing for short-term cashflow
• Brand Marketing for long-term cashflow

Imagine it like the Tour de France. At the end there is one overall winner of the Tour. To gather points until then, there are many mountain evaluations and sprint evaluations. To end up on top, you need to think both long-term and short-term.

From a marketing perspective, this means that you need Brand Marketing to secure market shares in the long term and ensure that new customers arrive. You need Performance Marketing to make the most of conversions from individual sales periods, like Black Friday or Prime Day. Consequently, the focus can vary within a business year. From a marketing perspective, this mainly makes sense for you if you take into account seasonal price effects.

Performance vs. Brand Share

Therefore, the CPMs for TV advertising are particularly low in the months of January, June, July, and August. It may make sense to focus more on Brand Marketing in the form of TV advertising during these months. During the months when TV CPMs are particularly high, it makes more sense to focus on Performance Marketing.

However, it's important to understand that Performance and Brand Marketing are only efficient in combination. More on this in the next chapter.

The dangers of one-sided strategies: Brand and Performance Marketing need each other

"Really smart marketers build the brand long-term and activate it efficiently." (Les Binet).

This sentence by Les Binet, Group Head of Effectiveness at adam&eveDDB, sums it up. Brand Marketing prepares the ground for activation in the form of Performance Marketing.

That's why this either/or thinking is a thorn in my side, as it does not reflect reality. For example, you can see the budget allocation of mobile marketing campaigns in the U.S. in June 2019:

Performance vs. Brand Marketing Split Companies

Hardly any company focuses solely on Brand or Performance Marketing. Most companies use a balanced mix. The reasons for this are clear.

• If you only rely on Brand Marketing, you will generate the traffic and the customer interest for a product category, but the competition will rub their hands because they can snag your customers with targeted Performance Marketing.
• An exclusive focus on Performance Marketing, on the other hand, results in you standing in your own way during scaling. Because you can only activate what is already anchored in the consciousness of the customers. Long-term brand campaigns allow you to activate efficiently in the short term. If you neglect this, the efficiency of your Performance Marketing will decrease in the long term, because customers without brand recognition are not easily activated.

Even in Germany, blinkered thinking is unfortunately still prevalent. On the one hand, there are those Performance experts who classify everything that is not directly and immediately measurable as irrelevant. On the other hand, there are those who often belong to the old school of Brand Marketing. This may now sound very dramatically formulated, but search for articles on the topic of Adidas Brand & Performance Marketing and statements around this topic. When you read headlines like "The Return of the Brand", you can see how confrontational this debate was conducted in the past.

Special case Start-ups

So far, I've discussed the topic of Brand versus Performance from the perspective of established companies. Start-ups are a special case for two reasons:

1. Financial resources are usually limited for start-ups. However, Brand Marketing is expensive.
2. Start-ups often think short-term: You're surely familiar with the rule of thumb that 9 out of 10 start-ups fail. A fifth of all start-ups don't survive the first year. Consequently, founders think first of short-term survival rather than long-term brand building.

It's completely understandable that most start-ups have a strong focus on performance. I also strongly recommend that you lay a solid performance base before testing other channels.

In the long run, as a founder, you should pay attention not to running too one-sided of a strategy. An exclusive focus on performance makes you vulnerable. Your brand is the moat that keeps your competition at bay.

⁠Moat

Where the lines between Performance and Brand blur

What makes the distinction between Brand and Performance Marketing so challenging is that many campaigns can't be clearly assigned to a specific area. This is because most traditional brand campaigns also include direct response elements, while Performance campaigns must of course contribute to a comprehensive brand strategy.

The decisive factor, as mentioned at the beginning, is the primary objective of a campaign. If triggering direct customer response is the focus, then a campaign is attributed to Performance Marketing. If, on the other hand, a long-term branding is the main focus, then we are talking about Brand Marketing.

Things get interesting with campaigns that involve both performance and brand objectives to the same extent. Let's take the example of Influencer Marketing: as VP marketing at Tractive I put a strong emphasis on Influencer Marketing. On one hand, because it has proven to be an efficient acquisition tool and on the other hand because good Influencer marketing has a substantial influence on brand building. However, campaigns that efficiently combine performance and Brand Marketing are rather scarce.

Finding the right mix

A rule of thumb that has been used in the past is the 60/40 rule established by Les Binet and Peter Field. 60% of the marketing budget should be invested in long-term branding. 40% in activation, i.e. Performance Marketing.

As mentioned before and as also indicated by Les Binet and Peter Field in "Effectiveness in Context: A Manual for Brand Building", the company phase plays a major role in the Performance vs. Brand mix, as does the product category. Depending on the growth phase and product category, the mix can vary greatly.

A good indicator is the Share-of-Voice (SOV). Share-of-Voice is the sum of mentions your brand has in relation to all mentions of brands in a specific product category (your brand, plus competitor brands), i.e. (number of mentions of your brand/total number of brand mentions (yours + your competitors') x 100 = SOV.

As long as the SOV is larger than the market share, you should be on a growth path. Start-ups benefit from their innovation factor, which, for example, manifests itself in the form of free PR. Therefore, it makes sense to have a strong focus on performance in the early company phase. However, when the innovation factor fades away, there's no way around a stronger investment in brand marketing.

More on the topic of social media monitoring and the applicable tools can be found on OMR Reviews and in the article on the 7 best tools for social media monitoring.

Once you've defined the rough mix, Brand vs. Performance, you have to select the channels that are suitable for achieving the defined brand and performance goals. The winner here is whoever knows their target groups well. What do your target groups look like and where can you reach them? More on the topics of marketing goals and customer centricity can be found in the article, in 6 steps to content marketing strategy or why customer centricity is so important for your business.

Assuming you have a decent target group analysis, you can now select the channels.

What's important in this process is that you are able to measure your marketing activities, both in the short-term and over a long period of time. While the metrics for Performance Marketing are relatively easy and measurable in most cases in real time, for example through clicks and short-term sales, this is not so clear with Brand Marketing. How do I measure the long-term effect of Brand Marketing?

One approach is econometric models, which can be used to test and measure the relationships between various variables. However, you should turn to specialized agencies for this. Another approach to measuring the effect of Brand Marketing is brand tracking. This is quantitative surveys to query Brand KPIs like brand recall, brand awareness, or also the brand image. Even though in contrast to the econometric model the causality between sellers and marketing activities can't be represented, brand tracking still yields valuable insights into the long-term development and health of brands. Also a good indicator and easily evaluable with every Web Analytics is the organic brand traffic. Good brand marketing should have a long-term impact on the volume of organic brand traffic. An overview of the best Web Analytics can be found on OMR Reviews or in the article on the 7 best website analysis tools.

Brand vs. Performance Mix

Conclusion

I hope I was able to give you some helpful tips for finding the right balance between Brand and Performance Marketing.

Do not forget:

1. Brand needs Performance and Performance needs Brand. You can only activate what you sow with Brand Marketing through Performance Marketing. You only reap the maximum brand potential if you also activate it with the help of Performance Marketing.
2. One-sided strategies are doomed to fail in the long run.
3. You have to measure your Performance Marketing AND your Brand Marketing. Think in time about which Tracking tools you need to work with.