Brand vs. Performance

With this statement published in Horizont, founder and agency head Markus Biermann addressed a phenomenon that we are also observing and, as a digital and brand agency, have been experiencing particularly recently. This refers to an upheaval in marketing - a tipping of the scales in favour of more and more expenditure on digital performance marketing, while investments in traditional brand development are decreasing.

It is hardly surprising that industries are changing with digitalisation and that marketing is also breaking new ground with digital channels and intelligent algorithms. After all, performance marketing with its cost-benefit guarantee, precise target group targeting and precise analysis down to the click has some excellent arguments in its favour. However, the way in which some companies seem to lose sight of their own brand in the process has not gone unnoticed by attentive observers. The Adidas case finally brought the issue to the centre of attention at the end of 2019, where the debate is still raging between the fronts.

Are voices warning of a loss of value due to a focus on performance just a future-shy echo of the past or can performance marketing actually impair long-term brand growth? To answer this question, we need to take a deeper look into both worlds - strategic brand building and fast-moving performance marketing.

Classic brand building is as old as the concept of ‘brand’ itself. Identity, values and messages are honed in a cosmos of their own, while communicative measures are used to publicise the brand in every conceivable form. This is contrasted by digital performance marketing, which is gaining more and more momentum - data-based, cost-efficient and virtually a guarantee for tangible, measurable success without a long start-up time.

Everyone has a handful of brands they swear by. We search for and compare or discover new products, recognise logos and names, and the decision to buy is usually already made. This is because our encounter with a familiar brand is an emotionally charged reunion that makes us act subjectively. It is precisely this preference, this trust in brands, that is the aim of brand building - and a lengthy, complex process that is designed to have a lasting effect and long-term success.

To achieve its goal, brand building relies on the differentiation of brands - an appearance that sets the brand apart from the competition, conveys USPs to the outside world and promotes recognition. Meanwhile, a network of associations is built up in the subconscious of consumers: Through high-quality products or memorable messages, brands are not only associated with quality features or objects, but also with colours, smells, tastes or a certain attitude towards life. In practice, you suddenly feel like you're in a James Bond film, even though you only drink coffee from aluminium capsules (we won't name names).

Brands that become status symbols in this way satisfy the social needs of consumers as an expression of belonging and exert a considerable influence on the consumer behaviour of entire social classes (keyword: ‘new iPhone’). However, the influence always remains subconscious and complexly interwoven in an infinite number of small touchpoints at which the brand encounters us and wraps us around its finger piece by piece. This is how brand building creates its long-term added value and long-lasting effect - almost always a fascinating spectacle.

While strategic brand building aims the arrow at the customer's heart from a safe distance, performance marketing puts the gun directly at their head. It focusses on sales and conversion figures, relies on all kinds of data and excites customers with targeted targeting. The appeal of optimised ads should lead directly to a purchase without any detours.

In addition, the goals of performance marketing are usually of a short-term nature: short-term sales of certain product ranges, triggering a short-term purchase decision by the customer - offering strong arguments to convince on the spot. Google Ads, social media adverts or pay-per-click campaigns on marketplaces are always inviting eye-catchers and sometimes seem to know your own shopping desires better than you do.

The contrast becomes noticeable the more you compare the two: Brand communication with substance and storytelling meets performance communication through offers, adverts and sales - a fog of emotional value creation on bare figures and tangible results. Where brand building strives for long-term differentiation, performance marketing promises quick sales and conversions, conversions, conversions.

In this section, we want to come back to the question mentioned at the very beginning and look at the various reasons why prioritising performance marketing can slow down brand growth. However, the comparison naturally includes a critical assessment of both methods. One thing is clear: neither is free of weaknesses.

Brand building is a qualitative topic - both in terms of the work and the evaluation. And although it is difficult to put a price tag on strategic brand development: Quality has its price. Unfortunately, there are often no clear, measurable and tangible results in exchange for regular, long-term investments and the more channels are used, the more opaque the marketing communication construct becomes.

If you want to evaluate the success of brand work, you have to carry out qualitative market analyses and surveys to find out how the relationship with the brand is developing among individual consumers. Otherwise, the only option is to build on the growth strategy, stick with it and hope that quality will pay off. Here it suddenly becomes clear why many are turning to marketing tools that offer more certainty and demand less ‘blind’ trust.

A common mistake in performance marketing is so-called ‘silo marketing’. It describes how marketing departments set themselves predominantly short-term goals and align their campaigns accordingly. Advertising measures are created with the aim of generating sales, with long-term effects and brand impact having to take second place. Focussing on analytics data and KPIs decouples the ‘marketing silos’ from the overall strategy and limits success to the short-term performance cycle.

One consequence of this approach, which is geared towards short-term conversions, is that the customer journey is shortened for many customers. The customer journey is always shortened if certain touchpoints are ignored and only the last 10% of the customer journey is considered. The previous points of contact with the brand or product are completely neglected, although they may make a fundamental contribution to the purchase decision. And with the constant focus on conversion and completing a purchase, it is also easy to forget how sustainably successful campaigns can be that impress target groups with creativity and storytelling instead of simply tracking clicks that convert.

Out with comparability and in with uniqueness: Swedish payment service provider Klarna proved that there are still companies that want to build their brands emotionally with another campaign at the beginning of 2019 centred around the topic of ‘smooth payments’, i.e. simple and stress-free payments. This time, rap legend Snoop Dogg - unceremoniously crowned ‘Smooth Dogg’ by Klarna - was involved.

Why is this campaign a marketing best case for us? Because you suddenly no longer have a ‘click-away advert’ in front of you, but are entertained with humour and a message. In other words: brand communication with which Klarna can suddenly stand for more than just payment transactions and triggers a feeling with every contact. And anyone who still doubts that such a brand campaign can reach the individual will experience the literal ‘brand to touch’ at the latest when the Klarna card arrives plush and ‘smooth’ in their letterbox.

In addition to Klarna, numerous other big names are also setting a good example and successfully showcasing themselves through bold, authentic or funny branding campaigns. So is the only real solution to ditch performance marketing and invest all your budget in your brand? Les Binet, marketing guru at US communications agency adam&eveDDB, has the answer:

Although performance marketing would have a clear effect with each individual measure, this would only last for a short time and then tail off again. In contrast, brand building would bring with it a steady but slow upward trend. In his opinion, digital activation through performance measures should therefore be used to generate reach and support emotional brand building.

Source: Les Binet and Peter Field, Media in Focus: Marketing Effectiveness in the Digital Era

Conclusion: The answer is not ‘either or’, but the right mix. So if brand and performance do not work against each other, but favour each other, the only question that remains is how large the respective share in the marketing mix should be. Here, too, Binet provided an answer with his 60/40 model: brand development should be budgeted at 60% and thus account for the larger share. The remaining 40% should be used for supporting performance measures, generating short-term sales and accelerating growth.

This clarifies one thing: performance marketing does not harm long-term brand success - it actually promotes it! To achieve this, however, it must be integrated as part of an overarching, long-term strategy and must not communicate against the brand messages or devalue companies through permanent discounts or market-screaming arguments. The 60/40 model serves as a valuable guide, but at the end of the day, everyone in marketing - including us - still has to keep searching for the right solution.