How Brand Building and Performance Marketing can work together?

Read time: 3.5 minutes

On a Friday morning call, one of the D2C founders said- ‘we are great at performance marketing, but our brand sucks’.

On Monday, another CMO quoted, ‘Most of our marketing budgets have moved to performance marketing and he fears that their brand narrative is lost.’

I was not listening to this for the first time, over years I have seen brands choosing one over the other & losing out either on short-term sales or long-term brand narrative.

After these 2 calls last week- it got me thinking, there are very few brands that are able to combine Brand building and performance marketing together to chase a common guided north star of brand equity that results in actual financial outcomes.

That’s the genesis of today’s newsletter.

Read this if you are pitting brand against performance or vice versa:

It is easier said than done. I know it.

And that is why setting the right expectation with brand-building initiatives and performance marketing is critical.

Traditionally, the two were seen as a trade-off: Brand building was a long-term investment, and performance marketing was about generating revenue in the here and now.

The trick was to “balance” them.

But brand building is losing out more and more, in large part because performance marketing is considered to be much more closely linked to measurable business results.

I propose a different approach, which hinges on creating metrics that measure the effects of brand-building and performance-marketing investments on a North Star metric for brand equity. That is then linked to specific financial outcomes—such as revenue, shareholder value, and return on investment—and deployed as a key performance indicator for both types of investments.

Creating Your Brand Metrics

Brand building has long suffered from having measures—such as “awareness” and “advocacy”—that have no credible predictive linkage or retrospective connection to financial performance.

For that reason, its accountability as a business contributor—especially in the short term—is often considered to be weak, undermining its perceived value.

For its part, performance marketing lacks measures that account for its impact on brand building, and its metrics account only for short-term results, such as sales, leads, and clicks.

If companies want more performance-accountable brand building and brand-accountable performance marketing, they need to upgrade their brand metrics. Here’s how:

1. Create and connect brand positioning and activation metrics.

The foundation of brand building is positioning. It determines a brand’s ability to compete in the marketplace.

The most successful brands automatically and immediately convey the distinctive benefits they offer, to whom they offer them, and why those benefits matter.

By doing so, they capture market share, gain pricing power and move towards sustainable revenue growth.

Your company must consider four things in positioning a brand:

a. Purpose, or your long-term commitment to values other than profits (for example, inclusivity, sustainability, humanitarian goals, or cultural priorities);

b. Emotional attributes (such as competent, sophisticated, or cool) that you want target consumers to associate with your brand;

c. Functional benefits, or the tangible features of quality, design, and variety that you want your brand to project; and

d. Experiential qualities, or the intangibles (such as consistency, convenience, and expertise) that you want your brand to represent in your target market.

2. Create a composite metric of brand equity.

The goal of all positioning choices and activation activities is to grow brand equity.

Companies measure brand equity in a dizzying number of ways, but I recommend measuring it as a composite of four key elements:

a. Familiarity, the degree to which consumers feel they know and understand a brand, beyond just being aware of its existence;

b. Regard, how much consumers like and respect a brand;

c. Meaning, the relevance that consumers perceive a brand has to their lives; and

d. Uniqueness, the differentiation that consumers see in a brand.

Measuring a brand’s familiarity, regard, meaning, and uniqueness is not a new idea.

What’s different about our approach is that we roll up the four FRMU metrics into a single composite measure of brand equity.

This can be done using a 1-to-7 Likert scale for each sub-metric, for example, and then taking a simple, unweighted average of each. And this should be measured and reviewed, weekly, monthly and quarterly. The cycle of track and optimisations on the basis of results should be shorter.

This is what a Likert scale looks like, you would have seen it many times when various companies as for feedback about their services:

3. Make brand equity a KPI for performance marketers.

At too many companies, performance marketing is exclusively focused on demand conversion without regard to its impact on brand equity.

Companies must regularly and frequently monitor changes in brand equity and its four constituents against the conversion rates from their performance-marketing programs.

If conversion rates are going up but brand equity metrics are trending down, they should conduct analyses to determine whether the performance-marketing mix (for example, direct mail, email, and banner ads) is negatively impacting the brand or whether the problem is content related (say, poorly conceived messaging).

And they should revise either or both accordingly. Rising brand metrics but falling conversion rates is less likely, but it can happen when performance-marketing programs are disconnected from brand-growth strategies.

Brand equity should be part of the brand marketing team as well for performance marketing to have a long-term impact on shareholder value while the brand narrative doesn’t stand at the risk of dilution.

Today’s newsletter content is an inspiration by the HBS study of measuring Brand equity on a Likert scale with the help of FRMU (Familiarity, regard, meaning, uniqueness).

That’s it for today folks!

This is the last week to sign up for the upcoming batch of A to Z of the digital marketing masterclass. Grab your early bird offer today on the landing page.

Have an awesome Sunday ahead.

Cheers,

Apurv