Content created for Dollar Shave club
The explosion of performance marketing in 2012 drove the success of direct-to-consumer brands like Dollar Shave Club who, in just four years, captured 15% of a CPG market dominated by global giants P&G and Unilever.
Growth hacking has allowed opportunistic brands the tools to scale rapidly and efficiently, but the once holy grail of performance marketing soon hit roadblocks as the influx of competition sky-rocketed auction-based pricing and consumers became increasingly inundated with ads.
While great short term performance metrics might suggest success, they are not necessarily a sign of long term revenue growth and customer loyalty, and while performance marketing can help a brand lower their CAC, it rarely correlates to maximum lifetime value customers.
Adidas is a prime example of a company that advocates against performance marketing as a standalone tactic. During EffWeek 2019, Adidas admitted to over- investing into their performance marketing strategy at the cost of their brand. In an effort to maximize KPIs like ROAS, Adidas shifted their focus from marketing effectiveness to efficiency—a decision that lowered their acquisition cost but ultimately, attracted customers that were less valuable over the long-term.
Introducing more qualitative, contextual methods of analysis to their digital marketing— namely econometrics—Adidas learned that they should be creating more video content and investing into more out-of-home marketing efforts. Even though they had not previously translated to immediate, direct sales, they provide brand value that performance marketing cannot buy.
In a recent interview with Social Native, Amanda Goetz, VP of Marketing at The Knot Worldwide explained “If you are solely a performance driven company, you are going to find yourself with a leaking bucket that you will have to keep filling to reacquire customers.”
Performance marketing metrics capture quantitative short-term effectiveness of a single digital ad, but often fail to paint a full picture of the long-term brand impact on consumers and its positioning in the market.
A focus on performance marketing in silo limits a brand’s diversity of content and marketing mix as a whole. Amanda continues to explain, “If you keep continuing to bring consumers in through the side door through performance marketing, you won’t increase your LTV, loyalty and word of mouth engine because they will never understand what you as a brand stand for.”
If you are solely a performance driven company, you are going to find yourself a leaking bucket that you have to keep filling to reacquire customers.
—Amanda Goetz, VP of Marketing, The Knot Worldwide
Content created for Adidas
Brands are facing complex challenges in today’s direct-to- consumer era and retention has become a more critical KPI than ever, but with market saturation and mass productization, consumers crave more than just a transaction, they seek a connection.
Back to the Adidas example; to make up for their over-investment in performance, the key priority over the past 4 years has been brand. The brand's Creating the New marketing initiative refocuses on deep brand connection with consumers through pillars of collaboration and creation. And they’ve proved brand and revenue have direct correlation. During the first quarter of 2019, Adidas’ revenues grew 4% driven by 5% growth at brand.
Last year, brands like OkCupid, Postmates and Pepsi showcased the benefits of tapping into key cultural moments to connect with consumers on a deeper level. In 2020, building and maintaining a strong brand will continue to be the most effective way to grow customer acquisition and extend customer loyalty.
Performance marketing will continue to drive growth, but its horizons will be restricted if there is no brand to back it. Brand and performance have typically been thought of as two distinct entities, but there are extraordinary benefits of merging the two strategies.
Customers have such freedom of choice that brand products shouldn’t feel like a commodity, rather should feel like an extension of themselves.
—Amanda Goetz, VP of Marketing, The Knot Worldwide
“I’m a really big fan of making sure that there is a 60-40 balance between brand and performance marketing. I say that because I do think you can performance- market a brand to death despite the magical and sometimes immediate results that you get.”
For Amanda Goetz, brand marketing keeps them top of mind for when the time comes and a consumer starts to think about their big day. One of the most effective ways to amplify their brand is through customer testimonials:
“Our customer content doesn’t need to have a CTA. We take the testimonials and amplify it on social without there being a direct response. The content is coming from someone who can authentically speak about The Knot, which is very powerful.” Using a portion of your performance dollars to amplify your brand marketing efforts can go a long way in 2020. Amanda believes that for success in 2020, “brand and performance marketers need to be seen as partners, and not competitors for money.”
From driving revenue to building customer loyalty, haloing brand and performance serves a variety of different purposes in today’s marketing landscape. “The role of the brand helps communicate relevance and increases your LTV of a consumer because you don’t have to spend later down the line to reacquire them. If a brand has truly done their job, they have organically created loyal consumers,” concludes Amanda.
I’m a really big fan of making sure that there is a 60-40 balance between brand and performance marketing. I say that because you can performance- market a brand to death despite the magical and sometimes immediate results that you get.
—Kristen D'Arcy, CMO, PacSun
Content created for American Eagle Outfitters
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