By Wes Kao
There are few philosophical stances that will influence everything about your marketing thereafter.
Deciding to prioritize brand versus performance is one of those things.
I call this the Law of Brand vs Performance Marketing. It states:
All marketing activities are a trade-off between immediate conversion and brand equity.
This means there is a trade-off between brand marketing and performance marketing.
- Performance marketing means better short-term conversion, but worse long-term brand equity.
- Brand marketing means worse short-term conversion, but better long-term brand equity.
This is worth discussing with your team:
“If you could only prioritize brand or performance, what would you pick?”
- Ask your clients
- Ask your boss
- Ask your co-founders
- Ask anyone who can veto your work
Get on the same page about this early. If you don’t, you risk getting push-back and skepticism downstream.
This skepticism is masked as logical criticism or concern.
They’ll say something feels “off.” It doesn’t seem “right.” They might not have the vocabulary to explain.
But what they really mean is, “I thought we were more brand-driven (or performance-driven) than this.”
So before you do any marketing or creative work, get on the same page.
“Do we as a team prioritize brand or performance? More importantly, are we comfortable with the trade-offs that come with each path?”
Read on to understand the trade-offs, so you can make an informed, deliberate choice.
Performance-driven companies optimize for immediate wins
Some teams are 100% performance-driven.
In general, a performance-driven approach means better short-term conversion, but worse long-term brand equity.
For example, one of my clients was squarely in the performance-driven camp. They did whatever converted well. But in the process, became known for spammy ads and promotional offers.
They sacrificed their brand to get short-term conversion. At a certain point, their customer acquisition cost still got too high. So they wanted to start investing in their brand, in the hopes that it would drive word of mouth and reduce their reliance on paid media.
But once you’re addicted to throwing money at a problem, it’s hard to pull back. So if your organization skews performance-first, you need the leadership team to be on board with balancing that with a brand-driven approach.
There’s no way around it:
If your default is performance-first but you want to add a more brand-driven approach, all your metrics will get worse in the short run.
- Your customer acquisition cost will go up
- Your conversion rate will go down
- Your ads will get more expensive
Brace yourself. Make sure your leadership team understands it will be a rough period.
Brand-driven companies optimize for brand equity
Some teams are the opposite. They are 100% brand driven.
Luxury brands are a good example.
They’d rather burn their excess inventory than sell it at a discount.
Hermès isn’t trying to convert you with their billboard in Times Square.
They are hoping that, with repeated exposure, when you’re able to invest in a statement handbag, you’ll want a Birkin.
A brand-driven approach means worse short-term conversion, but better long-term brand equity.
The downside, though, is you’ll see lower conversions because you’re not doing all the performance-driven conversion optimization that normally gets people to convert:
- Making the button bigger
- Using brighter colors
- Writing shorter copy
- Putting everything on the homepage above the fold
- Adding the call-to-action button everywhere on the website
- Sending reminder emails about the sale
- Discounts
- Bulk sales rates
- Bundles
- Promotions
- Reverse promotions (“The price goes up next month!”)
You have to be okay walking away from short-term sales.
It seems easy to say, “Of course we’ll prioritize the brand.”
But when you’re walking away from a few million dollars in revenue, it becomes a harder decision.
Most people want the long-term brand equity, but aren’t willing to live with the worse click throughs or lower revenues.
So you need a tough stomach (and good cash flow) for playing the long-game.
Expectations for a return on marketing spend
To recap, performance marketing means better short-term conversion, but worse long-term brand equity. Brand marketing means worse short-term conversion, but better long-term brand equity.
It boils down to the expectation of how soon you expect to see a return on marketing spend.
With a brand-driven mindset, you are okay with a longer timeline for returns. Examples:
- Podcast ads
- Influencers
- Customer/brand experience
- PR
- Product placement
With a performance-driven mindset, you’re more impatient on returns. Examples:
- SEO
- PPC
- Conversion optimization
- Lead generation
- Affiliates
What are some implications of this?
If you measure brand marketing using performance marketing metrics, you will always be disappointed. Set yourself up for success by making sure your leadership team knows if you’re doing a brand marketing activity. They shouldn’t measure the effectiveness in terms of immediate sales.
If a customer hears your podcast pre-roll ad, they might not convert right away. But that podcast ad, combined with seeing your other ads and hearing a good recommendation from a friend and doing more research, might contribute to them becoming a customer.
Just because it’s measurable, doesn’t mean it’s important. And just because it’s not measurable, doesn’t mean it’s not important.
For example, I had a horrible phone call with RBC’s customer service representative who was condescending and hung up on me. I didn’t have the person’s information and didn’t want to wait another 20 minutes on hold to report him. So RBC didn’t capture this data point about poor customer satisfaction. I’m ready to switch banks, so one of these days, I’ll contribute to RBC’s churn metrics.
So how would they know it’s because of this poor customer experience? They won’t. It’s not measurable, but it’s important.
The type of product matters. Impulse purchases and high-intent purchases lend themselves more to performance channels. If I see a $10 product and it’s below my threshold for needing to do due diligence, I might go ahead and buy it. If you just got into a car accident and need a lawyer, this is a high-intent situation. So if you’re the lawyer, you’d likely benefit from popping up on search results.
But even impulse purchases can benefit from branding. For example, you might buy Jiffy peanut butter or Tide detergent because you remember your parents using it. It reminds you of your childhood. The coupon (performance marketing) might trigger the purchase, but the 20+ years seeing your parents use Tide (brand marketing) is what built the trust.
Can you optimize for both brand and performance?
All of this begs the question: Can you have both brand AND performance? Can I have my cake and eat it too?
Yes. Realistically, most brands have to aim for both:
- If you only focus on branding, you’re making art
- If you only focus on performance, you’re using photos of puppies and headlines about the 1 weird way to lose belly fat
Some channels, like email marketing, are squarely in both performance and brand buckets. You can have emails that are performance driven and meant to generate action right away, versus emails that are more about building credibility and getting students excited so you can cash in later.
So most brands balance brand and performance—but doing both well is hard.
For example, we did this at the altMBA.
Seth spent years building a strong brand. We didn’t want to flippantly use hooks that would get clicks but erode trust with his fans.
So we had strict self-imposed guidelines on what we couldn’t do—including almost all the levers typically used to increase conversion.
For example:
- We didn’t offer discounts
- We didn’t use Seth’s photo in any paid ads
- We didn’t use affiliates or referral programs
- We didn’t mention how much money we helped students make
- We didn’t dangle silver bullets even though we knew it would convert
- We didn’t use exclusivity plays like offering secret content
When you can’t rely on low-hanging fruit tactics, you have to get much more creative. You get more creative with messaging, copywriting, visuals, and audience segmentation. It raises the bar.
On the surface, we made it look easy. Behind the scenes, we were ducks paddling hard under the water.
Even if you aim for both, most organizations are still either more brand-driven or performance-driven. I’d say with the altMBA, the fact that we chose to have self-imposed constraints is a sign we prioritized the brand. At the same time, we had ambitious targets for CAC (customer acquisition cost) that meant we were ruthlessly results-focused.
It’s not easy. So yes, you can and should aim for both. But acknowledge you are doing difficult work. Be patient with yourself and know the tension is normal.
When you look through this brand vs. performance lens, what do you think your company leaders would pick? Which are you more drawn to?
