How to make the call between brand and performance marketing
Advertising affects sales in two ways. Firstly, by prompting someone to buy or act now, which is the goal of performance marketing; secondly by creating brand associations in the minds of consumers that make them more likely to buy your product in the future, which is the goal of brand marketing. Performance is short-term and easily measurable. Brand is long-term and hard to measure.
Most serious marketers understand that the battle between brand marketing and performance marketing is a phoney war. Brand without performance is vanity, performance without brand is insanity. Every brand should pursue a strategy of what author Mark Ritson has called ‘bothism’.
The first thing to say is that every business should be brand building from day one. Your brand will be built in the minds of consumers through every interaction they have with you, so make every single owned touchpoint count, from website and packaging, to email and content. As a startup, if you haven’t developed a crisp articulation of who you are, who you are for, and what you do for them, stop reading now and do that work.
The question is, how to spend your advertising budget. The famous rule-of-thumb from marketing experts Les Binet & Peter Field is 60% Brand, 40% Performance (or around 50:50 for B2B) but, in the early stages of a business, it is natural to focus on performance-driven marketing that yields short term results.
Without sales today, there might be no tomorrow for your business. Channels such as search, paid social, affiliates, and aggregators offer a scalable, measurable route to immediate sales. These early stages are about mining existing demand from those that are “in -market” and ready to buy today, and giving them compelling reasons to buy now.
According to the B2B Institute, in-market consumers represent about 5% of their total audience, and that’s a useful rule of thumb for most businesses. It makes sense to go after the low hanging fruit first.
But since growth comes from constantly recruiting new consumers to the brand (penetration), performance marketing naturally hits a plateau. It becomes increasingly expensive to reach in-market customers through digital channels. The platforms might target some harder-to-convert new customers, but also keep rinsing the same audience, trying to maintain the Cost Per Action (CPA) and Return on Ad Spend (ROAS).
The pool of demand has diminished, and the juicy fruit is out of reach on the higher branches of the tree. At this point, brands need to think about the 95%: those potential, future customers who aren’t yet in-market to buy now. It is time to invest in the brand.
This is the situation we faced with Marloe Watch Company, which designs and assembles British mechanical watches. Their core audience of watch-collectors has a natural limit, as does the number of watches any one enthusiast will buy, and the Meta algorithms were failing to increase numbers of new customers. To grow the brand, we needed to test different propositions, creative, and audiences to find the most promising cohorts for the long-term.
Sometimes the question is not whether to invest in brand building activity, but how to convince non-marketing founders and CEOs that it will deliver incremental profit in the end. The data is unequivocal, yet there remains a sense that brand is at best ‘nice to have’ and at worse ‘fluffy nonsense’.
The issue is a fundamental misunderstanding of how long-term advertising works; not by giving people reasons to buy you, but rather making your brand memorable and recognisable so that it easily comes to mind at some future date when your audience is ready to buy. It’s a tough sell, and models and industry research can only get you so far. However, there is a useful truth, first expressed by Les Binet, which is “…although long term effects always produce some short-term effects, the reverse is not true”. In other words, campaigns designed for long-term brand building will also deliver some measurable, short-term impact that can help build the business case.
Used-car supermarket Big Motoring World used this fact when transitioning from a performance-only strategy to ‘bothism’ in 2025. By running media tests for out-of-home, radio and press channels against control ‘performance only’ stores, they saw around 25% incremental uplift in short term sales.
By demonstrating incremental sales growth in the short term, we gained enough trust to continue with brand building channels in the long term. Twelve months later and the data also reveals the impact of that future-demand generation, with record sales and increasing brand awareness.
In summary
- A strong brand is essential however big you are. In the beginning, it must shine through in every owned channel
- Early stage startups will likely focus media spend on capturing the in-market demand of the low hanging fruit consumers
- But performance marketing reaches a plateau as the pool of these easily reachable, in-market consumers is exhausted and conversion costs increase
- At this stage, investing in brand building media channels is essential
- Brand building campaigns work differently, by being memorable and distinctive in order to support future demand
- But whilst short-term campaigns have very few long-term impacts, long term campaigns do have short term effects that can be measured. This is a useful fact when building the case for brand with non-marketing leaders
This article originally appeared in the July/August issue of Startups Magazine
