Brand marketing vs performance marketing – the age old debate

“Half the money I spend on advertising is wasted; the trouble is I don’t know which half,” said John Wanamaker, an American merchant and a pioneer in marketing.

Had Wanamaker been a marketer today, he would have had a different point of view on advertising, when it is possible to measure returns on every penny spent.

Wanamaker’s famous statement, quoted till this day, is perhaps the earliest articulation of the brand and performance marketing dilemma.

And while a lot has been said and done on this topic, perhaps the question to ask is: should it be considered a “waste” (read: no returns) or does one half of advertising serve a purpose and add value, but just a different kind of value, and over a much longer period of time?

Let’s face it. The world around us has changed irrevocably. Today, business owners are bottom-line conscious. And in turn, leadership teams are revenue focused. When budgets shrink, Marketing is usually the first department to take that blow as it is often seen as “discretionary spends.”

And that’s often when the dilemma gets real and marketers find themselves in the midst of this brand vs performance tug-of-war struggling to fit in both within very finite, shoestring budgets.

This dilemma however doesn’t just surface in the face of budget cuts. It looms large in meeting rooms when a great creative brand campaign idea is challenged with a “All that is fine. But will this get us revenue? How many units of XX will we sell with this campaign?”

And that, my friends, is where the real problem lies.

Please don’t get me wrong. I am all for performance marketing. Because the primary role of marketing is to create a customer. A customer that you would like to sell your product to. The question is, how do you want to create this customer? What sort of business and philosophical approach do you want to adopt to build a relationship with this customer? Do you just want to sell to him today and at this very moment with a deal which may eventually hurt your brand equity? Or do you want to bond with him, listen to him, interest him, intrigue him, delight him with your personality and then sell to him, so that when you do sell to him, you are a lot more than just another product to him.

The evolution of performance marketing from a CPM (Cost Per Impression) to a CPC (Cost Per Click) to finally a CPA (Cost Per Acquisition) model, has made digital an ecosystem which is more and more bottom funnel focused. And there are many pluses to that. Martech has only made us more efficient and effective with our spends, helping us identify the audience that is the most likely to convert.

But the reason why brand vs performance marketing is an age-old debate is because it is a bit of a catch -22 situation. There is always a trade-off. More so for young, start-up brands that are new in the market, who don’t have the legacy, recognition and the trust factor that established brands enjoy.

So, if you are a marketer of a new brand in an emerging space or even in an established category, this is a great conundrum. Your media planners will continuously tell you that your performance campaigns won’t work as effectively if you focus only on performance marketing, neglecting brand marketing. Your CPA/CPL is likely to shoot up. And you will convert immediately but convert less because you haven’t spent enough time building the brand.

What does this mean in the start-up ecosystem where a lot is about scaling businesses, reaching the first million users milestone as quickly as possible, and ultimately creating investor value? What it probably means if the hiring trends are anything to go by is there is greater focus on performance marketing with candidates for positions such as Head of Performance Marketing, Head of Growth Marketing or even ultra-specific roles such as Head of Email Marketing in high demand.

I have obviously given this conundrum some thought. And to me, it boils down to how Marketing as a function is looked at in an organisation. Or does your organisation consider Marketing as a “cost center” when it shouldn’t be? Or are you fortunate enough to be part of an organisation where Marketing is considered a “profit center” much like what the great management guru Peter Drucker opined, because Marketing, after all, is the only function that drives revenue. And therefore it should be a profit center.

If your business owner and C-suite does not see Marketing as a profit center, but as a cost center, then it is quite likely that there would be pressure to show immediate returns and “recover costs.” The result? Disproportionately higher number of zeroes in the Performance bucket compared to the Brand bucket in your annual budget plan.

On the other hand, if you are fortunate enough to be a part of an organisation that values long-term thinking and are patient, stable investors, they are more likely to (there are always exceptions, mind you) understand and appreciate brand marketing efforts and the importance of it.

Quite realistically speaking, in the ROAS obsessed world that marketers live in today, it’s not possible to ignore performance marketing. In fact, many would say, the future is performance marketing, with CMOs having travelled the huge distance of not taking digital seriously to now diverting a large chunk of their marketing budgets to performance marketing. COVID, of course, played a huge part in this transformation.

But a brand’s stories, messages, purposes and personality is what makes it immortal. It’s why the whole nation is in love with the Amul girl. It’s why, when you see a breathtakingly beautiful Dior ad on the pages of Vogue, you don’t really expect to know the price of the handbag or whether it’s on discount. Because to you, that image is enough. It is sacrosanct.

These brands never had short term objectives. And that’s why they are iconic.

But if the objective is short term/immediate returns on investment, by all means, adopt tactical strategies and put out that banner ad with a discount code. But that’s unlikely to strengthen your brand’s positioning and sharpen your USP. You will most likely be seen as “just another discount brand liquidating last season inventory.”

Brands, much like the idyllic city of Rome, can’t be built in a day. Brand building is almost like rearing a child. It takes time, immense patience, love, care, compassion, and also money. There is nothing short term about it. Because if it is short term, it’s not brand building. Simple.

It is possible to find a middle ground. Like everything else in life. And do a great job of it. Look at two wonderful homegrown brands – Swiggy and Dunzo. New age, hungry for revenue and performance driven, but have built very solid brands in less than ten years. All because they could deftly do both. And so, you can too.

I could go on about this. But I will have to review my next performance campaign media plan. Or wait…would it be a brand campaign plan this time?