Commentary

Brand And Performance Are Codependent - Here's Why

Algorithm-driven media and AI-generated creative tools will teach advertisers and marketers how to use data behind every campaign to drive better results, but the key to remember is that brand and performance are codependent, despite having a limited budget.

Research released this week shows how performance advertising holds the promise of immediate returns and near-endless options for optimization, regardless of the amount that companies spend on campaigns.

Misleading metrics and diminishing returns, however, mean risking a diminished impact from campaigns by over-investing in performance and entering what the study defines as the “doom loop,” slow growth and a decline in effectiveness. 

WARC, in partnership with Analytic Partners, BERA.ai, Prophet and System1, released research this week — The Multiplier Effect: a CMO's guide to brand-building in the performance era. The idea is to help marketers better understand how to deliver high-impact advertising.

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The report outlines several reasons why this is the "performance era," which include the rise of digital-native businesses, pressure on legacy players to maintain growth, and consumers using more media.

Researchers broke down each segment of the study. The greatest payback resulted from performance- and equity-led advertising. Moving from a performance-only to a mixed approach can deliver an improvement in total revenue return on investment (ROI) between 25% and 100% – with the average uplift of 90%. Moving to a performance-only approach from a mixed approach, by contrast, results in an average decline in ROI of 40%, according to research by Analytic Partners.

Equity building influences consumers who are not yet in-market, and increases the chance that they will consider a brand when the time comes to make a purchase.

The research reported that System1 found 92.1% of strong equity-based ads built on impactful creative performed well in the short term. It's important to consider, for an ad that could have been seen months ago, how it may have led to the purchase of a product from that brand.

Prophet surveyed 300 marketers in North America, who identified the qualities that set over-performing companies apart. Their spending patterns were not found to be the key. Spending remained fairly consistent, per the study. Some 90% of "winning" companies were at least somewhat integrated when it came to connecting brand and demand.

Here’s the evidence: the key to unlocking the power of brand building is to move away from conceptualizing brand and performance as separate activities -- brand and performance -- and instead base advertising efforts on the fundamental codependency between these tasks as part of an integrated growth strategy, according to the report.

Researchers broke down each segment of the study. The greatest payback was found to come with performance- and equity-led advertising. Moving from a performance-only to a mixed approach was shown to deliver an improvement in total revenue return on investment (ROI) between 25% and 100% -- with the average uplift of 90%.

Moving to a performance-only approach from a mixed approach, by contrast, results in an average decline in ROI of 40%, according to research by Analytic Partners.

Equity-led advertising can help drive sales, and performance advertising can reinforce the brand while operating efficiently.

The report provides these suggestions on how to use The Multiplier Effect:

  • For budgeting purposes, CMOs should be allocating at least 30% to equity-driving ads, or the “brand baseline,” with 40% to 60% a typical “best practice” range.
  • Search investment will vary by brand and category, but, for most brands, spending more than 25% of budgets on search should be a red flag. This is called the “search ceiling.”
  • Avoid thinking in silos when campaign planning; instead, think of full-funnel creative platforms, where different types of assets reinforce each other. The ideal is to “go deep” by integrating all creative assets within a platform.
  • Performance-led techniques, such as promotions, should still tie back to the core brand idea.
  • Build a “measurement stack” that can identify a brand’s “baseline” revenues and the incremental impact of advertising beyond it.
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