Hey hey future-shaper!

Not sure if you caught it, but earlier this week I shared a post on LinkedIn that I haven’t been able to stop talking about. I call this ‘mention-itis’.

The topic: Which is better? Performance advertising (direct, measurable, ex. PPC, direct mail, etc) or Brand advertising (the type of ads you saw in the Superbowl).

Well, it’s complicated.

When things feel risky, or resources feel scarce (like now! during this weird economy), the fight or flight instinct kicks in. Management chimes in. People start throwing out the term ROI. You need clicks. You need leads. You need proof. You need data. You need attribution.

So you lean hard into performance advertising (especially if you’re a small to medium sized business). And guess what happens?

You start to get  . . . clicks! Yay! 🎉

But what happens after someone clicks?

Have you differentiated your brand enough to get a fair chance at converting a cold prospect into a customer or a client. Do you have authority, credibility, familiarity?

Big business knows the power of investing to build a brand. They take the long view to get an unfair share of the market. But many SMBs think brand marketing and advertising is only for the big guys.

Not so.

Here's the challenge of performance marketing without brand marketing: you get caught with finite funds at the auction.

The beauty of an auction is that you get a bunch of people (prospects) with high purchase intent (they're actively searching) into a confined space (the auction) and sell your goods to the highest bidder (that's you –if you have enough money).

People go to auctions with their wallets open, hoping for a deal. But only the highest bidders get to take anything home.

Auctions are DESIGNED TO DRIVE UP THE PRICE!! Because - scarcity.

If all you ever do is market to the most scarce & frenzied shoppers at auction -- those who've signaled an intent to purchase now -- prices will always increase. It’s arbitrage, and it’s rarely scalable. It’s like getting on a treadmill that keeps getting faster.

Brand marketing complements performance marketing by speaking to the 95% of potential purchasers who are not at the auction today. In other words, brand marketing speaks to your FUTURE customers.

A good metaphor to capture the benefits of brand marketing versus performance marketing would be the difference between planting a quick-growing, annual plant versus a slow-growing, perennial tree.

A quick-growing plant may sprout up and look impressive in the short-term, but be prepared to do a lot of re-planting! In contrast, a slow-growing tree may take years to grow to its full potential, but once it does, it will continue to bear fruit and provide benefits for many years to come.

Performance marketing may deliver quick results in terms of immediate sales or conversions, but those results may not be sustainable over the long-term. Brand marketing may take longer to see results, but the benefits will continue to accumulate and compound over time, resulting in a stronger, more established brand with a loyal customer base.

Investing in brand advertising is why Apple, Coke, Red Bull, and Tesla are almost impossible to avoid when you want to do a business case for brand building!!

I know . . . they have country-sized budgets!!

I hear you whispering:

How about a few examples of companies born in the internet age? And ones that sell boring products! How about that, huh?

Oh! You mean like razor blades, reading glasses, and exercise bikes. Exercise bikes – I mean those are so 1970s!

That’s right my friends. Brand building isn’t just for the sexy people.  

I give you Dollar Shave Club, Warby Parker and yes, Peloton.

Dollar Shave Club was founded in 2011, and trust me no one was googling razor blades. They grew like wildfire due to their innovative subscription model and clever brand advertising campaigns focused on creating a fun and irreverent image, and highlighting the convenience and cost savings of their service.

Warby Parker has grown primarily due to its brand advertising too. Their marketing campaigns originally focused on creating an emotional connection with customers, highlighting the importance of fashion and affordability when it comes to eyewear. Their "Home Try-On" campaign, which allowed customers to try on frames at home before making a purchase, took a page straight from Zappos free shipping both ways.

Peloton, founded in 2012  . . . well you know all about Peloton. I mean, you’ve probably built a platform for yours and set it in front of that window in your high-rise that looks out on the San Francisco skyline.

You see, you can do this too.

Update a tired model. Do something different and TELL YOUR BRAND STORY!

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Now let’s get tactical.

How much should you spend?

You’ll have to figure out what’s right for you, but you can start with a few benchmarks.

What does your industry tend to allocate toward marketing?
(This tends to range between 2 - 10% of revenue depending on your category. If you need help with this, hit me up, I’ve got some data).

Then, on average, the marketing budget breaks out like this:

• ~25% marketing labor
• ~25% marketing tech
• ~25% marketing agencies & services
• ~25% paid media

• 60% brand advertising
• 40% performance marketing

You see, the truth is you need both brand and performance marketing. Yin and Yang. Peanut butter and chocolate. Mmmm.

Start somewhere. And if you need help, give me a shout.

Three things to mull over:

• Why Advertisers May Be Overemphasizing Performance Marketing by the WSJ
• The 2022 Nielsen Marketing ROI report (Hint, spending too little is more wasteful than spending the right amount)
• Brand Positioning: A Complete Guide for SMBs and Startups

Thanks for reading to the end! Happy weekend.

Ginger