“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Sean Popen, EVP at Matterkind.
The jury is still out on whether a recession is inevitable given the current strength of the job market and consumer demand. Nevertheless, the vast majority of businesses are revisiting all line items in their budgets.
Research clearly shows that investing in marketing during times of economic crisis yields strong business results. Some businesses have already changed their mix and reduced their spend on performance in favor of brand marketing. Airbnb has done just this, leaning on the strength of its instantly recognizable brand as a primary marketing tactic since 2021.
So, is prioritizing brand marketing at the expense of performance the right tactic for brands looking to maintain control of marketing spend at a time of uncertainty?
My answer is a firm no. Performance marketing is a CFO’s dream – it drives measurable growth for every dollar spent. That’s why it’s absolutely essential in an unstable economic climate.
1. Performance is moving up the funnel
Traditionally, branding and performance are seen as opposite extremes of the funnel. However, performance tactics are now moving up the funnel, meaning brands can use them to drive awareness and build relationships.
Rather than investing in lower-funnel affiliate programs, for instance, brands can use affiliate marketing on premium publisher sites and through high-profile social media influencers.
But channeling more spend into data-backed performance marketing doesn’t mean neglecting brand identity. On the contrary, it’s important to view brand marketing as a slower-burn tactic, establishing your personality and point of view over time. Getting the balance right is the key to optimizing your marketing efforts.
2. Brands have greater flexibility
Performance marketing has evolved significantly since its emergence two decades ago. Rather than being a one-size-fits all approach, marketers can tailor strategy to their brand’s individual needs and can set the parameters for success. This provides greater flexibility and control.
Instead of aiming for generic metrics such as views or clicks, brand marketers can set their own KPIs. If you’re a retailer, for example, your number-one priority might be driving customers into physical stores. For an insurance brand on the other hand, your focus might be lead generation.
3. Spend can be linked to business KPIs
Marketing programs are most successful when each dollar can be tied to specific business KPIs. This enables CMOs to be more accountable and have productive conversations with the leadership team to demonstrate how marketing investment is driving results.
Transparent performance marketing is fully trackable. Its impact can be measured and attributed directly back to each investment.
4. Agility is a given
During the course of any year (and especially in tough economic times), brands don’t want to be tied to fixed monthly costs. They need to be able to scale spend up and down on a monthly basis, depending on priorities and seasonality.
With performance marketing, brands don’t just get the agility to adjust spend as required. They also only pay for the results that are achieved. With connected TV advertising, for instance, brands might pay a cost per incremental reach or per percentage of in-market demographic.
When combined with the expertise and technology of their performance partner, this flexibility gives brands the ability to navigate even the toughest economic storms.
5. Brand growth is built on first-party data
While the deadline for the deprecation of third-party cookies has moved once more, it’s still on the horizon. That means first-party data is vital to developing a long-term relationship with the customer.
Brands can use performance marketing for lead generation and build out their own first-party data. At a time of conscious marketing, performance channels are evolving to deliver relevant, respectful experiences and build long-term customer relationships.
As we enter a time of economic instability, brands should be looking for solutions that can help them maintain growth, even if budgets are limited. Performance marketing can achieve many of the same goals as brand marketing – delivering incremental, measurable growth – but with less risk, more control and more insights.
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