On May 18th, we hosted the third part of our series of ‘Nordic Morning Talks’ on Linkedin Live. These sessions are dedicated to discussing emerging business challenges in the field of digital.
This time we covered the topic of how to balance brand marketing and performance marketing and hit the marks as a marketing decision-maker.
In this session, Emelie Magnusson, Client Growth Lead in our Stockholm office, and Mikko Peltomäki, Agency Director in our Helsinki office, covered how to influence human behavior to hit marketing objectives, questions from our audience, as well as practical tips on the topic.
If you prefer to watch, you can view the full session here.
Let’s get into it!
Tomas Wihlborg (TW): Hi, my name is Tomas Wihlborg and I’m your host for today. If you’re a marketing decision-maker looking to really understand the impact of brand and performance marketing in combination, you’re in the right place! Mikko I'd like you to kick it off on this subject, can you give us some kind of context on brand and performance marketing?
Mikko Peltomäki (MP): Yes, sure Tomas. I think that although marketing is constantly evolving with new ways and capabilities to understand better, target, and communicate with prospective customers, the principles of human behavior and how we make decisions as consumers have changed very little.
These fundamentals of consumer decision making, i.e. the process of need recognition, search for information, evaluation of alternatives to purchase decision, and post-purchase evaluation are still based on both our emotional and rational motives.
As much as the methods and the available technologies may have changed and evolved over the years, marketing itself is still the same business it has always been: Making people aware of the service or a product, building trust and reason for them to use or buy the product, and creating loyalty, ensuring they return and pass the good word.
Emelie Magnusson (EM): How do we balance the marketing efforts along the consumer decision journey from the upper funnel branding, building a deeper connection and emotion with the target audience, to the lower funnel demand generated activities, driving a transactional relationship with the consumer?
Moreover, how to ensure that we measure the right things? Do we have “good” data (with consent) and correct techniques to develop insights into consumer needs and preferences across channels and devices, that enable us to make informed decisions?
EM: To start with, no matter if your focus area is B2C or B2B, brand marketing will for sure increase the total value of your marketing.
This graph comes from Les Binet and Peter Fields' “Marketing Effectiveness in the Digital Era” and shows how Brand Building and Sales Activation (or Performance Marketing) work over different timescales.
The lighter green graph line shows how performance activities work overtime (in this case a period of one year) with dips and peaks in sales or conversion, but at the end of the year, the sales/conversion baseline is constant. We didn’t achieve any growth at all here.
Looking at the darker green graph line which shows our branding activities, we can see how this works over the same period of time and we can call this type of branding activity a “slow starter” But, most importantly, we can see long-term sales growth when being consistent with our brand-building activities.
So by consistently working with a joint brand and performance strategy, we will see a continuous lift of the sales baseline.
MP: As the available technologies and the amount of quality data have greatly increased, data-driven performance marketing tactics can now be applied much more effectively also to brand marketing activities.
With integrated data and a more holistic view of consumer preferences and behaviors, companies have the ability to generate better insights to drive business development and also increase the marketing impact across all the stages of the decision journey.
Finnish premium decor brand Vepsäläinen, a long-term client of Nordic Morning, is a great example of a company using both the inspiring, high reach, multi-channel branding campaigns towards large audiences together with high data and performance-driven tactical, intention-based activation campaigns against the micro-segments.
The achieved results have shown a clear correlation between brand marketing activities enforcing the performance marketing activities (vice versa) and driving incremental growth across the set target KPIs.
MP: The two well-known marketing strategists Les Binet & Peter Field, the authors of Effectiveness in Context / (WARC), have advanced an approach to marketing based on the idea of “balance.”
Marketers must balance short-term sales activation and long-term brand building, two different types of marketing that require different creative, media, and measurement strategies.
Their well-known 60/40 rule - 60% for brand building and 40% for activation “tends to be an optimum effectiveness”. The ratio is not absolute and may vary by category. For example, in categories where there is a high degree of product innovation, the products are great and quite easy to sell, plus there’s a great deal of online research, you can tilt towards a brand with a split more like 70/30.
(Their B2B recommendation varies slightly, with 46% focused on the long term and 54% on the short term).
EM: For B2B, in general, about 95% of buyers are not ‘in-market’ to buy your products right now. That means effective marketing works primarily by reaching the 95% of customers who are not yet in-market, increasing the odds that your brand gets remembered when those customers do enter the market in some future period.
Performance marketing captures sales from in-market buyers, but I would say it has little to no effect on future buyers.
(According to LinkedIn data, B2B marketers spend around 8% of their budgets on brand awareness objectives. That makes 92% of B2B budgets dedicated to short-term, lower-funnel objectives like lead generation). So a lot can be done in that area!
EM: First, make sure you have an accurate KPI framework. Break it down to specific objectives, down to the channel level, to make sure they’re aligned with your overall business objectives.
What part of the funnel do the different marketing activities fit in and what KPI do they answer to?
Then secure that you have a presence throughout the whole funnel. Build a full-funnel strategy and make sure to measure the right things connected to your KPIs based on your overall business objectives.
Also, when measuring the right things, try to see the synergy effect between the different funnel activities. What happens with our performance ROI overtime when we add a long-term brand building activity for example?
MP: When aligning the goals and KPIs, ensure the data quality (including the consent), the processes, and the techniques to harness the data for better strategy and execution through different platforms are clear, transparent, and aligned with the different stakeholders (across marketing and sales organization plus the external partners.)
Adopt an agile way of working with a test-and-learn regime that is based on incremental improvements through a focus to incorporate learnings continuously to improve both branding and performance activities.
It’s an excellent opportunity to do that exercise now if you’re facing the Google Analytics migration. Now is a great time to plan ahead for new innovative things.
Having a strong, recognizable brand that has a consistent identity throughout your marketing activities helps you to differentiate yourself from the competition and build long-term value for your company. In order to achieve results, you need to invest in both demand creation through brand marketing activities together with harnessing the intention with performance marketing tactics.
Leverage new ways, technologies, and capabilities to better understand, target, and communicate with customers. Apply data-driven performance marketing tactics to your brand marketing activities.
You’ll need a wide skill set and a very agile mindset to execute in both disciplines. Embrace close collaboration across all stakeholders, ensure everyone is working towards the same goals, and assess abilities to execute and learn on a high frequency.
EM: It’s about seeing the whole funnel, and then making sure that you measure the right things. That you compare apples with apples and pears with pears. It’s easy to focus on your performance marketing, because you have instant results, looking at the ROI. It’s harder to measure the brand awareness activities and look at different KPIs that don't count for the ROI, for example.
MP: To invest in the abilities to track and understand both brand marketing and performance marketing. But also apply those technologies into execution. So they can actually do and execute on strategies that you define with the processes and technologies. That’s the key, that you completely change your mindset, and how to work. It's a much more agile and test-and-learn type of environment than it used to be in the past. So that’s one thing that’s very difficult for many marketing teams and organizations: to adapt to the new way of working.
MP: With the experience of working with many of our clients, you need to have the data. You need to have the numbers you can back and have those discussions. I’ve been a CMO myself and the discussion with the CFO usually comes through the numbers. If you can really show the numbers and the results of the activity traits, you can then have the long-term view but also the short-term results. So, make sure that you have the numbers in that discussion.
EM: You said the word long term. And I think this is one of the most important things to have in mind. What you invest in your brand building does not pay off next month or the next six months. You must have a longer horizon on how you want to grow your brand. And of course, at the same time, capture all the sales that are in-market at the moment with your performance marketing. It’s all about the joint strategy between your brand marketing and performance marketing.
TW: Thank you Emelie and Mikko. We’re going to wrap this up. Thanks everybody for watching. I hope you enjoyed it. More sessions like this to come!
Our next session will be about the newest Google analytics update, GA4, and how to take advantage of the platform while doing a smart and effective transition. We will have a panel of experts who will help you navigate all those changes so you can stay ahead of the curve.
June 16th, save the date!