Three leading advertisers have said investing in long-term brand building and not being overly reliant on short-term performance is key for growth, but none of them currently meets a widely supported ratio of 60:40 in favour of brand.
Marketers from Direct Line, Booking.com and Eve Sleep spoke alongside Les Binet, one of Britain's leading marketing effectiveness thinkers, at Campaign's breakfast briefing, Brand vs Performance: the Marketer's Dilemma, at the Regent Street Cinema in London today.
Binet, the head of effectiveness at Adam & Eve/DDB and co-author of acclaimed study The Long and the Short of It, said evidence showed that most brands should aim for a 60:40 split in spend between brand building and short-term activation but in recent years the pendulum has swung in favour of the latter.
"Lots of the changes we’ve seen in the digital economy have been about making activation more efficient," he said.
"That means that brand building is the final frontier of marketing. It’s the one area where digital technology can’t do all the work. But marketers have tended to learn the wrong lesson."
Because the return on performance marketing is higher in the short term, advertisers have "gone way too far" in that direction, Binet said.
Direct Line and Eve Sleep both said they divide their spend roughly 50:50 between brand and performance. Booking.com didn't disclose figures but indicated it remains heavily skewed to performance, despite investing in brand recently.
All three shared their ideas on getting the balance right:
‘A lot of our performance marketing wasn’t all it was cracked up to be’
Brands director, Direct Line Group
Direct Line had been in decline until the brand launched its campaign featuring Pulp Fiction character Winston Wolf, created by Saatchi & Saatchi, in 2014.
That moment was the start of a process of "absolutely focusing on brand", Chilvers said, which involved becoming "forensic" about how its marketing spend was performing – which produced important revelations.
"We discovered that an awful lot of our direct-response and performance marketing wasn’t quite all it was cracked up to be," she said.
New measurement techniques uncovered "insane excess frequency" in the brand’s direct-response TV ads, while geo-testing "consistently found a lack of incremental sales driven by online display and programmatic online video", which she said, "doesn’t feature as part of our plan any more".
Identifying inefficient spending in performance marketing had allowed Direct Line to cut spend without hitting its brand investment, Chilvers said.
Brand advertising has now reached a point where its cost per acquisition was slightly better for brand campaigns than direct response – whereas previously it had been more than 50% higher for brand advertising.
‘We were a $36bn company, so it was kind of a fair question: do we need brand?’
Director, global marketing communications, Booking.com
Booking.com had achieved almost continuous fast growth with no brand investment at all since it was founded in 1996, which meant it was "simply in our culture and DNA to think about things in a performance mindset", Smith said.
When the ecommerce company started to think about brand for the first time, the question was not "Do we want to be an iconic brand in the travel industry?" but "Where will we get growth after we see the initial return from Google?" he said.
"We were a $36bn company, and an organisation that had never spent a penny on brand, so it was kind of a fair question: do we need brand?"
For the next three years, Smith said, Booking.com’s brand advertising was purely about "filling the funnel" but in 2017 it "started to consider incrementality and intent".
The brand was also facing a sector that was becoming increasingly commoditised. "In order for us to generate sustained growth, we have a hypothesis that we have to be a much more differentiated brand," Smith said – and this required an increased focus on brand advertising.
It also adopted a "champion challenger" strategy, he said, in which 80% of spend would go to a "champion" asset but they would "continually challenge it with another creative to see where we’d achieve greater performance".
‘This is a nonsense way of viewing the world’
Chief marketing officer, Eve Sleep
"One of the first things I did when I arrived at Eve was turn off all our programmatic advertising – and I didn’t see a single sale lost," Calverley, who joined the mattress company in December, said.
The distinction between performance and brand channels was "largely nonsense", she argued.
"What is belied in here is the story we’re telling – and it’s the conversation you’re having that determines whether you’re doing brand or performance, and not the channel you’re using. So this is a nonsense way of viewing the world."
Because mattresses were a once-a-decade purchase for most consumers, Calverley’s challenge was to "make messages that will still be effective for 10 years", she said.
"The way memory structures work is you have to invest in a good asset that creates sustainable memories, and invest consistently in that asset. There would be nothing more damaging for Eve than to go, 'we’ve got a TV ad over here that makes brand, and then a load of performance stuff over here'.
"That doesn’t convert people as they move into market tomorrow, next week, next month, next year or even in five years."