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Strategic Marketing: Balancing Performance and Branding

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Chapter 1: The Unexpected Question

Have you ever been caught off guard by a blunt question about your work, leaving you momentarily speechless despite your familiarity with the topic? This recently happened to me during a conversation with a fledgling entrepreneur. I was casually explaining my role in brand marketing when he suddenly asked, “Why invest in brand marketing when you could allocate that budget to measurable performance channels?”

I was momentarily stumped, struggling to articulate a coherent response. Though I eventually found my footing, the encounter lingered in my mind, prompting me to reflect on a more insightful answer I had once heard:

"Performance pays the rent. Branding pays the mortgage."

This phrase encapsulates the essence of what I should have conveyed.

Performance Pays the Rent

Definition: Performance marketing is a digital strategy aimed at prompting specific customer actions, with payment only required for successful outcomes such as leads, sales, or clicks. Common channels include pay-per-click advertising, affiliate marketing, email campaigns, and SEO.

Performance marketing resembles paying rent; it delivers immediate results for ongoing financial commitments. The funds invested yield quick returns through measurable actions like clicks and sales, providing reassurance to founders and CFOs regarding their marketing expenditures.

However, there’s a caveat: ceasing to invest in performance marketing often results in a rapid loss of those results. For many small businesses, especially in e-commerce, this can lead to abrupt declines in performance once funding halts.

Branding Pays the Mortgage

Definition: Brand marketing focuses on building and nurturing a brand’s identity, culture, values, and promises to its audience. Typical channels include content marketing, public relations, sponsorships, social media, and experiential marketing.

In contrast, brand marketing is akin to paying a mortgage. It involves long-term investment in an asset that, with consistent effort, will ultimately belong to you. This type of marketing requires substantial time and resources to cultivate brand awareness and loyalty, often presenting itself as informative or entertaining content rather than direct advertising.

Although its effects may take longer to manifest and are harder to measure immediately, a well-established brand becomes a significant asset. It grants businesses a competitive advantage through audience recognition and loyalty, much like owning a home that secures your financial foundation.

To Rent or to Buy

While I strongly advocate for brand marketing, I don’t suggest it should be the sole focus. The choice between performance marketing and branding often depends on your current stage and circumstances.

In the early phases, performance marketing serves as an effective way to gauge product-market fit and optimize conversion rates. Once you’ve established traction, integrating brand-building strategies tailored to your audience becomes crucial. Over time, a solid brand will reduce reliance on performance campaigns, leading to sustained success.

A notable case study is Airbnb’s approach during the 2020 Covid-19 pandemic, which exemplifies this strategy.

Reflecting on the Encounter

As I conclude this discussion, I can’t help but revisit that awkward moment with the inquisitive founder. How I wish I had the chance to express the clarity of this analogy instead! Though our paths may never cross again, I find comfort in sharing this insight.

So, to any founder questioning the value of brand marketing, I respond: “Why choose to pay rent when you could invest in a mortgage?”

Did you find this article helpful?

If so, please give it a clap and follow me on Medium—I would greatly appreciate it! 😀

You can also connect with me on Twitter → @NB_Branding 👋

Chapter 2: Performance vs. Branding in Practice

The first video titled "WORK TRUCKS: Lease vs Pay Cash vs Loan (the truth!)" delves into the essential considerations of leasing versus purchasing vehicles, drawing parallels to financial decision-making in business.

The second video titled "Hundreds of Our Tenants Can't Pay Rent - What We Did" explores effective strategies and lessons learned during challenging economic times, applicable to both individual and business contexts.

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