Your marketing budget is strategically critical. Whether it’s financial, or capacity-based, your budget ultimately enables the what, when, and how of your marketing strategy, underpinning all the success your brand achieves.
With so much on the line, it’s therefore crucial to know what your budget is made up of. This all sounds great in theory, but putting it into practice can be quite the task, especially if your budget is up for renewal.
Whether you’re a brand approaching the end of its financial year, or if you’re a recently-hired marketing manager looking to revamp your marketing department’s approach, this article will help you plan an effective marketing budget that facilitates brand awareness, while still making major strides in overall marketing performance.
Performance, brand, Or both?
There are two primary approaches that marketers explore when planning their budgets: performance, and brand.
What is performance marketing?
Back in the early-mid 2000’s, the internet was a bit like the wild west in terms of marketing. Not only were there many agencies making wild, unfounded claims about how to market digitally, but the word “performance” had started to become synonymous with what we now call “digital”.
To be more specific, online advertising/digital marketing was seen as the best thing to ever happen to the lives of marketers. Any efforts made were measurable, targetable, and efficient.
On paper, performance marketing is defined as any marketing activity that: has a short-term, measurable business impact, deals with phrases like return on investment (ROI), cost per click (CPC), etc, and has some element of financial backing, such as bidding or advertising costs. A lot of these things are also true for digital marketing, but we wish to stress that they are in fact two different things.
Although the goals of performance marketing are a little more aggressive in terms of seeing a measurable return based on the efforts undertaken, it does not immediately mean a more efficient or cost effective approach. Nor does it mean that the measurable nature is 100% accurate.
To put it simply: a lot of performance marketing channels are digital, and a lot of digital marketing channels are performance – but they are not mutually exclusive.
What is brand marketing?
Brand marketing is all about, well, building a brand.
Compared to performance marketing, brand marketing focuses more on engaging and resonating with customers, with the ultimate goal of establishing some sort of emotional connection between the two.
Brand marketing approaches tend to be a bit more broad in terms of reach..Brand marketers aim to generate awareness of who the brand is with the customer, rather than funnelling them towards making a transaction. The timeframe for activity with brand marketing also tends to be longer compared to performance, so that activity can be conducted over a stretch of time, as opposed to a small window.
Much like how performance marketing is often perceived as being solely digital, some marketers get brand marketing confused with traditional marketing channels(TV, in-person, etc). Some also think that brand marketing does very little to stimulate the same sorts of sales generated by performance, and that brand marketing is mostly about aesthetics. These are incorrect assumptions.
Why this matters
So, why are we questioning this? There’s two main reasons:
Digital marketing: a tumultuous past
The history of digital marketing has been, in a word, complicated.
Prior to the mass adoption of digital marketing, there was a real demand for a streamlined marketing channel that had equal parts control over what consumers are exposed to, and how they respond. Outside of direct mail and local partnerships, there were few marketing tools to reach new audiences in an effective, yet efficient way. TV was unreachable for some, and increasingly expensive for others due to a steady decline in TV viewers since the turn of the millennium.
Around 2010, digital marketing starts to grow exponentially and seemingly answers this long-held demand from marketers big and small. Between then and 2015, digital marketing is at its peak, with many marketers experimenting with approaches to campaigns, SEO tactics and more.
However, as we move towards 2020, the hype begins to settle on this relatively new marketing channel, alongside the mountain of changes that have happened. From GDPR stipulations to growing scepticism around consumer data and privacy, digital marketing quickly goes from being a loved platform, to a suspicious one.
For brands that heavily invested in digital, brand marketing had often fallen to the wayside, see as fluffy, indulgent. So much so that when digital marketing hype hit a plateau and started to decline,, there was no brand marketing being done to make up for the deficit in awareness, consideration and distinction. This brings us to modern times, leaving marketers to question; do I invest more in performance or brand marketing?
Changing economic situations
Marketing success, at times, has a direct correlation to the economic situation of your target market. If we look at the UK economy as of late, a challenging story is unfolding.
Predictions for 2024 do show a nominal growth of just 0.5%, but we can’t argue with the fact that these numbers do present some clear economic uncertainty.
Alongside this, consumer confidence research by GfK shows that people have increasingly felt more confident around how they spend their money, and what brands they spend on. Though, towards the end of 2023, confidence levels did start to regress.
Source – GfK Consumer Confidence Barometer
Economic uncertainty places pressure on marketing efforts to focus on short-term goals in order to drive immediate revenue and push back. This is understandable and economically responsible, your brand won’t be much good if you don’t have a business. However, while fluctuating consumer confidence (see chart above) tells us that businesses should be readying their brand for a turning point in the market. Time and again it has been evidenced that building a brand through a downturn leads to longer-term success as consumers start to feel more secure in their purchasing behaviour.
Decision time: how to blend performance and brand marketing
Having stated some definitions, and given some context, let’s address the core of this article: how do you blend performance and brand marketing?
Gather baseline figures
Before thinking about choosing an approach, it’s critical to establish some statistics that can be used in the future to evaluate the results of your investment.
Be sure to conduct some customer sentiment analysis on how your brand is perceived online, measure your current conversion rates, and marry these figures up with your current marketing outgoings. Doing so will give you the ability to directly measure the effectiveness of your impending strategy.
While we know that marketing theory can only get us so far, when undertaking a considerable change to your current marketing approach, or defending the need for your current approach, it can be beneficial to refer to established principles and theoretical frameworks. In particular, there are four theories we recommend reviewing:
95% Rule – Prof. Byron Sharp
The 95% rule suggests that, 95% of the time, your consumers aren’t in the market for your products or services at this current time. The remaining 5%, however, are considering a purchase. Based on this, focusing all of your marketing messages from a performance perspective, will quickly cause your potential audience to disengage.
The premise of the 95% rule is that brands should prioritise sustainable messaging to the 95% of their audience, so that when they are in the market, your brand is at the top of their considerations.
60:40 – Binet and Field
Based on extensive market research on the effectiveness of advertising, the 60:40 rule by Peter Field and Les Binet is based on the idea that 60% of a brand’s marketing activity should focus on long-term, brand marketing, while 40% of the activity should focus on short-term, sales-activation (performance marketing).
Although this concept does apply a weighting that is slightly more in favour of brand marketing, it’s important to note that this is only given as guidance, and marketers should therefore adjust the system to their own situation; overemphasising short-term activation may undermine brand awareness, while long-term brand awareness may jeopardise short-term sales performance.
Performance Plateau – Grace Kite
The theory we’ve looked at so far all heavily implies that some sort of balance is needed to gain the best results.
Dr. Grace Kite from Magic Numbers, however, suggests otherwise. She suggests that, from a starting point, investing mainly in performance marketing can actually be a good way of building an audience, right up until that performance starts to level off.
We see similar arguments in the world of SEO; owning a subject area, writing about it exclusively to prove your authority on the matter and gain attention from those interested, can be a good way of proving your staying power in search rankings. This is until either your audience starts to find other interests, or search engines penalise your website for only commenting on one subject.
When a brand hits this performance ceiling, the only way to push beyond it is to invest further into brand marketing.
Of course, the principles discussed in this article can be applicable to all types of businesses, meaning that some changes are needed to extract the most potential.
There will be a large number of factors that affect whether you prioritise brand or performance marketing, the biggest two being the economy, and your market. Before enrolling any of these new approaches, take the following considerations into account:
- The age of your brand and its products
- The size of your brand
- Your brand’s position in the market
- Your goals (are you growing, or in maintenance mode?)
- The state of your market
For example, if you’re a market leader, you may wish to prioritise performance messaging, due to the fact that your brand messaging is mostly handled due to your market position. If you’re looking to grow the business, you may want a blended approach, whereas businesses looking to maintain their current position might place a slightly greater emphasis on brand marketing.
As with any new marketing approach, the testing phase is so important. Start in increments that you are comfortable with, and always have backup plans in place if things go wrong. Be wary of going too small, however, as it may mean you don’t get enough insight to learn from, and may mistakenly assume it hasn’t worked. Remember, we’re not trying to completely rip up your marketing strategy, the aim is to take it to even greater heights through measured assessment and improvement.
To give you a head start, we’ve created a simple tool that you can use to determine just how much effort you should be placing on performance vs brand marketing. It isn’t conclusive, but it should definitely get you started.
At the end of your testing period, make sure that you always assess how things are progressing. This is crucial if you’re adopting a completely new strategy, as it will allow you to make minor tweaks here and there to get the perfect balance.
If going in a more brand-friendly direction, businesses that have historically always been sales-focused in marketing messages may see lower short-term profits. In which case, this evaluation period allows you to figure out how detrimental those losses are to your business, enabling more customisation of your refined strategy.
Financial services narketing, from Balance
Developing a workable marketing strategy in the financial services sector can feel overwhelming. If you’re stuck, we’re here to help.
Balance is a team of dedicated financial services marketers that can help you develop a bespoke marketing strategy to help your brand stand out from the competition. For a free consultation, contact us today.