The age-old debate about brand-building vs. performance marketing shows no signs of abating, but it’s time to reframe it, says Marc Vermut.
A new study published by TransUnion aims to broker a truce, says Vermut, VP of TransUnion’s Knowledge Lab, a unit focused on research that helps marketers improve performance. The whitepaper, Giving Marketing the Credit it Deserves, shows that common metrics used as key performance indicators tend to undervalue the impact of brand marketing on sales by as much as 83% and champions a new framework to help close that gap.
“Your teams are all over the place. You’re measuring them with different metrics that don’t link together,” says Vermut. Marketing may be split in many teams—performance, product and sales marketing; or by channels such as below-the-line and sponsorships—and each looks at results in their own way, he explains.
“The first thing you have to do is align: What does everyone believe marketing’s function is and how do you measure if you’re achieving it? And the second thing is that you have to design a more holistic measurement program,” says Vermut.
TransUnion’s research, in partnership with the trade group MMA Global, applied a framework dubbed Brand as Performance (BaP), which applies performance metrics to branding efforts. Brand building drives favorability, which drives conversions and sales growth in turn, and it compounds over time, showing long-term effects in the bottom line that can be up to six times greater than short-term sales bursts.
“Brand as performance gives marketing a stronger seat at the financial table, in terms of how they’re contributing to the business,” says Vermut. “It also allows CMOs, media strategists, and planners to have a complete view of how the different levers they have can impact their business performance.”
Marketers use many methods to measure performance, often relying on short-term metrics that may affect their choice of media and tactics, but may not give a full view of how effective their efforts really are, says Vermut. A more holistic view applies the same key performance indicators used to measure performance marketing to brandbuilding activities, but takes a longer-term view and leverages more data and experimentation to connect the marketing activities and their ultimate value to the business, Vermut explains.
“If you don’t look beyond where you are, A: You’re not going to capture the full impact to the business that your marketing is delivering. And B: You may not be waiting long enough to see the effects of the different media channels that you’re using,” explains Vermut.
“Experimentation on Steroids”
TransUnion’s study focused on a sample of organizations that deployed a brand-first strategy, including Ally Bank, Campbell’s and Kroger.
TransUnion enlisted survey vendors to create a pool of respondents who match the companies’ business, then combined it with internal customer data to build audiences it could measure, and create “a giant data set of people” for testing concepts and media. “We’re creating an experimental framework,” says Vermut. BaP is “experimentation on steroids,” he says.
“We do a lot of analysis in order to validate and understand how much did marketing make people feel more affinity to the brand, how did stronger affinity to the brand drive higher levels of conversion, and how does marketing interrelate to how people feel about the brand,” explains Vermut.
Rather than look at the 10 to 12 weeks of a typical campaign, TransUnion looked at an extra six months beyond that and found out the long-term effects on brands could be up to six times larger than thought.
“It’s providing a tool that more concretely connects why it matters that people care about your brand and the financial benefits you get from that,” says Vermut. The proof the experiments provide gives marketers permission to think broadly about how to invest their budgets and allows them to communicate to the C-suite the need to look at marketing as a long-term investment. “You can have financial trade-off conversations about more brand-oriented, brand-building marketing investments that may not pay off in three months,” he said.
BaP lets marketers test work in ways that go beyond what a model can show, and run experiments with real data to demonstrate to the C-suite the value they can deliver, Vermut explains. For example, a test done with Ally Bank showed a brand-forward strategy would bring in 16% more customers and 29% more accounts over a two-year period than a 10-week effort focused on driving account openings.
Vermut gave credit to Ally CMO Andrea Brimmer, whom he said has been a believer in branding since the bank launched in 2010. “She was getting more pressure to focus less on brand marketing and more on performance marketing,” he explains. “The Brand as Performance experiment was able to demonstrate that what she was doing was causally driving that longer term growth in the business.”
TransUnion is able to build this framework thanks to its data capabilities, notes Vermut. BaP “is a large-scale, long-term investment in marketing measurement,” but it is built on smaller, fast-moving user-level sentiment-to-conversion analysis that can be used on a smaller scale by brands, he explains.
The company works with MMA Global to deliver a Brand as Performance company-wide, but also is using the learnings from the research to develop smaller-scale, faster moving analyses that can link brand to behavior and marketing mix, Vermut says.
“It’s a new capability, in a world where that capability is hard to bring together, ” says Vermut. “Our hope is we can start giving these tools to more brands and more marketers to use.”
Applying this framework does require a “mindset shift” for marketers as much as an operational challenge of breaking down silos and embracing new metrics, says Vermut. The BaP approach gives organizations a way to calibrate and understand the trade-offs and opportunity costs involved to get to a more informed marketing allocation. This helps marketers deliver performance now, while still setting the business up for longer term growth and success, he explains.
“It’s about driving long-term growth while balancing it with the short-term performance goals that your organizations have. There are reasons why we have to hit our sales goals,” he says. “You can’t ignore today just for the promise of tomorrow, just as you can’t only focus on today and not worry about what’s going to happen tomorrow.”
