Digital brand builders on the rise as performance-only marketing falls

Change is the only constant in the digital marketing world and right now, a major shift is underway. Performance-only marketing, a practice that has underpinned the majority of online advertising strategies for decades, is dying. Taking its place is a new breed of digital brand builders focused on the longer-term activity of brand equity and customer relationship development.

This shift is less a fad or a trend and more a recognition of how customers truly operate and the importance of sustainable business growth. In this blog, we'll talk about the emergence and decline of performance-only marketing, the growth of digital brand builders, and adaptability strategies for organizations.

What is performance-only marketing?

At its core, performance-only marketing (sometimes referred to as direct response marketing) is focused on short-term results and tangible performance metrics. Common examples of performance-based marketing include pay-per-click (PPC) ads, affiliate marketing and email blasts that drive sales or leads.

It became popular by giving brands tangible and measurable ROI. Every click, every conversion and every dollar spent could be tracked and measured. Businesses loved it because it seemed to offer the ability to connect spending with revenue in near-real time.

The problem today

Performance-only marketing has had mixed results. The biggest issues facing the practice today include:

• Admixture: Performance-only strategies were adopted by nearly every business. The result? A crowded digital landscape that has driven up competition and the cost of advertising.
• Declining productivity: Over time, the productivity of performance-only marketing has declined. Consumers are accustomed to this type of marketing and are increasingly unlikely to click through or convert.
• Short-term orientation: Performance-only marketing has always been a short-term strategy that sacrifices brand building for immediate results. The problem is that, in the long run, brand loyalty and customer relationships can suffer.

What are digital brand builders and their key characteristics?

Digital brand builders are focused on the long-term activity of brand equity and customer relationship development. They understand that while performance metrics are important, true marketing excellence integrates performance with brand building. Some of the key characteristics of digital brand builders include:

• Brand equity: Developing and promoting a strong, identifiable brand that customers connect with.
• Blending performance metrics with brand metrics: Meeting short-term performance targets as well as long-term brand goals.
• Customer relationships: Developing real relationships with customers through compelling content and customer interactions.

Tactics

There are several core tactics that digital brand builders use to accomplish their objectives:

• Content marketing: Developing and promoting useful, relevant content around core topics that are meaningful to both your business and your customers. Content can take many forms, including blog posts, videos, podcasts and social media shares.
• Social media interactions: Cultivate and grow a community of followers through regular activity and engagement on social media channels. This includes answering questions, commenting on posts and creating content that is worthy of being shared.
• Influencer marketing: Partnering with influencers to expand your reach and build trust. Influencers can humanize your brand and offer authentic marketing that feels unique to your core audience.

Real-world examples of effective digital brand building

1. Nike’s transition from performance-only to digital brand builder

Nike is a company that has made the shift from a performance-only marketer to a true digital brand builder. Two key components of Nike’s strategy demonstrate this shift:

Unified marketing: Nike operates with a “best customer” mentality, providing a unified brand experience across all channels. Their website, mobile app and brick-and-mortar stores are all highly integrated with one another. Everything that the “Swoosh” does is done with their target customer in mind.

Compelling narrative and community: Nike’s marketing campaigns are all about storytelling that their target customer can relate to. The brand’s “Just Do It” motto is a movement that inspires and empowers. Likewise, Nike invests significant resources into community building, from the Nike Run Club in their retail stores to various marathons, triathlons and “unlucky 13” fitness challenges.

2. Airbnb’s compelling brand narrative

The Airbnb brand is built around the idea of belonging and the unique experiences that their customers have when they stay at one of their listings. Two key components of their strategy:

• Social proof: Airbnb regularly uses user-generated content to highlight real stories from their customers. The authenticity and relatability of this type of content help to build trust and increase credibility.
• Focus on the experience: Airbnb could easily focus its marketing on getting more bookings, but it doesn't. Instead, it promotes the experiences that its customers have when they book a stay. Looking beyond the transaction reveals the true value that Airbnb brings to the travel experience: memorable, local and uncommon adventures.

Short-term performance and long-term brand building go hand-in-hand

There are several advantages to blending performance marketing with true digital brand builders. The most important would arguably be customer retention since it builds brand loyalty and encourages repeat purchases while creating a sense of trust. Customer lifetime value (CLV) is another aspect; engaged customers make more frequent purchases. Blending performance and brand metrics also allows marketing teams to measure short-term ROI alongside long-term brand equity, customer satisfaction and retention.

What should you measure?

If you're looking to blend performance and brand building, what should you focus on? As always, ROI and return on ad spend (ROAS) are critical performance indicators, and brand metrics like recall and recognition help to gauge the success of your brand-building efforts. Meanwhile, metrics like time on task, social media interactions, and repeat business can help to gauge the strength of your customer relationships.

Conclusion

With long-term effectiveness becoming increasingly important, fundamental brand-building is a key strategy organizations should consider for their future success. Understanding the mindsets of customers is central to this. By building user trust and the optimal use of the right metrics, the ROI for organizations stands to be exponential thanks to greater mindshare and a larger profile.

Transform your digital marketing approach with NEXA. Our strategy-first services blend performance metrics and brand building to drive sustainable growth. Partner with us to meet your business goals and convert customers into loyal advocates. Contact us today to start your journey.