Focusing on ROI Alone Can Yield Lackluster Results

Performance marketing—or advertising strategies with a focus on measurable outcomes and the ability to demonstrate performance—is becoming increasingly popular. While performance marketing is vital to lower funnel conversions and allows for real-time optimizations and budget allocations between channels, focusing solely on performance marketing is likely reducing your overall marketing effectiveness.

This is especially true when a focus on performance marketing comes at the expense of brand marketing. While performance marketing aims to drive more immediate impact, brand marketing is focused on building long-term awareness, recognition, and loyalty for a company and its products or services.

Raja Rajamannar, chief marketing and communications officer at Mastercard, shared his perspective at the recent 2023 SXSW FastCompany event and at B2B World Fest 2022*. When it comes to balancing brand and demand in the marketing mix, Rajamannar is certain of one thing: “Whatever we’re claiming in our products, the credibility is coming from the brand itself,” he says. “If all you’re doing is focusing on performance marketing, you’re running on a treadmill. The speed of the treadmill keeps increasing but you haven’t moved forward, and you’ve tired yourself out.

What gets you off that treadmill and gives you good progress and competitive advantage is the brand. When you’re building the brand, you’re building curiosity and awareness. It’s for that reason that two-thirds of Mastercard’s marketing spend goes on brand building, not on products and performance.

Taking a lead from Mr. Rajamannar, here are some tactical reasons why brand marketing is necessary in addition to performance marketing:

Building brand equity: Brand marketing helps businesses establish their brand identity, values, and personality. By investing in brand-building efforts such as advertising, social media, and PR, companies can create a strong emotional connection with their audience, which can lead to long-term loyalty and increased customer lifetime value.

Differentiation from competitors: In today’s crowded marketplace, it’s important to stand out from the competition. Brand marketing can help businesses differentiate themselves by emphasizing their unique selling proposition and building a distinctive brand voice and visual identity.

Creating a long-term strategy: Performance marketing tends to be focused on short-term results and immediate ROI. In contrast, brand marketing takes a more long-term view, aiming to build a sustainable competitive advantage over time.

Supporting performance marketing efforts: Strong brand recognition and reputation can help support the effectiveness of performance marketing efforts, as customers are more likely to engage with and trust a company that they already know and have a positive opinion of.
While performance marketing is important for driving immediate conversions and measurable results, brand marketing is necessary for building a strong, recognizable brand that can support sustainable growth over the long term.

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*Mastercard’s Raja Rajamannar Talks People, Purpose, Passion and Profits at B2B World Fest