Building relationships with customers is essential to achieve business success, and the most effective way to build these relationships is through advertising.
In the modern business world, advertising a new business to consumers can be long-term and short-term. For a business venture, an advertiser can either build brand value for a longer period or the company can choose performance marketing, where the advertiser will be compensated according to consumers’ interactions with the company through sales, leads, and clicks on the online advertisements.
Brand building involves long-term investments in strategic activities and efforts to create and improve a brand’s identity, reputation, and customer perception. It aims to create a strong and positive association with the brand in the minds of consumers. On the other hand, performance marketing is a marketing strategy focusing on measurable and trackable results in specific actions such as sales, leads, clicks, etc. It has short-term goals and heavily depends on data and channels such as targeted campaigns, digital advertising, search engine marketing, affiliate marketing, and other tactics to generate direct responses and deliver measurable results.
Nowadays, most businesses choose performance marketing as it is short-term, budget-friendly, and cost-effective, as they only have to pay the advertisers when they reach the marketing targets. As a result, the marketing world tends to diverge from brand building and focus more on performance marketing. This tendency to overlook the brand-building aspect might not be evident immediately, but it will surely affect business success in the long run. Developing brand value for a business and hiring advertisers for performance marketing complement each other. If both are used correctly, any business can maximize customer reach and taste cherished success.
Although some businesses or companies understand the importance of both aspects, they fail to balance them. As a result, the companies succeed in connecting with consumers but fail to create their own brands in the market. In Bangladesh’s context, the prime example would be Warid Telecom, the now-defunct telecommunications company of Bangladesh. Warid Telecom entered the Bangladeshi telecommunication market in 2007. It launched an exorbitant marketing campaign that amassed 1 million customers within six months, becoming Bangladesh’s fourth largest mobile phone operator. But Warid did not create any distinct brand of their own, as they provided the same service as their competitors and nothing more than that. As a result, they began to lose in the competitive market and were forced to sell their shares to Bharti Airtel Limited in 2010, facing huge losses.
On the other hand, major telecom operators like Grameenphone Limited launched their operations way back in 1997. They had some fierce competitors, like Citycell. Still, they managed to survive through continuous advertisements and create a strong brand value by attracting consumers with lucrative voice calls and internet offers. As a result, after 26 years, Grameenphone has been a significant market player since 2018, holding over 40% of the telecommunications market and revenue. This is why creating brand value for a company is equally important as performance marketing.
Since the dawn of the internet age, performance marketing has been standard for businesses to promote their products. It posed a significant challenge: How should a business approach its marketing, i.e., promote product features or appeal to consumer identities?
In the case of brand building, brand metrics are measurements or key performance indicators (KPIs) used to assess and evaluate the performance and effectiveness of a brand. These metrics provide insights into various aspects of a brand’s performance, including brand awareness, perception, loyalty, customer engagement, and overall brand equity. Improving brand metrics is important for companies to balance the relationship between brand building and performance marketing.
To improve brand metrics, companies first need to define their objectives for brand building and performance marketing. They must determine the specific outcomes and results, aligning them with their business objectives. Secondly, companies must identify relevant brand metrics by selecting metrics relevant to their industry, target audience, and strategic goals. The metrics can include brand awareness measures, brand perception indicators (e.g., brand reputation, customer sentiment), brand loyalty measures (e.g., customer retention, repeat purchases), and other relevant metrics that reflect the brand’s strength and value. Companies should also connect brand metrics with performance metrics to establish a unified measurement framework and identify the linkages between brand-building activities and performance outcomes.
Many US-based companies adopt the North Star metric, representing overall brand equity. The North Star Metric is a primary metric that serves as a guiding light for a business or organization. It is a key performance indicator (KPI) that reflects the core value or goal the company wants to achieve. The North Star Metric acts as a compass, providing direction and focus for decision-making and strategy. It goes beyond short-term numbers and looks at the long-term value created for customers and the business itself. For example, the North Star Metric could be the number of daily active users on a social media platform. This metric reflects the platform’s ability to attract and engage users, which is vital for success.
Lastly, establishing solid connections between brand metrics and specific financial outcomes, such as revenue, market share, shareholder value, return on investment (ROI), etc., is crucial for improving brand metrics. These are how companies can enhance brand metrics and implement a framework that makes brand building and performance marketing reliable, enabling them to measure and optimize the impact of their marketing efforts. This integrated approach aligns brand building and performance marketing activities, leading to the overall success of the brand and business.
To strengthen the overall value and perception of a brand, there are some key strategies to boost brand equity growth:
- Differentiating one’s brand from competitors by showcasing unique benefits, packages, or values
- Emphasizing delivering exceptional customer service at every sales point. Exceptional customer experiences foster loyalty and build strong brand equity.
- Executing compelling brand stories that resonate with the target audience. Storytelling can communicate the brand’s values, missions, and purpose engagingly.
- Collaborating with complementary brands or social media influencers to expand a brand’s reach and credibility. Strategic partnerships help tap into new markets, attract customers, and strengthen brand equity through association.
- Continuously innovating and adapting to shifting market trends and consumer preferences. To maintain strong brand equity, companies must stay ahead of the curve by introducing new products and services that meet consumer needs.
- Monitoring a brand’s performance is crucial for consistent brand value. Companies have to collect feedback, conduct market research, and measure brand metrics to gain insights into brand equity growth and identify areas for improvement.
One unavoidable piece of advice for companies is always distinguishing between brand building and performance marketing. Short-term revenue generation and long-term value establishment are equally important for a company’s continuous success. When a CEO focuses on search engine marketing (SEM) while overlooking brand marketing campaigns, disaster is meant to happen for the company in the long run. Most companies think brand value is not quantifiable, but the ROI calculates performance marketing. However, this is not true, as linking key performance indicators (KPIs) specific to brand-building activities and the brand’s financial performance can show the brand’s value in quantitative terms.
For the final piece of advice, performance marketing values are easily calculable but not always accurate. Common metrics used in performance marketing may underestimate the return on investment for brand equity growth while overestimating the impact of campaigns that unintentionally erode brand equity. Implement a brand measurement approach that aligns brand building and performance marketing with a unified metric for brand equity.
An aspiring young business enthusiast, passionate about exploring technology’s transformative impact on various sectors.
