At Carat, we understand that connecting brand and performance media is critical for brand health and business growth. When brands strike the right balance between the craft of brand building and the rigor of hard-working media, magic happens.
In today’s media landscape, striking the right balance can feel like a moving target. Traditionally, performance media has been associated with short term sales uplift, while brand building has been understood to drive long-term growth. But in a connected media ecosystem, these norms are quickly becoming outdated. Recent research from Analytic Partners found that upper funnel branding tactics are 60% more effective over the long term than lower funnel tactics, but only 25% less effective in the short term than performance tactics1. And when it comes to messaging, brand messages in ad campaigns outperform performance messages 80% of the time in terms of sales and ROI1. This suggests that we have been presented with a false choice. It’s not about choosing brand over performance, or performance over brand – it’s about making the two work harder together.
Missed Connections in a Connected Landscape
In a connected media ecosystem, balancing brand and performance media is both easier and more complex. Technology is transforming upper funnel channels into addressable commerce platforms, blurring the lines between brand vs. performance. When Harvard Business Review reporters surveyed senior marketing executives at the 2022 Cannes Lions International Festival of Creativity about their top burning issues, twice as many selected “managing the tension between brand and performance marketing” over any other issue2.
In the face of uncertainty, our tendency as marketers – and as humans – is to prioritize what can be proven. Performance marketing has clearer KPIs; its impact on business is easier to prove. This has caused brand building to lose out more and more, with 61% of today’s media dollars focused on performance tactics and only 39% in brand building3. Instead of investing in what makes them special, brands have been pressured into justifying media spend with quantifiable short-term results. This is widening the gap between brands and consumers.
It is our belief that the current investment imbalance is eating away at brand and missing key opportunities to connect with consumers. By connecting brands to what consumers want/need, and delivering the right experience in that time of want/need, we can drive brand momentum AND business performance. We call this marketing with emotional intelligence, or Brand EQ.
So how do we strike the right balance? First, we must understand how we got to this place of imbalance.
The Danger of Short-Termism
Tough economic times have forced marketers to make tough economic decisions. The volatile climate of recent years has bred a culture of “short-termism”. Multiple socio-political challenges facing the world today have had huge implications on marketing and media – from war in Europe, to global inflation, to trade protectionism, to perhaps the largest, our climate – all of these factors have created an urgency to drive growth in a shorter period of time3. As a result, our industry has been overinvesting in short-term media impact and underinvesting in long term brand equity.
Also driving a “short-termism” mentality is the expanded role of the CMO. More CMOs today cite short-term sales/revenue growth as their primary responsibility (51%) than medium-long term brand health (36%)4. With the average brand campaign lasting 24 months, and the average CMO tenure lasting 21 months, a need to drive short-term gains has given rise to a preference for performance media.
The Importance of Brand
We know from Carat’s own research how important brand building is5. First, brand building has a positive impact on stock price. Businesses who have consistently nurtured strong brands see an increase in stock price over time, while businesses who have underinvested in brand see a decline.
Second, we have found a direct relationship between the emotional intelligence of brands and their business performance. Brands who exhibit higher emotional EQ by creating value for people – living their brand purpose, communicating with meaning, and delivering exceptional customer experiences – outperform the market on growth.