Let’s start with something controversial: Branding and performance marketing are converging.
Worse, advertising on television was annoying and inefficient. This helped big brands who monopolized key marketing channels and retail distribution. This made it impossible for small businesses to compete with them. Only big brands could survive expensive funnel inefficiencies.
Big brands dominated every mass media format:
- Jingles on television
- Slogans on billboards
- One liners on the radio
These tactics were memorable but inefficient. A famous quote describes this perfectly: "we know 50% of ad spend works, we just don’t know which 50%."
Procter & Gamble is a perfect example of how big brands used to dominate. In 2014, they spent $10.1 billion in global advertising. By monopolizing attention, they commanded a price premium, and ensured paid for product placement in retail stores. The decline of CPG brands is a lagging indicator of decline in TV viewership. Big brands are beginning to struggle. Among the top 100 consumer-packaged good (CPG) brands, 90 percent lost market share in 2015.
What does this mean for the future of advertising?
- TV ad investment will decrease over time
- Nobody's going to watch annoying ads
Gone are the days of poor data, imprecise targeting, and limited shelf-space. Impressions is an outdated term. Today, we skip podcast ads. Nobody watches pre-roll ads. And we scroll Instagram instead of watching TV commercials.
People want to be entertained. They want to be talked with, not talked to. They don’t listen to brands. They listen to friends and influencers.
So many people are using Facebook that it’s like the Super Bowl every day. This helps small businesses with clearly defined customer sets. It’s also more efficient. Brands can gauge the effectiveness of their ads fast. Brands are searching for instant attribution. They want to know what’s working and what’s not working. Because of this, branding and direct response are converging in surprising ways.
Modern brand managers manage ad spend and sales in the same dashboard, in real time. This quick feedback loop allows brands to see what’s working and what’s not working — in real time. Small brands are equipped with efficiency and scale for the first time. They have reach like brand marketers and the tracking and targeting of performance marketers.
On average, brands are becoming smaller and more targeted. They’re nimble and hyper-focused on their customers. The best ones have different ads for different types of customers, depending on their interests. They care less about “branding.”
Media companies no longer sell reach because it’s become a commodity. Instead, they sell custom audiences, a point of view, and give brands personality. As the cost of failure goes down, brands are experimenting more. The best ones create content that’s native to the platform and the best ads don’t feel like ads.
Social media rewards raw content that mimics what our friends post. For example, shaky outperform still ones because they doesn’t feel like an ad. This works because people support brands that are real, human, and relatable. They’re called “Naked Brands.”
As the funnel gets shorter and shorter, performance marketing and branding will keep converging. Everything will be tracked and measured.
As technology improves, the best brands will create 3D worlds for us to explore. Everything will be measured.
The best brands will offer an escape from reality. And when we return to the “real world,” they’ll guide us through life and help us become who we want to be.
Soon, branding and performance marketing will be the same thing.