Should you invest more of your marketing budget into brand-building or direct response, in order to drive sales results?
Both elements are important, but due to immediate pressures, it's often direct response that gets more focus. Because we need to sell now, right? We need conversions in order to meet our KPIs and demonstrate ROI to decision-makers.
Yet, at the same time, the benefits of building brand can be equally, if not more significant, over time. It just depends on how long a time scale you're able to measure.
To provide some more insight on this, Facebook recently partnered with Analytic Partners and GroupM to analyze more than 500 Facebook brand and DR campaigns run by 21 businesses over a three-year period. The research took into account the varying approaches, with a view to determining which actually drives more value for a business.
As explained by Facebook:
"What is the proper balance of lower funnel and upper-funnel marketing activities on Facebook? Is it possible for brands to maximize the ‘easy wins’ now (through lower funnel messaging) while simultaneously setting themselves up for further growth tomorrow (through upper funnel messaging)? These are questions that all marketers face, and they become even complex when facing real-world challenges such as pressing growth and limited budgets."
So which is the better approach, according to the research? Well, really, it depends.
Facebook's report essentially breaks down the comparison into three charts.
In this first graph, we can see that direct response campaigns generated more conversions, which makes sense given the focus on such.
But Facebook notes that this isn't the only metric to consider - you also need to factor in the cost per impression, with DR approaches generally being more expensive due to more specific audience targeting, which tends to have higher CPM.
As you can see here, the cost per impression for brand-building (upper funnel) campaigns is far lower, because your targeting will be much more broad as you look to connect with a wider audience.
Correcting for this, once you factor in the cost per conversion, brand-building actually ended up being a more effective approach in some verticals.
"On a per-spend basis, the ROI performance of upper-funnel marketing is more comparable because of the less expensive cost structure. In fact, upper-funnel marketing is a consistently better performing strategy for driving short-term sales in specific industries like ecommerce and Retail."
That's an interesting consideration, especially given the rise of eCommerce over the past year. Brand-building, and establishing connection with a wider audience, can actually drive similar, if not better, sales results - but you need to go the extra mile of comparing your costs and conversions over time to see that reflected in your data.
The research really highlights the need for taking a tiered approach to your advertising, and investing accordingly.
As a basic outline, the structure of each of your ad campaigns should be split into three elements:
- Highlighting product utility and brand to generate initial interest (broad audience targeting)
- Highlighting more specific product benefits in targeting people who've expressed initial interest (those who've responded to ads or posts, or have visited your website)
- Retargeting those who've expressed interest in specific products by underlining specific benefits (those who've visited product pages or gone through to the check-out but haven't converted)
Segmentation is key, and Facebook's research here underlines the need for investment in each element in order to maximize results.
But there's no definitive answer - Facebook's study doesn't specifically say that investing in brand-building will generate better results for all businesses over DR campaigns. It does show, however, that there are clear benefits to each, and by experimenting and tracking your results, you'll be able to demonstrate relevant value for your efforts over time.
You can read Facebook's full "The Effectiveness of Brand Messaging in Driving Sales Incrementality" report here.