CLV or Cash Multiplier?
How to bring back clients with a minimum of data
OCTOBER 19, 2022 | 6 MIN
For optimal results, the two types of advertising campaigns should work together. But sometimes reality takes steps of its own. This example illustrates what happens if you focus only on a certain level of demand.
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It might seem that CTR, CPC, CPA, TCR and other KPIs have been out there for a long time, but in fact, performance marketing only originated in the early 2010s.

According to the latest research on the marketing development from Netology, until recently, it was at least difficult, and often even impossible to determine which advertising channel brought more profit and which was less effective.

However, modern technology has given us not only Instagram and TikTok, but also SaaS platforms, dynamic call tracking, CRM systems, end-to-end analytics and other tools that have split marketing into branding and performance — in other words into “emotional” and “results-driven” advertising.
Performance is King? (No)
The emergence of performance marketing has truly changed the advertising market: if previously the effectiveness of campaigns could only be evaluated through expensive research (and that only approximately), now advertisers have the opportunity to know what they spent every penny on.

One by one, brands began to join the performance culture in the hope of an immediate and easily measurable result, and to focus all their macrobudget on it.

Around the 2010s, specialized performance departments appeared in large media holdings, and agencies focusing only on performance marketing began to emerge on the market.

However, the mechanics of cost per action, which is at the heart of performance marketing, are sharpened to work with warm and hot demand at the lower stages of the sales funnel. This means that if you focus only on performance tools, the business will sooner or later begin to have trouble scaling. Therefore, over time, even the most radical adherents of performance marketing came to realize that this approach simply could not exist in a vacuum, because the demand for products is finite if it is not additionally stimulated.

Performance marketing, working with end demand, will inevitably need additional image support to reach new audiences and build product or service awareness to expand the sales funnel at the entry point.

Let’s look at an example: several years ago, E-Promo Group began working with a federal supermarket chain to promote a grocery delivery service. The main objective in the first stages was performance promotion to generate orders on the site. The marketing mix consisted of Paid Search advertising and situational support for promotions in social networks. Image support through outreach tools was not planned in the first place due to limited resources.

We promoted the supermarket brand in the region only by handling the current demand, i.e. search queries in Yandex and Google. Our strategy worked for six months, and we were getting good results simply because the brand had not been active in this market before. It’s always easier to grow from the ground up than to scale up the existing demand base.
After a while, a period of stagnation followed, as was to be expected. We noticed a lack of positive dynamics: the number of leads stopped growing, we hit the ceiling on the market demand. During the advertising campaign, we were able to process the maximum number of those who were interested in the brand’s services. What is next in a situation like this? How do you get the performance mechanism going again?
We reviewed the promotion strategy and planned a campaign designed not to generate leads and drive traffic to the site, but to build awareness and recognition. This way we drew the attention of our audience and reached new users who were not aware of the existence and benefits of the grocery delivery service. It set the wheels in motion: image advertising gave a boost to brand demand and we were able to further drive traffic and conversions to the site through SEM and targeted advertising.
Affordable marketing: performance + branding
Let’s put it this way: image advertising is unlikely to “die,” but it will for sure transform in the long term. Branding activity is likely to change over time, and that change will be directly influenced by our culture of content consumption. New media, content formats, and ways of interacting with the audience will emerge.

By the way, a great example of how content and advertisers are adapting to new media consumption is the popularity of TikTok and Instagram Reels placements among both audience and advertisers. The pandemic gave a boost to video consumption, stimulated the popularity of livestreams and podcasts.

Most players in the market will not be able to completely give up on image advertising. After all, no matter how the information will be distributed, there will be a need for tools that familiarize the target audience with the product and broadcast key USPs.

Without image advertising it is impossible to form brand demand, because the better known the brand is, the larger the volume of the audience can be converted with the help of performance tools down the sales funnel. And as you know, demand in the market is limited. In addition, in recent years, most modern companies have marked their presence on the Internet, and in order to make themselves known and compare favorably with their competitors, they need to keep some forms of image advertising in their marketing mixes.
Asya Tikhomolova, the head of digital strategy at E-Promo Agency and a lecturer of the “Brand manager” course at Netology, explains why performance tools could not replace image advertising and how they complement each other today.
Most advertisers, if their budget and other resources allow, work with both image and performance advertising, as only an omnichannel approach can provide the highest quality contact with the audience. The logic behind allocating the budget between performance and branding is influenced by a multitude of factors: the level of demand, the company’s market position, crisis situations within the organization, increased competition in the market segment, etc.

New companies that are just entering the market should invest into image advertising to build brand awareness, to form a brand demand first, and then extensively introduce performance tools.

For companies that are standing firmly on their feet and whose main goal is to increase market share, it is fair to focus both on image activities to stay in the public eye and reach new potential customers, and on performance tools to generate sales and work with the current demand.

In such a media mix, image advertising is responsible for generating demand and product recognition in the market, informing the audience and introducing it to the mission and values of the brand. And performance marketing works at the lower stages of the sales funnel and solves problems both at the level of user engagement and at the level of lead generation at the very end of the funnel. In the final stages of the user journey, performance marketing helps a person to make a final decision and make a specific purchase of a product, service or register for a service, leave an application or call.
In this case, the effect of image advertising on demand is delayed and remains for a long period, while the performance tools work almost immediately.
The evolution of branding — what’s in store for us?
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