The Brand Multiplier: Is 2025 the year DTC brands start to get serious about brand marketing?
Glad you made it. Walking talking, and eating an apple is still work in progress for me. If you chanced upon this from elsewhere, don't worry, click follow and all will be revealed.
In the competitive world of digital commerce, DTC brands face an increasingly complex challenge: balancing the immediate gratification of performance marketing with the long-term necessity of brand building. The first they get in spades and judging by certain quarters of the internet and social feeds, there is an abundance of individuals and agencies just gunning to help get you 12X on your performance ads. From what I experienced some are very good and know their onions, the rest, digital noise.
Last week's groundbreaking (reminder to all), WARC study has recently shed light on what many marketers have intuitively known - the relationship between brand and performance marketing isn't additive; it's multiplicative. It is probably no surprise that this age-old topic is back in the limelight, as the very concept of brand building in an atomised world of algorithms and attention was hotly debated back in January.
The Performance Paradox
Imagine having an apple orchard. Each season, you meticulously harvest every fruit, celebrating the immediate returns. But what happens when you forget to plant new trees? Eventually, your yields diminish, your costs increase, and your once-profitable orchard struggles to sustain itself. This is precisely what's happening to brands that over-index on performance marketing whilst neglecting brand building.
The WARC study reveals a startling statistic: overinvesting in performance advertising can reduce revenue returns by a median of 40%. This "performance penalty" occurs because brands become trapped in what the report calls a 'doom loop' of wasted spend and diminishing returns.
The Multiplier Effect
However, the study also unveils an extraordinary opportunity. When brands shift from a performance-focused approach to a more balanced advertising investment portfolio, they can achieve revenue growth of up to 90%. This isn't just an incremental improvement - it's a transformative shift in business outcomes.
Why does this multiplication effect occur? The answer lies in how brand and performance marketing complement each other:
Brand-Led Activity:
- Engages a broad range of potential customers
- Builds emotional connections through storytelling
- Creates mental availability and preference
- Establishes trust and credibility
- Reduces price sensitivity
Performance Marketing:
- Captures in-market buyers
- Delivers rational, action-oriented messaging
- Optimises conversion pathways
- Provides immediate feedback and data
- Drives short-term sales
The New (not so new) Growth Formula
The key to unlocking this multiplier effect lies in understanding that brand and performance marketing shouldn't operate in isolation. When strong brand-led creative combines with targeted performance marketing, it creates what the WARC study calls a 'double impact' - improving sales across both long and short-term timescales.
Consider these practical implications:
1. Content Strategy
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Instead of creating separate content streams for brand and performance, develop integrated 'brand platforms' that can flex across both objectives. Your brand story should inform your performance messaging, creating a coherent customer experience.? Create customer engagement platforms that can integrate across your whole marketing funnel, not just campaigns in isolation. Chances are you’ll also increase your creative consistency in doing so.
2. Budget Allocation
Rather than viewing brand building as a luxury, treat it as a fundamental part of your growth strategy. The study suggests that finding the right balance between brand and performance investment can significantly improve overall ROI. Remember all marketing should perform, don’t separate you’re terminology or spending.
3. Measurement Framework
Develop metrics that capture both immediate performance and long-term brand health. This might include combining traditional KPIs like ROAS with brand metrics such as awareness, consideration, and emotional connection.
4. Creative Development
Invest in creativity that can serve both brand and performance objectives. Strong brand-led creative has been shown to improve performance marketing effectiveness, creating a virtuous cycle of improved returns. If you're unsure think about doing some creative development research, rather than rely of testing and post-apocalyptic analysis. Hot tip check out this ditty...
The Path Forward
For DTC brands looking to implement these insights, the path forward requires a shift in mindset. Rather than viewing brand and performance marketing as competing interests, they should be seen as complementary forces that, when properly aligned, create exponential rather than linear growth.? We’ve already seen some of the major payers investing more in brand marketing activities with key hires and some best-in-class activations, AG1 and Dr. Squatch spring to mind.
Start by:
- Auditing your current marketing mix
- Identifying opportunities for brand-building
- Developing integrated platforms that serve both objectives
- Creating measurement frameworks that capture both short and long-term impact
- Building internal alignment around the multiplier effect. .
The Future of Growth
As the digital marketing landscape continues to evolve, with rising acquisition costs and increasing competition for attention, the brand multiplier effect becomes even more critical.
Successful brands will be those that understand and harness this relationship, creating sustainable growth engines that drive both immediate results and long-term value.
I expect brand building to take a different shape tactically this year, as we reach beyond just social feeds, to creating multi-hyphenated entertainment that audiences can participate in, touch and feel.
The WARC study doesn't just provide data; it offers a roadmap for the future of marketing effectiveness - which is useful as that's there objective. For DTC brands ready to move beyond the limitations of performance-only marketing, the opportunity is clear: invest in brand building, maintain performance marketing efficiency, and watch the multiplier effect transform your growth trajectory.
The orchard doesn't just need harvesting; it needs cultivation, care, and continuous renewal.
Only then can it deliver sustainable, long-term yields that justify the investment.