Kicking Your Performance Habit

When times are tough, it’s traditional for businesses to lean into short term growth strategies to the detriment of brand investment. Why should this time be any different?

This debate has been around since I started my career, and honestly, probably long before that – when things get tough, do you double down on performance marketing and cut back on brand spend or, as I’ve always suspected, is that kind of short-term thinking just setting you up for a fall down the line?

According to the Media Budgets Survey from Ebiquity and the World Federation of Advertisers, 42% of respondents plan to boost their performance marketing budgets in 2025, while only 24% intend to increase brand spend (compared to 21% and 35%, respectively, in 2024). Nothing too shocking here – marketers, especially when faced with anxious CEOs and nervous CFOs, tend to react this way.

However, long-term research says that’s a mistake.

Take the Harvard Business Review’s 2010 report, for example. Their year-long study looked at corporate performance during the last three major global recessions: the 1980 crisis, the 1990 slowdown, and the 2000 bust. They analysed data from 4,700 public companies across three key periods: the three years before a recession, the recession years, and the three years after.

The findings? Well, they won’t come as a surprise to most of you, even if most companies seem to wholeheartedly ignore the bare truth. The companies that managed to balance cost-cutting with investing in their brand were the ones that thrived post-recession. And within that group, there was a smaller subset that made the right mix of defensive and offensive moves—those were the ones with the highest likelihood of success.

“Businesses that continue investing in marketing through a downturn, funded by operational efficiencies, are 37% more likely to come out of the recession stronger than their competitors” concluded the HBR report, reinforced by this 2022 research summary by?Analytic Partners:-?

“Around 60% of brands that increased media spend in the last recession saw greater ROI. Notably, the brands that spent more, not less, on paid advertising saw a 17% increase in incremental sales”. Even more surprising, Analytic Partners also found that “...brand messaging significantly outperforms performance messaging, with findings showing that brand messaging drives a higher percentage of customer acquisition and overall sales compared to solely focused performance marketing tactics

Marketing, especially performance marketing, has come a long, long way in the 15 years since that research was published, so do the findings still apply? While brand-building strategies remain largely constant (despite the serious land grab made by social media and influencers), performance is a very different beast now than it was then, with Gareth Knight, Digital Director at Wilderness identifying one significant speed bump, unsurprisingly linked to the ground zero of performance marketing:-?

“The elephant in the room is how Google is changing their keyword matching. I think it's critical for how budgets are allocated”.

Increased use of AI for automated bidding, dynamic creative optimisation and predictive analytics can deliver incrementally personalised customer experiences, twinned with a more customer-centric focus, moving the focus away from acquisition and towards longer term advocacy which then leads in turn to increased lifetime value.

Bianca Bass, CMO at Privalgo has embraced these capabilities in how she exploits performance channels to engage with - and entice - B2B customers:-?

“I've seen seismic shifts in what works in performance marketing. The 'spray and pray' era of B2B performance marketing is dead and buried. What's working now is highly contextual, hyperpersonal creative that speaks directly to specific verticals”.

Not wanting to blow an already overplayed trumpet, but Les Binet and Peter Field’s findings from their 2019 Brandz report remain highly relevant:-

“Brands that decrease their share of voice in a recession risk suffering a proportional decrease in market share. Meanwhile, strong brands recovered nine times faster”. (BrandZ, 2019).

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