John Denny of CAVU Venture Partners on Brand Marketing vs. Performance Marketing: Which Ecommerce Vision Will Reign Supreme?
Written by: Satta Sarmah Hightower
"You have to create future demand. And then you've got to balance demand capture with that creation of future demand. You can't wait, because if you run out, if you're looking at dried stalks and you harvest that field so there's nothing left, you can't instantly turn to future demand. They have to be done concurrently." — John Denny, Vice President of Ecommerce and Digital Marketing for CAVU Venture Partners
Does brand matter in a performance era? It all depends on whom you ask.
As marketers increasingly focus on clicks and optimizing conversions, brand building has become secondary.
But brand loyalty still matters, and you can’t be a successful company today without it, according to John Denny, vice president of ecommerce and digital marketing for CAVU Venture Partners.
Denny joined a recent episode of the "Unpacking the Digital Shelf" podcast, "The Case for Future Demand," to share his perspective on the current performance marketing era, why focusing on future demand is so critical, and what ecommerce vision he thinks will reign supreme for brands going forward.
Nurturing High-Growth Brands at CAVU Venture Partners
When it comes to brand building, you could say Denny is an institutionalist.
He began his career at Chiat/Day, the agency that became famous for Apple’s "Think Different" campaign — the gold standard for brand marketing. After Chiat/Day, Denny began to gradually transition from brand to performance marketing, working at AltaVista (a search engine that was Google before Google), and then moving on to CMGI to work with Dave Weatherhall, one of the inventors of behaviorally targeted programmatic display ads. Denny later worked for Advance Conde Nast, where he focused on ecommerce, search engine optimization (SEO), paid search, and programmatic marketing.
Denny has spent the last four years at CAVU Venture Partners, where he’s tasked with helping the 30 brands in the firm’s portfolio drive growth.
"That experience has given us a deep look under the hood at what all these companies are doing in terms of investing to drive the fastest growth that we're seeing in the consumer space today," Denny says. "You see these amazing things, where I'll see something that a company is doing in 2018, and then it looks like they're growing incredibly quickly. Flash forward four years later, and 'uh-oh,' cautionary tale. Something's happened and they aren't growing at that pace. So it's really been an amazing education opportunity to really see what works and what may not work over the long term."
The Shift From Brand Building to Performance Marketing (And Why This May Be Bad for Brands)
In recent years, there’s been a significant shift from brand building to performance marketing, which is entirely results-driven. The rise of ecommerce and retail media has contributed to this sea of change, but it also has to do with how brand marketing is viewed by some C-suite leaders.
Many chief marketing officers (CMOs) and chief financial officers (CFOs) have difficulty seeing eye-to-eye when it comes to budget allocation and, particularly, brand marketing, as outlined in an article by In Partnership With.
Denny says this mindset is something he frequently sees across the brands and leadership teams with which he works. He says brands view performance marketing as this "money machine."
"It’s a lot like a slot machine," Denny says. "You put your money in, but you're guaranteed those bells are going to go off and that money's going to come pouring out. And I understand. I [also] live in these dashboards for Amazon search, Google search, and Facebook performance advertising. You can get this sense that it's as easy as that. Just throw a couple of dollars in. Why do you need to be famous? Why do people have to remember you? Just go with the performance machine."
The Problem With Performance Marketing
Denny says there needs to be more balance between brand and performance advertising within companies.
Why? Because every company’s addressable market has a ceiling.
Focusing on lower-funnel performance at the expense of driving brand awareness or cultivating a long-term relationship with consumers can lead to companies "optimizing themselves out of effectiveness," Denny says.
"Lo and behold, three or four years later, you see this growth stall. The cost per acquisition has skyrocketed, and the company's growth is stopping," he says.
Denny likens this scenario to farming.
"I've tried to use this [example] with the brands that I talk to, which is about a farmer who is harvesting a field. If you think about it, he's got this field and he's got mature crops and he's doing demand capture and he's harvesting those crops over and over again over time. Years pass as he's harvesting those crops. Then, the challenge is competitors come in. The finite demand that exists in that field starts to get less and less and less."
Denny says the problem with this approach is that there’s a larger, more valuable market in the consideration set rather than with demand capture, because there’s only a small segment of consumers in the market who are actively searching for a particular product at any given time — whether it’s on Amazon or Google.
"Eventually, if you’re harvesting that field over and over again, you’re just left with a lot of dried stalk," he says.
Creating a New Ecommerce Vision: Why Focusing on Future Demand Is So Crucial
Companies need to simultaneously focus on demand capture and future demand.
Denny says research has shown time and time again that consumers make buying decisions based on emotion, rather than rationality. Much of the time, their decision is subconscious, so a brand that has taken the time to understand their unique needs, engage them, and build a relationship with them will often come to the forefront of their mind when it’s time to spend their hard-earned money. Ultimately, performance marketing doesn’t drive the very real economics of customer loyalty.
Denny says brands can strike a balance between brand and performance marketing by crafting a unique brand voice and identity that engages consumers on an emotional level.
"You've got to be distinctive. If you're boring and you do exactly what everybody else is doing and you focus on your product and you do speeds and feeds, nobody is ever going to notice you in this new world of future demand." — John Denny, Vice President of Ecommerce and Digital Marketing for CAVU Venture Partners
"You've got to balance demand capture with that creation of future demand," Denny adds. "You can't wait, because if you're looking at dried stalks and you harvest that field so there's nothing left, you can't instantly turn to future demand. They have to be done concurrently."
The Way Forward for Brands
Emerging upper-funnel activation and measurement platforms will help marketers execute these simultaneous priorities.
Multi-touch attribution platforms provide richer insights into the full-funnel for brands and have become more affordable than they were a few years ago. Amazon brand search is also an invaluable tool.
"Track your brand search over time. It’s a cheap proxy for awareness," Denny says of the tool.
Amazon launched a feature last year called Brand Analytics, which gives brand owners robust insights on things like customer intent and lifetime value to inform their strategic decisions.
Using the tool, CAVU Venture Partners discovered a consumer who demonstrated brand intent was four times more valuable for one of its portfolio brands compared to a consumer who just clicked on a performance ad, Denny says.
Instacart is also creating upper-funnel marketing tools for brands.
"They're opening up this ability to influence consumers with much richer units that can allow for emotional resonance — not just a product-forward ad, but something that can allow you to do storytelling," Denny says.
Ultimately, brands will have to focus on driving conversions today while also making their marketing efforts more future-focused. Rather than optimize themselves out of effectiveness, brands need to cultivate a new ecommerce vision and lay the groundwork today to build their customer base for tomorrow.
"You've got to plant seeds and you've got to water those seeds," Denny says. You've got to let those tender plants grow because you can't harvest [them] in a day, a week, or a month. It's going to take many months to build those brand associations and those memory structures so that when the moment comes up, I remember your brand."
For more of Denny’s insights on the battle between brand and performance marketing, check out the rest of this episode of "Unpacking the Digital Shelf."