In an era dominated by AI-driven creative and algorithm-driven media, WARC, in collaboration with Analytic Partners, BERA.ai, Prophet, and System1, has released The Multiplier Effect – A CMO’s Guide to Brand Building in the Performance Era. The report provides data-driven insights to help marketers navigate the evolving advertising landscape while maximizing commercial impact.
The research underscores a fundamental shift in advertising strategy, advocating for a balanced approach between performance-driven and brand-building advertising. According to the study, companies that integrate both approaches see a 90% average uplift in revenue ROI, while those focusing solely on performance marketing risk a 40% decline in ROI.
Key Insights from the Study
- The “Doom Loop” of Over-Reliance on Performance Advertising
Many businesses fall into the trap of prioritizing short-term performance marketing, leading to diminishing returns and slow growth. The study warns against this over-investment, which can stifle long-term brand equity. - Brand and Performance Advertising Work Better Together
Research from Analytic Partners highlights that a mixed approach to advertising yields 25% to 100% higher revenue ROI compared to performance-only strategies. - The Multiplier Effect: A New Approach to Growth
Instead of viewing brand and performance advertising as separate, the report introduces The Multiplier Effect—a strategy where brand-building and demand-generation work in tandem to drive both immediate and long-term business growth.
Best Practices for CMOs
The report outlines actionable steps for marketers looking to optimize their advertising strategy:
- Allocate at least 30% of budgets to brand-building ads, with best practices suggesting 40%-60%.
- Avoid exceeding 25% of budgets on search advertising, termed the “search ceiling.”
- Plan full-funnel creative campaigns that integrate brand messaging with performance-driven tactics.
- Build a measurement stack to assess baseline revenue and incremental advertising impact.
David Tiltman, Chief Content Officer at WARC, emphasized the significance of the study, stating, “The biggest returns come when marketers see brand equity as an accelerant of commercial performance. While the research is US-focused, its findings are globally relevant.”
As WARC and its partners continue exploring this field, the next phase of research will delve into optimizing creativity and communicating marketing effectiveness to CFOs. The report is set to shape the future of advertising strategies, offering a framework that balances immediate results with sustainable brand equity growth.
