Digital performance marketing vs. growth marketing; do you have to choose?

Digital performance marketing vs. growth marketing; do you have to choose?

Jonathan Suchet
23 May 2022
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Digital performance marketing vs. growth marketing; do you have to choose?

Jonathan Suchet

“Performance marketing”, “guerilla marketing”, “growth marketing”, “growth hacking”,… you might think that with these kinds of hyped concepts, digital marketing has become more of a battlefield than a business activity.

Behind these buzzwords, that you hear more and more often, lie real marketing concepts and activities that have become crucial to ensure short- and long-term value creation.

In this article, I’ll focus on two of the above concepts: performance marketing and growth marketing. Having worked in both a media agency working with performance budgets and on growth marketing tracks for clients, I’d like to share why I believe that companies can and should leverage both activities, and how these can work alongside to support each other.

 

Understanding the jargon

Let’s first take a step back and define what these concepts are all about.

The first one, (digital) performance marketing, is defined by Gartner as “an online marketing and advertising program in which advertisers pay marketing companies only when a specific action is completed, such as a sale, lead or click”. In other words, performance marketing refers to marketing activities that (can) have a direct impact on a well-defined KPI that creates business value. We thus have a clear difference from traditional advertising campaigns that you see at your local bus stop for example. There, the advertiser will not be able to make a clear link between the purchase you made of their product and the fact that you saw the ad, no matter if seeing their product at the bus stop made you buy the product or not.

Growth marketing on the other hand is different as the focus lies in rapid experimentation, testing new ideas, campaigns, channels or, in other words, doing what has never been done. However, both growth marketing and performance marketing aim to achieve a well-defined KPI (One Metric That Matters). This metric should be as close to the bottom of the funnel as possible, for example a sales qualified lead (B2B) or an e-commerce sale (BC2), to prove business value but depending on the client it can also be more top of the funnel, for example a marketing qualified lead (B2B) or even a download or a newsletter subscription.

 

 

Different concepts, different objectives

As defined, the objective of performance marketing is to achieve a specific action, often a conversion (can be a download, a lead, or a purchase) by using digital advertising channels. In this context, some will say that with performance marketing you can also do some testing. That’s true. However, you’re more limited, whether it’s because of budget constraints, objectives that you need to reach, technical limitations or simply because you lack the growth and experimentation mindset needed. We can think of doing A/B testing within performance campaigns, such as testing a different visual or ad copy, but this doesn’t really mean that you’re verifying radically different hypothesis and building further on them.

With growth marketing, the objective is completely different. Here you really go out of your comfort zone as the main objective is to experiment and to test bold ideas to see if they could later be scaled and implemented as an always-on approach.

Furthermore, the way you start working on growth or performance marketing campaigns is also radically different. With performance marketing you start from a longer-term plan combining an always-on presence with specific momentums. Growth marketing campaigns on the other hand always start with ideation sessions and aim to rapidly put things live. Therefore, growth activities could be launched independently of the marketing plan.

Linked to that, with performance marketing you generally adhere to a previously defined media plan that includes a campaign planning, the channel mix, and the budget attribution. This is not the case for growth marketing as budget attribution for instance can be shifted from one experiment to the other or one channel to the other depending on the performance observed on a daily and weekly basis.

 

To make a parallel with the business world in which we live, performance marketing is more the traditional big corporation, while growth marketing is more the startup testing things to be successful. But, as in the business world where a startup can become a big corporation, the same applies in marketing: small scale experiments can become long-term performance campaigns.

The table below shows how both activities have their respective strengths and weaknesses, highlighting that companies shouldn’t do one or the other but rather look at how they can complement each other.

Digital performance marketing vs. growth marketing; do you have to choose?

Indeed, as each activity has different strengths, it means that by focusing on only one activity, you miss something. You’ll miss rapid experimentation and testing innovative ideas that could potentially work (how can you know if you don’t test, right?) if you only do performance-driven campaigns; and you’ll miss stability, consistency, good forecasting and budgeting if you only focus on growth experiments.

 

The true power is in the combination of both

We observe that nowadays an increasing number of companies is trying to take advantage of both activities as they understand that the power is the combination of them. However, there are certain attention points worth highlighting if you want to leverage that power.

 

  • Distinguish both and find the synergy

First, most companies usually assign growth and performance campaigns to different teams or agencies. What we often see at clients is an internalization or a close partnership with a dedicated agency for everything that is related to performance and an external partner working on growth marketing, usually for a set period of time. This type of setup also enables the agency working on growth experiments to come with an external point-of-view and mindset, which increases the chance of coming up with newer and out of the ordinary ideas to test.

It’s also important to define clear objectives and budgets for both type of activities. Whether the same people manage both pillars (performance and growth) or not, you need to distinguish performance budget from growth marketing budget as you’ll not be able to compare the results of growth marketing experiments with traditional performance campaigns. It’s not the same KPIs, not the same approach, not the same goal and not the same methodology.

A good example of that shared by my colleague Jean-Marc in one of the THoMcast episode is how Coca-Cola is allocating its marketing budget. They use what is referred to as the 70/20/10 marketing budget rule which consists of allocating 70% of the marketing budget to traditional digital performance activities and storytelling, a part of the budget that can be forecasted quite easily; 20% on innovative ideas based on what worked in the 70% chunk; and use the last 10% to test crazy, high-risk reward content. This way, Coca-Cola is spending 70% on activities that drive direct revenue, including performance marketing and 30% on what can be considered growth marketing campaigns. By doing so they ensure that they still have a dedicated budget to test creative and innovational ideas on top of the one for their ongoing activities.

  • Rome wasn’t built in a day

Once a growth marketing experiment has proven to be successful, it’s not directly implemented as-is in the performance campaigns. Indeed, it’s important to look at how the experiment you want to scale fits in the overall strategy but also to make sure that everything is fine in terms of branding, messaging, timing, and tracking. Then, start adding budget slowly and wait for the algorithm to exit its learning phase. In case of decreasing results, go back to the experimentation and growth phase; if the results remain positive, continue scaling by slowly increasing the budget or audience size.

 

  • Closing the loop

Making the link with the example of Coca-Cola, it’s both important to:

  • Use the knowledge of the digital strategy that lies at the basis of the performance plan to inspire the ideation of the growth marketing experiments
  • Leverage the growth experiments to reinforce your always-on performance layer

By doing so, you get the best of both worlds.

Closing the loop

 

 

To recap, the perfect setup is one where you can experiment with a growth mindset, test while keeping a specific objective and KPI in mind and scale/kill what works well/doesn’t work at all. Then, implement slowly in your always-on media and campaign plan what has shown good results. We thus see that there is a clear link between performance and growth marketing and in the long term, one cannot work without the other.

 

 

How we combine performance and growth marketing

At Customer Collective, we really believe in the combination between digital performance marketing and growth marketing. We combine them by using digital strategy as the foundation. The basis of both your always-on media and campaign plan, as well as your growth experiments, lies in the mapping of your business objectives, the understanding of your audience and customer journeys and the definition of your content strategy. At The House of Marketing, we help clients by co-creating their digital strategy with them. Then, together with our sister company Upthrust we run growth experimentation tracks to validate the strategy by launching a series of experiments that are run, analyzed, and scaled when successful or killed when they aren’t. These then build and reinforce the digital performance layer of our clients that we implement with our sister company, Fightclub.

Learn more about how to get started by building the digital strategy foundation enabling both performance marketing and growth marketing at your company

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