Brand awareness drives the effectiveness of performance marketing

"Greater brand awareness favors greater growth efficiency," says WARC's "Growth efficiency: Marketing's existential metric" report.

Companies that invest in brand awareness obtain better results in digital markets, as revealed by WARC, together with Tracksuit and Perpetua, in a study titled "Growth efficiency: Marketing's existential metric", which delves into the role of brand when it comes to helping performance marketing obtain better results.

To achieve the results, this study analyzed the Amazon ads of more than 100 brands in the United States, to reveal that creating greater brand awareness drives greater effectiveness in performance marketing.

In the words of Amin Mrini, Senior Vice President of Business Operations at WARC and co-author of the report, he notes that faced with steadily rising inflation and the cost of living crisis, “many marketers, including branding advocates, "They have pivoted towards performance."

Furthermore, Mrini notes that the results of this study demonstrate that, even within digital environments, “brand awareness drives greater effectiveness in performance marketing. “We also introduced ‘growth efficiency,’ a new effectiveness metric to help marketers better understand and control the relationship between sales growth and advertising spend growth.”

Brand awareness and “growth effectiveness”

Among the main conclusions of the study is "the paradox of non-scalable efficiency", since only 20% of portfolio companies grow. As WARC points out, a common pattern among brands trying to grow is that, at some point, growth stagnates, becomes more expensive, and previously strong marketing metrics decline. That is why if the company's overall goal is to grow exponentially or become a market leader, it is important to understand how efficiently a company can grow.

In relation to growth effectiveness and brand strength, the study's conclusions highlight that brands with high awareness (51% or more awareness) have an advantage in growth effectiveness over those that have medium or low awareness.

In addition, high-profile brands generate more than twice as many sales as lower-profile brands. In this sense, they point out that with an increase in investment of 10%, they generate an average increase in sales of 13%, while brands with little notoriety only generate an increase equivalent to 6%.
The need to optimize growth efficiency

«Greater brand awareness promotes greater growth effectiveness. Both are essential for sustainable and profitable growth. And the latter depends largely on the first," they say from WARC.

In the words of James Hurman, co-author and founding partner of Previously Unavailable, “the data clearly demonstrates that building brand awareness improves performance marketing performance.” In this sense, a recommendation stands out for marketing professionals, particularly those of small brands or those in the scaling phase, "optimize the efficiency of growth, invest in the brand - even in the start-up or scaling phases -, and make "monitor and optimize both brand and performance."

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