Idea in Brief

The Problem

Marketers often worry that performance marketing and its focus on short-term sales is crowding out brand-building activities aimed at enhancing customer perceptions of their brand—and sometimes works against brand strategy.

Why It Happens

Brand-building activities are typically measured using metrics that have no predictive or retrospective connection to financial returns.

The Solution

To achieve performance-accountable brand building and brand-accountable performance marketing, firms need to upgrade their brand metrics in a way that allows the two to work together.

Over the past 20 years, performance marketing has become the dominant approach companies use to connect with consumers. It is defined by the Performance Marketing Association as paying for results from marketing campaigns—like sales, leads, or clicks—conducted through third-party channels such as direct mail providers, search engines, and social media sites. It’s easy to see why the approach is so compelling: It enables companies to run highly targeted marketing campaigns that deliver measurable ROI, solving the century-old Wanamaker problem, named after the department store retailer who’s credited with saying about advertising, “Half the money I spend is wasted; the trouble is I don’t know which half.”
A version of this article appeared in the May–June 2023 issue of Harvard Business Review.
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