Welcome, man. I'm excited to start the series with Dale on we're going to do this is going to be one of I think three events we're going to do Dale and this is this is the first one we do know from all the advertising that we run with clients and from the decades of research that's out there how important brand marketing is towards breaking through getting into consideration sets and really growing and punching above your weight. You know, you're not really going to punch above your weight as a brand running only performance marketing, but we also recognize unique performance marketing also because that is going to in essence pay the bills for you in the short term and give your brand efforts time to kind of reach the kind of critical mass that you're expecting it to. So I'm super excited to have Dale here to talk through the mechanics of both of these why they're important how to balance them.
It is a different calculus depending on the stage of company that you're at. And so that's another thing that we're going to talk about a little bit as well. Well, if I'm a challenger brand or if I'm a leader or if I'm an e-com or manufacturing or SAS like what should my balance be in order to in order to strike that right tone. So this is not just going to be like just for people in B2B SAS, there will be aspects of this that are going to be applicable if you sell hard goods for instance and things of that sort.
So let's do I'm going to do a quick intro of myself and Dale I'm going to hand it off to you to do your own intro and then we'll jump right into it. So I want to host a moderating and I'll be ruminating on some of these slides. Also, my name is Matthew Schnell. I'm senior director of Demand Gen A Refined Labs.
I've been with Profine for three plus years running B2B Demand Gen Strategies for our base of clients. And then with me, I have Dale Harrison who is the founder of Enfora and Dale. I'll let you introduce yourself because your background is much more expansive than mine. And in the end, it takes a lot of interesting turns.
And so I'll let you detail your bona fides and then we can just get right into it here while people join. Okay. So actually I did not start out in marketing. I sort of fell into it by accident later in my career.
I was originally an experimental physicist. So I did super-cut activity research and I have a pretty decent scientific publication record out of that. But that was several careers ago. But a couple of decades ago, I ended up falling into marketing through a very complicated process.
And so I have done a lot of really in the trenches marketing. For instance, I ran my very first Google AdWords campaign in 2004. I have operated across almost every sort of channel and platform. And I tell senior level positions, so VP of sales marketing, CMO roles.
And so I kind of this with kind of a combination of both a very structured technical background out of coming out of physics, but also with the experience of years in the trenches really doing this primarily for B2B, they're not exclusively. And primarily in the tech side of B2B. Nice. All right.
So let's go ahead and get started. We're going to start by just talking about why this stuff actually matters because there is, there's almost two schools of thought they almost feel like they're clashing with each other all the time. I'm either all performance marketing where I'm running POG or I'm running this signal based outbound with Clayer or something like that, or I'm running all brand and the only thing I'm interested in is shared search and then just looking at the incremental lift of my of my of my email from it. But obviously you need both in some way, shape or form and you need and you need to balance it.
So I think we're going to start by talking about why this matters, how they differ and then how they interact with one another. And I think those are going to be sort of the three things to key in on for your for you guys and then we'll get into like heuristics about budget allocation and what's best there. I'm dying to hear your use cases also here in the audience. So if you're running into a challenge or a situation where you have a bunch of peers here and we can talk it out and I really would love to hear to hear those use cases and down and I can ruminate on those as well.
Drop them in the comments. Stephanie will moderate those and where it's advantageous. Stephanie I'll ask you to just interject and ask the question and then we will we will shoot on it. If that's okay.
That's okay. That's not good to you, Dale. Sounds great. All right.
Let's let's go man. Let's go ahead and get started and let's start by talking about why brand and performance matter. Right. So what does it matter?
And especially in B2B. I mean, I think it's it's they're slightly different case if you're in say fast moving consumer goods on the B2C side. But in B2B, it really matters that people know who you are before they come in market. If they don't that they don't know you exist until they stumble across you after you're in market, you've largely already lost the game.
And so, you know, we now have multiple studies just within the last few years from Gartner from Boston Consulting Group. And then more recently, really good stuff out of six cents. This shows that somewhere between 80 to 85% of B2B buyers have what's called a day one consideration set, which means they already have a set of typically two to three brands that they're already fully familiar with before they ever have a need that brings them in market. And then about 90% of the final purchases come from that day one list.
And as you move upscale from mom and pops to SMBs to, you know, up toward the enterprise, this becomes a stronger and stronger effect. You know, it's very, very hard to sell, especially if you're selling into larger companies or enterprise level companies, it's very hard to sell them something that they were not already familiar with before they had a need. So if a buyer does not already know you and see you as a purchase option before they come in market, you got relatively less chance of being selected. And what this really means is that companies simply buy from other companies that they know and trust.
And this is especially true for B2B. But we still need to get in front of buyers when they're ready to buy. So, you know, we can't rely just on brand alone, you know, nor can we rely entirely on performance trying to catch them as they come in market. So, you know, if we know that 100% of either is not the right solution, and there's going to be some sort of a correct profit maximizing balance between 100% brand versus 100% performance.
And that's a lot of what we're going to talk about here is how do you get some sense of what that correct profit maximizing balance is. So let's start with what do we mean by the difference between brand versus performance? Because I think this is a, this is a huge area of confusion, especially in B2B, you know, because people say, well, we have our logo on the, you know, right next to the call to action. So it must be a brand ad, you know, or it's a brand, brand performance ad all rolled into one.
And, you know, so there's a lot of confusion. You tend not to see this level of confusion with large B2B to see companies. You know, if you're selling, you know, consumer packaged goods, there's a really, really well understood distinction between brand and, you know, what they call sales activation or point of sale marketing. So, so what do we mean by brand versus performance?
So when is something brand? When is it performance? And can it be both? And if you think of this in terms of jobs to be done.
So, brand marketing piece, and again, it's probably makes sense to make a distinction between between a brand, brand elements. So what about distinctive brand assets and then brand marketing? So, you know, a brand is, is a product unique identity. It's what makes that product look like itself.
And part of what makes it look like itself is that there are distinctive brand assets, logos, colors, we'll go into a list of these in a minute. But you know, in the same way that we are unique individuals, part of how our friends recognize this as, you know, you know, that we are who we are and not, you know, and don't mistake us for say our mother or our father or our cousin is that, you know, we have very distinctive looks, you know, you know, and humans are really quite tuned in on being able to see very subtle distinctions and sort of visual looks and sounds and smells that help us immediately identify the characteristics that make a unique person unique. And a lot of what we're doing in brand marketing is we're leaning into these sort of evolutionary capabilities that have developed in humans to be able to see subtle differences to identify uniqueness and unique identity. But so if we think about what a brand's brand marketing's job to be done is to implant a refreshed durable memory associations between the brand's distinctive brand assets and the product category, along with recall triggers tied to specific buying situations.
So if all they do is remember the logo, we haven't really gotten very far. You know, even if we can get them to make that connection between who we are as a brand and the product category that we're offering a product in, if they don't think about us when they come and market, if there isn't a good recall trigger, we failed. So, so in the end, brand is about creating recallable memory structures. And just to talk for a quick second about this idea of DBA, so distinctive brand assets.
So these are all the things that make you look like yourself and make you look different than others that are similar to you. And one of the things that you often see, especially in B2B, is there's often a tendency to look, you know, for different brands to end up looking very similar to one another. Same colors, same fonts, similar sorts of logos. And one of the things that you see is that in some areas, there can be very high misattribution rates among brand marketing, where someone will see an ad for Company A, but it looks so much like Company B, because using similar colors, the same fonts, very similar sorts of logos, it looks so much like brand B, that they completely think that they have seen an ad for brand B, or that, you know, that ad will actually trigger a memory of brand B.
This is a real problem if you're small brand working against large competitors. If you look too much like your large competitor, your ads won't trigger a memory of you, it will trigger a memory of your competitor. So this is why the creative side of distinctive brand assets becomes very, very important for success. But you know, these things are like logos, taglines, colors and fonts, mascots, which turn out to be very little used and extremely powerful, because we have a tendency to remember sort of anthropomorphic things, animals and people.
Yeah. And we see this with something, you know, with a really highly successful brand like Salesforce from day one, Salesforce used mascots. You know, when they made a large pivot in the, you know, around 2010, 2012, part of that pivot was around pivoting away from the, the, what they call the Sassy mascot, which was basically a person in a costume that had the no-software logo over to, you know, Astro, you know, the kid in the raccoon costume. And now it's kind of this whole collection of animal mascots that they, you know, that is present in every single ad that they do.
The other thing that turns out to be very significant, because again, we have this ability to remember auditory cues, or jingles, bumpers and stingers. So, you know, not just, you know, a song, but, you know, just a single, you know, four notes in a row that are unique. Yeah. And you know, you look at something like, for those that are old enough to remember, the AOL, you have male ding, highly distinctive, you know, it was like a two note or three note ding, the, the log on ding for Windows that was around for a long time.
And then things like packaging design. And again, you see this with Apple where, you know, part of our example, very distinctive, isn't just, you know, the product, but how the package looks. And you see an Apple package, you know, you know, that that is Apple without ever having to see the Apple logo. Yeah.
I'm going to, oh, wait, can we go back to that? I want to add a little bit to this, because I think one thing that I see a lot, we see a lot of companies really only have the first three, right? Logos, sometimes tagline, colors and fonts to your point, mascots are a super underutilized distinctive brand asset, even for smaller and smaller, and smaller, and a smaller, and a challenger brands. I mean, I think most of us found this event on LinkedIn.
And one, one brand that's a smaller brand, even that I think is taking advantage of mascots as a company like Fiddler, which uses the pink lion almost throughout everything that Adam Hongren and his team does. And I think you don't have to be a large brand to use a mascot effectively as a distinctive brand asset. I think they're, I mean, I'm seeing a brand like Fiddler use that super effectively. Another jingles, mumbers, and single-day, these things to me are like some of the most memorable things that you actually associate to brands.
You, you cited a bunch of examples. One thing that is like etched in my memory is like the ding from teams. Like, I always know what the sound of a Microsoft Teams message is because I just hear it so often. And so like, the sound of your brand actually matters quite a bit.
And I think companies that use that really effectively, especially when they're consistent about it really make it last. I had a question for you on this too, because I don't know if this actually falls into this category. But I just wanted to think about it a little technically, because I'm, I was reading a lot of the, I was reading a lot of the, the output of like the Con Festival last week. And like influencer marketing was like one of the huge topics, even though it's been around forever, but for whatever reason, all those huge brands now are thinking about it and want to present on it.
But how do influencer efforts like help or hurt you when you want to look like yourself? I'm curious kind of how you, how you view something like that in relation to this? Well, and that's a challenge because, you know, if the influencer is well known, or at least well known to their audience, you know, are they reinforcing their own brand or they reinforcing your brand? You know, and there's a lot of evidence that, that, you know, the influencer presenting your brand in many circumstances can be very weak in the sense that it's what is really triggering is memories of the influencer, supposed to memories of the brand that they're, that they're presenting.
You know, the other thing with, you know, especially in the era of video where I think everyone has video marketing assets, there's no reason you should not have a highly distinctive bumper and a highly distinctive stinger, you know, at the beginning and the ending of those videos. And even something like jingles, which are considered kind of old school, I'll just tell you a quick anecdote. In the late 1940s, Alka Seltzer came up with a short little jingle that was plot, plot, fizz, fizz, I won't try to sing it. There were people of a certain age that all you have to say is plot, plot, and they can immediately break into that jingle.
What's interesting is the last time that, and Alka Seltzer really heavily used this in TV advertising and secondarily radio, but heavily TV. The last time an Alka Seltzer commercial ran with that jingle was 1975. And 50 years later, there are tens of millions of people who can, you say the first two words and they can finish the song. And so that gives you a sense of kind of the power and the long lasting memory structures that something like a jingle can, you know, or these bumpers or singers can can provide you.
So these are, these are simple to do and very powerful in terms of, of adding to the list of distinctive brand assets. Dail, we have a question in chat from Amit, who wants to know what the line is between DBA and something that's replicable, like a department store who's known for heartwarming, tear jerking, creative narratives during the holiday season. So where do you ride the line between something that's distinctly yours and something that's more thematic? I mean, I think a good thing.
I mean, a reasonable dividing line is, if someone else uses it, can I sue them? Because, you know, that then means that you're establishing a moat, you know, that you've got a sufficient intellectual protection. And the reason these laws exist are because this is what companies for decades and decades trying to do is to basically steal each other's fame by a recognition by mimicking their assets. And, you know, and so the reason that they're very clear laws about how close you can get to matching someone else before you get sued is because that's really where the demarcation is.
You know, you can't, you can't actually protect a feeling or a concept or an idea, but you can definitely protect a jingle, a bumper, a mascot, you know, a logo. And, you know, and even things like colors and fonts, if they get heavily copied because they're not that protectable. So you can't rely just on something like colors and fonts, you know, alone. And this is why some of these other distinctive brand assets really give you a deeper moat, because you have a higher degree of legal protection for a longer period of time.
You look at someone like Coca-Cola or BMW or Nike that, you know, Coke 120 years, BMW, you know, now 130 or 40 years, Mercedes, you know, more than 100 years with essentially the same core distinctive brand assets. So, you know, they're highly successful companies that have been, you know, that have had really stable use of these sorts of devices for a long time. It's sometimes not just the brand asset to but how you use the brand asset as well. So like, you know, we'll get into this later as we get into more of this more of this presentation.
But the amount, the amount of reach you try to give those assets across your serviceable, obtainable market also matters quite a bit because there's lots of brands that have distinctive brand assets, but we'll over index on things like performance marketing where those things don't really take the hold or build a moat that they're initially designed to do. Right. So, so if we, so we looked at, you know, what's brands job to be done? Performance job to be done is to basically trigger an in market buyer to take an immediate physical action that will advance an active buying process.
So, performance is about driving some sort of an immediate action. You know, and one of the things that we see right away is that, you know, these are, these are touching very different parts of the brain. So, there's fundamental cognitive differences between between the process is involved in durable memory formation and the process is involved in responsive action. And it's really effectively impossible to do both at once.
You, there are cases where you can do them sequentially, one behind the other, but there's really no mechanism to where you can effectively do both. And, you know, which is why we need to really think in terms of separate streams of brand versus performance marketing. And there are actually some very good studies that have been done within the last 10 years showing that, that even highly performing performance marketing ads tend to leave no durable memory, and especially no durable memory in the minds of people who didn't execute the action, the call to action. So, you know, and again, there's some very, you know, very good research out of, out of neuroscience that explains why that is.
But, you know, if we look at the cognitive difference between brand and performance is memory formation works best. First of all, when it's triggering an emotional, you know, triggered in association with an emotional response. And, you know, the second thing is that future buyers who are not currently in market are simply not willing to invest the attention and focus on complex sort of logical presentation of product and features and details. So, you know, what that means is brand ads should be brief, focus on a single memory association, and they should trigger some sort of an emotional response to work well.
The emotional response has to do with some very kind of ancient pathways in the brain. Because one of the problems that, you know, all animals have humans as well is that there's an enormous amount of stimulus coming into our brains constantly from the outside world. Most of that stimulus is noise. Most of that stimulus has no real meaning.
And so, in the brainstem, there is a section of the brainstem called the reticular activating system that basically acts as a filter for sensory stimulus coming in. And it's constantly trying to decide, is this something that's important enough to pass up to the conscious brain? Or is this simply noise that I can ignore? And one of the mechanisms that the reticular activating system uses to be able to make that decision is did this stimulus arrive simultaneously with an emotional response?
And because again, the emotional responses are happening, you know, at a sort of a subconscious level in the brain. And when it sees that, it says there's probably something important here. I should pass it up for the smarter parts of the brain to take a deeper look at. And the example on this is, you know, many of us go to the store every week, go to the office every day, and we will go through a stop sign or a red light every single day for thousands and thousands of days in a row and have no memory of having gone through that stop sign.
Because what happens is we pull up, you know, we see the sign it triggers an immediate response, which is stop and look both ways. If everything's fine, then we move. The only time we remember that stop sign and then intersection, you know, is that day that someone almost t-bondses, because they ran the stop sign and scared the crap out of us. And it's that sort of very basic, everyday stimulus that occurs simultaneously with eliciting an emotion that then causes that to then go up to the higher levels of the brain and form and trigger the process for memory formation.
If we look at the performance side, responsive action requires a separate pathway for immediate action, you know, and you usually need some sort of factual information to drive the decision maker. So future buyers are simply who are not in market or just not willing to invest the sort of attention or focus, you know, that you're going to see in a good performance ad. You know, so again, performance ads should be information heavy with a clear immediate call to action, because our goal here is to get them to do something right now, you know, if they're ready. So how do the brand and performance interact?
So they're actually very tightly wound and a big mistake you see companies make is where there's like the brand group and then there's the marketing groups. And that's a very bad idea. So good brand ads make performance ads work better. And bad performance ads will wipe out the benefit of the brand ads that you've done.
And I would add here, it's not just the ads because brand, these brand memories come to us through a variety of channels advertising is just one. So, you know, there's word of mouth. There is, you know, incidental exposure to the product. You know, every time we see, you know, a, you know, Toyota go down the street with the Toyota logo on the side, we're reminded of the brand.
You know, there's also prior direct lived experience with the product. You know, if we spent, you know, four years in our last job, you as an Asana, we're likely to remember Asana when, you know, a similar need arrives, arises in the new company. So anything that forms or refreshes a brand memory is brand marketing, even if it's not, even if it's things that happen outside the purview of the marketing group. So, so one of the distinctions here between brand and performance is the fact that we know that most buyers are not in market in a given time.
So about 95% of your buyers are not actively in market in any given moment in time. So the performance ads are going to be effective at driving buying actions for the 5% who in market. The brand ads are going to impact the 95% of future buyers so that they can consider you once they choose to come in market. Again, this is part of the reason why the brand ads need to be very brief, very short, require low attention and use devices that will, that will aid in durable memory formation because the purpose of that brand ad is to either implant or refresh a memory in someone who is not currently in market, but will be in the future.
So performance ads have limitations. So one is that they primarily work on people who are in market buyers. So that 5% that are right now today in market. So, so one of the things is that the impact of the performance ad, even if they remember it, is typically not going to be more than about one cell cycle in the future.
So what it means is that we're running an ad campaign. You know, we, we've got 10,000 impressions of that ad today. Let's assume all 10,000 actually saw and recognize the ad. The only people that add will affect out of that 10,000 is the fraction of them who are going to be coming in market sometime over the next one cell cycle.
And, you know, so the performance ads have a very, very short shelf life before they really are not going to affect people. And again, because they primarily are triggering actions for people who are in market, what that means is one cell cycle out, anyone that had impacted is already, will have already made a buying decision. And so they're now going to be not in market for months or years to come. So, you know, any memories that that ad may have created is going to have no commercial value for, you know, a very long time to come once they made a buying decision.
So, so, and the other problem is that performance ads have been shown to induce no effective long term memory of the brand. And again, some of this goes back to to cognitive issues around these different sort of pathways. And one of the things that we're wired for is to only remember things that are important to remember. And so, if we go to the example of pulling up to a stop sign, you know, we go to that stop sign every single day for the last, you know, 2,000 days, there's a clear sort of task completion point with that.
So, we pull up the stop sign look both ways, it's clear, we hit a gas. At that point, we do not need to remember that event that that's an extra level sort of metabolic load on the brain to then store that memory away. And so, one of the things that the brain does is it has short-term working memory and then long-term dual memory. And if that short-term memory is tied to a task completion event, what will occur is that the brain will dump the contents of short-term memory at the moment the task, task completion trigger has occurred.
And you literally have complete amnesia of what just happened. And, you know, one of the things that we, you know, that happened, for instance, in with the design of ATM machines 25 years ago was that for decades, the big problem with ATM machines, the bank said, was that people would leave their ATM card in the machine and drive off. And what was happening was the machine would take the card, you do the transaction, it would give you money. But the task completion point for that entire cycle was to get money.
And the moment your fingers touch that stack of cash as it comes out of the machine, your brain does an immediate memory dump of all the working memory. And you literally forgot that the card is still in the machine until the next time you need to look for your debit card. And so, what ATM machines did about 25 years ago was they all got redesigned so that they forced you to take the credit card back before they give you the money. And watch this the next time you go to an ATM machine.
And the reason why is that that task completion trigger for an ATM transaction is your fingers touching the stack of cash. And the moment that happens, you know, and the other thing I'll do is they'll give you any paper receipts back before they give you the cash. So they force you to take the card, they force you to take the paper receipt. And only then does the door open up and give you cash because they know the moment your fingers touch that cash, everything that happened before will be dumped out of memory.
And the same process is happening with performance ads that, you know, you either, you're going to make a binary decision, click, not click. And if whatever that decision is, either to click or not to click, you've you've you have hit a task completion trigger, and everything just dog is dumped. And and so this is a real limitation for performance ads. And this is why you really can't effectively do combo brand performance ads in a single creative.
I think we had a question, I want to circle to this in particular. I want to add to the thing on the ATM. Because I think another design thing they're doing now is just doing the tap to even to to even take the card out of the equation for you in that in that motion. But I think going back the last bullet point, I think you're super important.
And because one of the reasons why a lot of performance ads have no effective long-term memory is because they're all a unimodal almost in their offer. It's like, it's get a demo, free trial, gift card for a meeting, like a lot of the offers that come into performance ads almost across the board, regardless of the brand are very much the same. And so you're basically filtering in the moment whether you are in market for that solution or not. And then beyond even being a market, whether this offer even interests you.
So there's just a lot of, there's just a lot of sort of horizontal ways, I guess, that comes with that over on. I think that's a huge, a huge reason why these things have no effective long-term memory is just essentially the execution of it as well, which segs into the question that Harry asked, which I thought was an interesting one. And there's another question from a minute that I also want to make sure I give it to. But Harry asked, or sorry, was it Harry that asked it?
Or no, it was a car thicken. I hope I pronounced that right. What are the guardrails on making good performance ads in your estimation? Or are there even any guardrails in your professional opinion on it?
I mean, I think this goes back to what do we want the thing we're making to accomplish? And so again, the idea with the brand ad is we won't either the refresh or formation of a durable memory association with a recaltrator. With performance, we want some sort of an immediate action that will advance a purchase process, a buying process. And so you're talking about a lot of the ads are very uni-modal.
That's true, that's also not necessarily a bad thing. Because part of what makes a really good performance ad is that there's a single, very clear call to action. And usually, if a call to action can be stated as some sort of a declarative statement, like, would you like to see this? Would you like a demo?
You say, get a demo now. Because people are going to be more likely to respond if you give them an order versus if you ask them a question. And so again, what you're thinking about here is you want them to take an action because the ad brings you no commercial value if someone looks at it and passes. It only has commercial value if someone takes the action.
The other issue with this, which is massive. And I've got a lot of data that I personally developed on this over the years. Every time you add an additional call to action, you're going to cut your response right in half. So if you've got a 50% response rate for one call to action and you throw a second one in there, you're going to cut it to 25.
If you throw a third one in there, you're going to cut it in half again to 12. You put four of them in there, you're going to cut it in half down to about five. Because what happens is, is that you're now forcing a branching decision process inside the brains of people. The more branching decision processes they have to work through, the more likely they're going to take the easiest way out, which is do nothing.
And so, I mean, you see this very, very, very badly done in a lot of email marketing, where an email should have a single, clear, unambiguous declarative call to action. And every time you add an extra call to action in there, again, you have a single action over and over, because that's the same single uni-mobile decision. But if you say, either request a demo or download this white paper, or come over here and sign up for the product, you're going to have very, very poor response rates, because you're forcing them to do something that's cognitively difficult. And the most likely response to a cognitively difficult set of tasks is to just do nothing, because it requires the least amount of thinking.
And again, it goes back as well to, would you like to have a demo? Well, now I have to both decide, how do I feel about getting a demo? And am I actually going to get the demo? So even a single call to action can actually force a branching narrative and a branching decision logic in someone's head.
Don't ask them how they feel. Tell them what they're going to do. Again, this is why really extremely clear declarative statements tend to really outperform things that require them to think about what they feel, or think about what they know, or think about what they want. Don't tell them what they want.
Don't ask them what they want. Tell them what they want. And so you can really turn performance ads into mush if you're not careful. Appreciate that, I can't help but answer the question for you.
So we talked about some of the limitations of performance ads. Brand ads have the same limitations. So one is, brand ads work on the 95% who are not actively in market, which means that a lot of your expenditure is about future income, not current income. But the other thing is they actually work, and there's really good data on this.
They work as well for the 5% who are in market, but they're typically not as good as a good CTA based performance ad. So even if you have a pure brand ad and someone's actively in market, then ad will do a reasonably good job of triggering someone to go deeper. But it's not really going to give you the top level performance of you telling them exactly what they need to do next, that a good CTA based performance head will do. But the other problem with brand ads is that because they're primarily acting on future buyers, we don't know when those future buyers are going to come in market.
And the longer it is before they come in market, the more likely it is they will have forgotten. So those brand memory associations decay over time and they have to be refreshed with ongoing reach. So there's no such thing as we're going to reach our entire ICP over the next two years. That's not a thing.
You have to do always on marketing, cycling back and refreshing those memories. And one of the things about population wide memory decay is that it follows an exponential process. So it's really almost like radioactive decay. There's a half life.
So there will be some, for your particular product category and your particular ad, there will be some point in the time where 50% of the people that saw that ad and formed a memory will have forgotten that memory. And that time can be very, very short. So there are studies for things like low consideration, fast moving consumer goods, buying a stick of butter in the store. The memory duration for that brand can be a day or two or even a few hours for very high consideration goods, buying a car, buying a CRM, buying an ERP system.
Those memory associations can last longer. But even for a fairly high consideration B2B good, it's typically not beyond eight to 12 weeks. And you just don't have a memory. Now that memory can still be triggered if you show them the original ad again.
But they are likely, if you showed someone your ad for your CRM six months ago and now they're in market today six months later, chances are you will not come to mind. You know, that someone who's ad they saw more recently will come to mind or some CRM that they maybe used in their last job, that will come to mind because those are more durable memories. So, you know, so the other aspect about brand versus performance ads here is that a brand ad has to reference the products that there's something to form an association with. Again, humans are really bad at remembering isolated facts.
That's why, that's why none of us do well at spelling bees. What we're good at is remembering the association between two things that are related. And, you know, and so for that brand ad to work, we need an association between the distinctive brand and elements and the product category. And one of the things that the product itself, you know, a picture of the product, a description of the product in some way, this very brief can do is it can act as a proxy for the underlying product category.
And, you know, and ideally, you would also like some sort of point of differentiation if there is one for, you know, again, how your product is not like the other products. You know, so, you know, you could have say a CRM for medical practices, you know, and, you know, and it's the medical CRM, you know, so now you've got a product association directly in the name, or the CRM when you have to have HIPAA compliance. And the right people will know what that means. And, you know, and you've got both a category association and a, you know, point of differentiation, you know, all in a very brief sort of under two and a half or three second message.
The dealer performance ads is this is where they really need, you know, one, they have to contain distinctive key assets, distinctive brand assets, because part of what you want the performance had to do is to trigger the recall of the prior brand memories. This is an idea of aided recall. And so even when we have forgotten something, we will, if we had remembered it once, we're still carrying a latent memory that can be triggered by essentially representing the same stimulus. So again, humans are very Pavlovian.
You know, the, you know, the dog hears the bell ring and remembers that every time the bell rang, you know, they were fed. And so they start salivating because they expect to be fed immediately. Humans are Pavlovian dogs. But what that means is we have to represent the same stimulus that triggered the original memory formation.
If we present a complete difference, and this is one of the reasons, for instance, why, why, you know, rebranding is essentially the equivalent of giving all of your future buyers a traumatic brain injury, you know, that you've essentially wiped out all of the investment you made in forming memory associations. And you're having to start from scratch because everything that you've stuffed in their brain isn't there to be triggered anymore, because you're now triggering them with something completely unrelated. And so, you know, and again, this is why highly, highly successful brands will tend to have the same core distinct brand assets for decades and even a century or more. You know, again, the font, the name, the color red that we associate with Coke has been around since the 1800s.
And you know, they've not had a sudden need to change their, you know, their brand color to purple, you know, or to change their font to San Serif. You know, even if the cursive is old-fashioned, there's a lot of investment in people recognizing that cursive font. So, so again, part of the thing to think about performance ads is it's a platform to represent the distinctive brand assets so that you trigger the recall of the brand memory associations. And that's part of why good brand marketing will increase the effectiveness of your performance ads, and why bad performance ads will wipe out the value of your prior brand marketing, because you've got to have this interplay between the two.
I want to recap this real quick that last slide because the performance ads, we kind of talked on all the elements of what makes a good sorry, brand ad, excuse me, and it's having the product as part of a distinctive brand assets and also driving an emotional response, probably oriented around a category entry point by a larger ideally speaking. So just because we've covered that a little bit before, and it's one of the type of bow on that for people when we talk about what makes a good brand ad, it's referencing the product. So there's something to form that memory association, it's having the distinctive brand assets that go with that to help differentiate your brand, and then it's also tying back to an emotional response, usually related to a category entry point or something even around jobs to be done in the absence of a category entry point. I got a quick question from Fahad if you don't mind me asking it, I'm going to actually keen on your second question.
So Fahad is saying, are you saying there are no performance as that can also give some brand ad benefits driving both immediate action and forming memory, should we give up on this idea altogether? I mean, the other part of the question there too is, if a performance ad drives action, will the subsequent product usage be enough for memory formation? Yes, product usage is a great source of memory formation. Again, any of us who've ever used a product every day for several years in our job, we're going to remember that for a long time.
But the problem is, again, look at B2B, we have a 15 to 20% close rate, close one rate for most companies. That means 80 or 85% of the people who saw that performance ad never had the experience of using your product because they picked someone else. So product usage is valuable, but you actually have to have the product usage to form the memory. You know, the other thing is that, you know, there's a lot of talk about wanting to sort of do combo brand in performance.
And I can see the idea of sort of the efficiency of being able to do that. But we have a lot of really good research data that says a good performance ad leaves no memory traces. I mean, whether we want it to or not, it just doesn't leave a memory trace. If that performance ad leads to product usage, it's the product usage that leaves the memory trace, not the performance ad.
And so, and again, it's, you know, we're doing the performance ad to have it do a specific job for us. And so we want to really, you know, have it do that job as best as it possibly can, which is to trigger an immediate physical action to advance a purchase process. It's just too much to ask everything we do to do every possible job to be done. You know, that we really have to break these out into sort of things that are better at doing one type of job versus another type of job.
Let's jump to budget allocation, if you don't mind, Dale, because we are not doing too great on time. I want to make sure we cover that because I know a lot of people interested in knowing or having an idea or some guidance on how they should budget allocate random performance based on the wrap. Yeah. And one last thing, just to wrap up what we've been talking about, performance ads work best when they recall, when they trigger the recall of a previous store memory association, the brand tees up the ball, performance drives it down the fairway, and then sells gets the ball on the green and puts it into the hole.
So let's talk about budget allocation, because this is what everybody came for. So, you know, 100% performance ad means you don't get into that all imported day one consideration set. But 100% brand ad means, you know, is like not having your brand to cereal on the shelf in the cereal aisle when they're ready to buy. You know, it's it means that, you know, you've lost a lot of opportunity at the moment that someone's ready to make a purchase decision.
So there's a Goldilocks solution in the middle. And so the best research we have on this comes out of work done by Lesbine and Peter Field out of the IPA. So the Institute of Practitioners and Advertisers, which is an old old industry organization in the UK. And so they looked at a mix of B2C and B2B companies of different sizes, different product areas.
And what they found was what they called the 6040 rule is the optimum, which is basically, and again, this is across B2B to see big, kind of small companies, all different kinds of products. So this is kind of a weird blended average. What they saw was 60% of your budget should go to brand, 40% to marketing. For B2B, it should be somewhat closer to 5050.
But the problem is this is not a one size fits all. And it's something that really has to be adjusted for where your particular brand is in its lifecycle. And this makes a huge, huge difference. So if we sort of dive into the nuances of the 6040 rule, this is a very, very important slide.
So brand is less effective for long purchase cycles. And the reason for that is that if someone remembers your brand for say, one quarter, you know, they see your brand as a remember for one quarter, but it's going to be three years before they come in market. A lot of those people have forgotten you, which means that that sort of translating that brand awareness into future sales, these brand ads are less efficient, which means we need more of them to be able to achieve the same level of kind of awareness of the brand of people coming in market. So this is a very counterintuitive concept that because it's less effective, you know, we need more of it and the effectiveness is being driven by a long purchase cycle instead of a short purchase cycle.
Because again, if you remember something for a month, but you're buying it weekly, then, you know, then it's much more likely that you're going to, you know, that prior memory will still be there on the next purchase cycle. But if you're going to remember it for say three months, but it's going to be five years before you rebuy, you have to go back and refresh that memory, that memory association multiple times in that one buyer before they come in market. So, so this is that interplay between long purchase cycles and short memory decay. And this becomes really important in terms of that allocation.
So B2B purchase options for in-market buyers, you know, lack the easy access and the visibility of retail shelf space. So, you know, so this is also one of the reasons that you need to try harder as a B2B brand to reach that in-market buyers. So again, if I'm looking to buy, you know, a brand of yogurt, I go to the grocery store and I see all of my options in front of me on the aisle. There's not any equivalent of that really in B2B, which also means that we've got to, you know, we have to work harder on the performance ads to be able to reach people to give them that option.
So, so one of the issues as well is newer versus mature. So recently long launched brands are going to need more performance ads. So, more of the budget for performance. Part of this is because the sales team needs people actively in the sales process.
And, you know, any other thing is that mature ads, mature brands, you know, have had a longer time to refresh memory. You know, and those memories require fewer ad exposures to be able to refresh. So, there's a real difference between a mature brand and a new brand, you know, especially in terms of the amount of performance ads that you need to run, you know, primarily because of kind of sort of business constraints. The other thing is what I call fast versus slow.
So, long-sell, long-purchase cycle products versus short. So, you know, again, if you're only buying something once every five years, you have a long time to forget the brand ad that you were exposed to before you're ready to actually come and market and that brand awareness to have commercial value for the company. For fast purchase cycles, I think, printer-ing, you're much more likely to have residual memory from the prior buying cycle, you know, and less time for memory to decay to kick in. So, you know, so generally if you have a slow product, you need a long purchase cycle, you're going to need more higher percentage of brand investment versus performance.
And so, here are some sample splits for different types of products that are kind of slow and fast. So, you know, for something like an enterprise SaaS platform, it's probably closer to 70-30 because you're having to keep reminding people because it's going to be because you don't know who individually is coming to market. You can't magically get your ad in front of just people who are going to come and market in the next six months. All you can do is sort of reach as broad an audience as possible.
And so, you're going to be more brand-less performance for a very long purchase cycle product like an enterprise SaaS platform. Again, it's a similar thing with life insurance, long purchase cycles on this. Considered package goods, much shorter purchase cycle, you know, things like fast fashion, you know, where you've got really quite short purchase cycles. You've got a lot of brand memory from the last purchase or the last, you know, purchase process, even if they didn't buy you, they will have been likely been exposed to your brand.
So, again, you've got a car. Car is a very long cycle, typically, you know, five to seven-year purchase cycle, you know, certainly in the US for purchasing a new car. And so, and you see this with, you know, the big car companies. They spend an enormous amount of money on brand ads for TV, trying to reach a broad audience because they know they have to keep reaching them over and over again because it's going to be so long before they buy that they have to keep reminding them.
So, what's right for you, and this is the important part is that the reality is there's no simple one-size-fits-all answer. You know, so you'll hear people talk about the 60-40 rule. It's a vague number. I mean, that is kind of a mixture of a lot of very different sorts of brands and companies.
It is not going to match you. So, you got to think through, am I a new brand, am I an incumbent brand? It's been there for a long time, am I a fast brand, a slow brand? How likely is it that someone is going to forget me before they come and market?
These are very important. But a good baseline to start with is about 50-50 brand versus performance. Slower purchase cycles, you need more brand. A younger product, you're going to need more performance.
Too much of either is going to reduce your revenue potential. Some of this we've already covered before, so we don't have to go through this. It's just a couple of slides. So, a few rules for kind of integrating the brand and performance together because they really have to go hand in hand if you need integrated, integrated, creative.
So, there really needs to be a single agency handling creative development for both brand and performance. You cannot farm this out to different agencies and hope for it to work well. Because, again, that performance ad needs to show you the things that they already showed you previously in the brand ad so that it can trigger those memories by representing the same stimulus to you. The other thing is consistency.
So, the look of the performance ad should be immediately recognizable for anyone who's seeing the brand ad. So, again, this is very, very important. And it's why bad brand ads can wipe out your investment. I'm sorry, bad performance ads can wipe out your investment in brand marketing.
The other thing is stability. If we're constantly refreshing the creative, we tend to wipe a lot of the usefulness of the prior brand memories. Because what we want to do is to show them something that's usually, or if we're using bumpers or stingers or jingles, something that's auditorially very close to what they were previously exposed to because the closer we get to the original stimulus, the more likely we are to trigger the memory. The other issue is that, and you see a lot of kind of especially in B2C, this is a bad problem, where they do want to call pulsing.
They'll have a big brand campaign that runs for three months and then they won't spend any money for the rest of the year. And the problem is that brand ads really need to be always on because we don't get to control who sees it. We put it down into the world. We don't know whether all the people who happen to randomly see it, even if it's perfectly targeted.
We have no idea which of those are going to be buying next week, next month, next year, five years from now. So, we need to constantly be out there refreshing those memories. And especially for long purchase cycle products, like B2B, Enterprise Serum, or SAS products, where you have a multi-year time lag between purchases, you really need to be always on. And then the other thing is reach.
Broad reach for brand ads, because every buyer you missed is a buyer who doesn't know you exist. And no company has the ability, has enough cash to reach everyone in their ICP. But you want to take the cash you've got and spend it preferentially for reach versus frequency. Because if I show the same person, my ad 50 times in the next 90 days, that means that there are 49 people who didn't see the ad at all because I spent the money on that one person.
I'm better off showing the ad once to 50 people in the next 90 days than I am to show the ad 50 times to one person in the next 90 days. So, there is this preference for investing the money toward broad reach over frequency. But you still have to have some level of frequency. You still have to come back to them every few weeks or months and hit them again with your ad to be able to refresh those memories because the memories are not forever.
This is a really interesting point. I want to circle back to the reach thing because we talk about reach and we talk about frequency. But it also impacts my, to me, the channels that you choose to distribute and run advertising on it because you look at channels like LinkedIn, which I know get championed a lot as the pre-eminent B2B advertising channel. And for all intents and purposes, it is.
But it's also an essentially a low reach channel by and large. I mean, it's not a channel where while you can have a lot of domain over targeting, it's a channel where you're not going to get a tremendous amount of audience penetration for each four-year entire audience compared to channels like Reddit or Meta or YouTube even. And so, I think when you talk about reach as a goal or a metric to key in on with your advertising, I think part of that is thinking about your channel mix and thinking about what channels facilitate the most reach for me because sometimes some of the channels that get a spouse are not always the ones that actually contribute to that. Well, and there's also this notion of what I'll reach primacy, which is that you're always better off reaching more future buyers than fewer future buyers, which means that one of the most important metrics to look at is CPM.
So what's that cost per thousand to get your ad in front of a unique group? Now again, that doesn't mean you should be running Super Bowl commercials, not because, you know, if every person you put the ad in front of who is not a future buyer is a wasted expenditure. But again, we don't have full control over that. We're always going to have a mixture of people that are in our ICP and not in our ICP, no matter what channel we choose.
But the idea is essentially what is the effective, I'm sorry, the effective CPM rate for reaching our ICP market. And so you can do adjustments on this. I mean, there are ways that you can do, you know, get some estimates for, you know, this channel, you know, the CTV channel is likely, you know, 10% of the views are likely to be people who are in our ICP. And which means that, you know, if, you know, if the, you know, if you're buying that channel at $2 a CPM, then the effective CPM rate is going to be $20 a CPM, you know, because only 10% of those dollars are going to go to, you know, future buyers.
So there are ways to make these sorts of tactical financial adjustments in your, in your channel mix. But, you know, but an important metric to think about is that I do have effective CPM to reach the ICP. I want to ask a question real quick. I know, I know we're past time, but I do.
There's a couple questions that I wanted to ask if you have time to. I don't know if you do. All right, cool. So I got a question from Harry and then I have one more question after that.
But Harry asked earlier when we were going through the material here is whether as the B2B buyer and being that they talked to sales normally later in the journey, should marketing's jobs to be done change? And I would think of this in a B2B context, change from brand and performance to brand performance and selling at scale. I would, I would think of performance and selling as really largely the same. And I don't, I don't really distinguish much between the two, but I'm curious if you differ on that.
Well, I mean, I think the real goal of the performance ad is to get someone into your sales process. Once they're in your sales process, you know, they don't need any more reminding. You know, it's not like, it's not like they're going to have a conversation with your BDR and then completely forget about you. If you don't hear back from them, it's probably because they decided they're not going to use you.
And so, you know, so the thing about the sales process is that just being in, because this, you know, even a very long sales cycle is still relatively short, you know, a long sale cycle is maybe 90 days, maybe six months if it's a massive enterprise product. But a lot of sales cycles are going to be two weeks, a month, six weeks. And so you're, you know, once you're in that process, you're being exposed to multiple brands and you're simply not going to forget the ones that you're working with. You may decide that a particular brand isn't for you, but you dropped it not because you forgot it, but because you made a decision to drop it.
And, you know, so I think that, you know, there's obviously a place for marketing in sales support, you know, in being able to have the sort of materials that salespeople cannot produce for themselves available to be able to pass through to salespeople. It's not entirely clear that how useful it is to keep hammering the crap out of them with LinkedIn ads or Reddit ads. Or retargeting. Because again, forgetting is at this point forgetting is not the problem.
You know, it's, you know, they're gathering information and they're sort of pruning their choices as they gather information. And, you know, and they have access to your salespeople, you know, which means that they have access to much more specific information for them to make a decision with, then you're going to be able to do with a generic ad that you drop on LinkedIn or you drop on Meta or Reddit or something. And again, the question is always, you know, well, if we did just hammer them with case study after case study for the next three months, is there any other questions anyway? The question isn't whether or not that might increase the likelihood of making the sale.
It almost surely will. The question is, were those resources better spent, you know, getting a 1% increase in close rate, you know, on the people that you're targeting with the, you know, in the sales process, or is it better spent reaching another 1000 people or another 10,000 people that are future buyers? And so, you know, I think you have to, to not get hung up on whether or not the thing you're doing is going to, you know, increase the chance of them buying, because almost anything you do is going to increase the chance of buying just because you're paying attention to them. But is this the best use of financial resources?
You have to financialize the marketing argument. So, you know, of all the ways I could spend the next dollar, should I spend it reaching, you know, someone who doesn't remember me right now, but might be coming in market, or should I spend it on someone who absolutely remembers me, but is pretty much decided they're not going to buy from me. All right, that's a perfect subject. We have the last question I have from Amit, from Amit, I hope I pronounced that right.
And it was a really good question. So, I'm going to do all the prefacing as well. So, he says, psychology, such as memory formation, is as unique as fingerprints, but we heavily approach marketing with math based heuristics. Are we as a practice heading down a risky route by thinking our approach can or should be driven solely by numbers?
I'm parenthetically saying solely. So, here's an important distinction that I think it's extremely confused in marketing. The internal desires and motivations and behaviors of a single individual is extremely random and chaotic. We are not in the business of controlling the behavior of single individuals.
We are in the business of moving market behavior. It's literally right there in the name of the word marketing. And so, we're looking at shifting broad patterns of behavior across thousands or tens of thousands or millions of people. And one of the things that we know is that as chaotic as individual behavior is, large population level behavior is highly predictable.
And specifically, one of the issues around this idea of the what's called the ebb and house forgetting curve. This research goes back 160 years. And we've got literally generations worth of research, I'm learning theory around how groups of people remember and forget at a group level. And one of the things that we know is that it is impossible to know when a single individual will forget something.
There's simply no way to model that or to estimate it. But if we have a million individuals, we could tell precisely the rate at which the fraction of that million will have forgotten within a given time period. And so, this is the real distinction is that we cannot know the internal mental states of single individuals. And because of that, we cannot know exactly when or what they're going to do next.
But if we look at 100,000 or 1,000,000 or 10,000 individuals, we can predict very precisely. And because what happens is that there is sort of emergent ensemble level behavior. So, so population-wide behavior that is emergent at the population level, that is at some level sort of disconnected from what's going on at the level of individual decision making. You know, the decisions are, individual decisions are chaotic, but they sort of are all moving in the same direction or in similar directions as a whole.
And you know, one very good analogy with this is if you have, you know, this is out of physics, but if you have a container of gas, every single individual molecule is randomly bouncing around off the walls, off of each other, it is literally impossible to calculate what any one molecule will do and the path it will take. But I can tell you things about the overall container, that there will be a certain amount of pressure at a certain temperature, you know, in a given volume. And because things like pressure and temperature and volume have nothing to do with the individual molecules, you know, in the gas, it has to do with the collection of all the molecules. And so, there's a very similar thing with human behavior.
Individual behavior, highly chaotic, but if we have enough humans that are all behaving chaotically, there are, there are population level patterns that are highly predictable. Dan and I are going to do this again next month. We're going to be basing it more around making a defensible argument to the CFO about brand marketing, which I think is going to be a really great discussion because I know that that tends to be a super uphill battle for the marketing professionals that are that are in this in the zoom room with us. So hope you all enjoyed.
We will get everything out to you. Dale, thank you so much for your time and your expertise and your wisdom. Look forward to doing this with you again. And we will see you all out on on LinkedIn land, I suppose.
Thank you all so much. Have a great rest of your week.