Why every business needs a funnel marketing strategy
Full-funnel marketing is not just a campaign strategy; it’s a total shift in how marketing works.
You could say that marketing has a split personality. On one side is traditional brand building, driven by TV ads and other broad-reach vehicles. Many old-guard marketers who have risen through the ranks excel at this. The other side is performance marketing, or the data-driven measure of online activity. The young guns of marketing who have grown up in the digital age dominate this discipline.
For many companies, this split is inhibiting growth aspirations. Budget and impact conversations often become contentious: performance marketers tout their ability to drive clicks while brand builders argue for longer-term investments, although they often struggle to demonstrate the near-term value their teams generate. In recent conversations with two dozen top marketing executives, less than a fifth report having a very strong understanding of how their brand-building campaigns are performing. “It’s tough to measure either the short-term or long-term impacts of brand campaigns,” says one marketing executive. “We attribute increases in sales to them because of correlation, not necessarily causation.” This is troubling for CMOs because 83 percent of CEOs look to marketing as a growth engine for the business.
Brand building’s measurement problem has obscured its importance. As a result, many CMOs shift too much of their marketing spend toward the easy-to-justify capture of customers at the bottom of the funnel at the expense of the less tangible generation of customer demand and attention at the top. This skew toward bottom-of-the-funnel campaigns has significant implications for long-term value: data from three large marketers in media and apparel retail industries indicate that customers who have an emotional connection to a brand tend to be more loyal and valuable over time than those who arrive at a site because of a generic keyword search or social media ad.
To redress this imbalance, leading organizations are moving toward “full-funnel” marketing, an approach that combines the power of both brand building and performance marketing through linked teams, measurement systems, and key performance indicators (KPIs). By adopting full-funnel marketing, companies can become more relevant to their customers, develop a fuller and more accurate picture of marketing’s overall effectiveness, and generate more value without having to spend additional marketing dollars. This approach isn’t just about doing more across each stage of the funnel. It’s about understanding how each of the stages impacts the others for a complete customer experience—how media spend on addressable TV, for example, can boost the impact of personalized emails, or how social-media ad campaigns can drive online and in-store visits.
In our experience, a thoughtful and data-driven full-funnel marketing strategy can drive significant value. By shifting greater media allocation to areas with higher returns and employing test-and-learn optimization for demand-generation campaigns, marketers can achieve a 15 to 20 percent lift in marketing ROI. Additionally, many marketers have found that incorporating both brand building and performance elements in a campaign often increases the overall return on ad spend compared with spending on performance channels alone.
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While the idea of full-funnel marketing has been around for years, most companies have been unable to overcome the organizational and technological barriers to actually implementing it effectively. There are several reasons why now is a critical time for marketers to lean into full-funnel marketing. For one, performance-marketing returns have recently plateaued or declined, thanks to inflation in digital-media costs and customer saturation in some highly targeted ad markets.1 In addition, widely available automation tools have commoditized the execution of performance marketing, making it difficult to secure a significant competitive advantage.
Driving full-funnel marketing is particularly necessary given the dramatic changes in customer behavior seen during the COVID-19 pandemic. This year, more than 60 percent of consumers tried a new shopping behavior in response to economic pressures, store closings, or changing priorities, one-third of whom experimented with a different brand of product. Our data make clear that customers' expectations of brands are shifting, with many citing a brand’s purpose as a key reason for buying. This wave of data on new behaviors has provided marketers with a windfall in terms of developing a better understanding of what their customers want and how they make decisions across the entire funnel, offering an opportunity to both win new customers and ensure the loyalty of existing ones.