Evolving Your Marketing Investment from Short-Term Demand Capture to Long-Term Brand Building

Throughout my career, I’ve been tasked with both explaining and justifying full-funnel marketing strategies to business and finance counterparts. 

Securing lower-funnel dollars is typically a straightforward exercise: ad return targets are quantified, budgets are set, and ad campaigns are optimized to target. However, the conversation around upper-funnel investment is often more complicated. 

“Upper” or “top-of-funnel” marketing drives brand awareness and interest. The creative message and tone is working to evoke an emotion or convey a particular lifestyle vs. drive an immediate purchase. As a result, the campaign KPIs are optimized for reach (e.g. impressions and/or video views) vs. direct conversions. Upper-funnel marketing then works in conjunction with lower-funnel tactics (e.g. paid search) to further your target customer’s consideration and drive an eventual purchase. 

Deploying a full-funnel marketing strategy ensures that you are generating new demand and building longer-term relationships with customers.

Being able to build and leverage a full funnel to acquire and retain customers is a marketer’s dream; however, measuring the impact of upper-funnel media on revenue is a common challenge–and this can make it difficult to secure upper-funnel budget.

Upper-funnel advertising tactics can certainly be assessed in a vacuum. If you run a display ad campaign, for example, you’ll measure campaign impressions and click-through-rates, which can be compared to previous campaigns and/or category benchmarks. Then, you can take regular pulses on your overall brand awareness (e.g. through a 3rd party tracking poll) and evaluate impact to your organic search volume and website traffic during the campaign’s flight dates. Yes, you’ll be measuring the campaign’s impact, but tying upper-funnel spend specifically to incremental revenue generation can be very difficult. 

In one of my corporate roles, the Finance team would only approve incremental media spending if we could guarantee a specific return on ad spend (ROAS) target. While we could optimize lower-funnel campaigns to the target ROAS, once we layered on our planned upper-funnel brand spending (which included PR, live events, and awareness advertising), it was near impossible to hit the ROAS target. And that’s because ROAS as a standalone metric does not paint a complete picture of advertising impact. For example, it does not account for revenue that is assisted by paid media but ultimately attributed to an organic channel. It also does not factor in the lifetime value of the customers acquired through paid channels. 

So to secure upper-funnel budget, we instead needed to develop a narrative around the long-term risk to our growth if we did not invest in brand and relationship-building tactics with our customers. While we were converting lower-funnel ad spending efficiently, our customers were largely “one and done” shoppers on our platform. We needed to grow awareness so that our customers would think of us first vs. another 3rd party retailer the next time they had a shopping need. We also underscored that without brand building to prime new audiences, the healthy lower-funnel ROAS that we were seeing today was likely to decrease. You can’t harvest demand without generating it.

A recent WSJ article shed light on how Airbnb transformed its approach to ad spending in favor of upper-funnel marketing. Airbnb started to shift away from paid search to brand-building efforts in 2019. In Q1 2021, their sales and marketing expenses were down 28% YoY due to the decrease in lower-funnel spending, and they were satisfied with their overall rate of return. Moreover, more than 90% of their website traffic was arriving directly (unaided by search), which is a testament to brand strength. 

This shift to upper-funnel brand spending is occurring elsewhere. In their April 2023 report, marketing agency Nest Commerce quoted a +158% YoY increase in upper-funnel ad spending among their ecommerce clients. They also underscored that running brand campaigns in parallel to lower-funnel performance campaigns is critical to improving overall ad spend efficiency. 

Going back to the measurement and justification challenge for upper-funnel, marketers who are able to run upper- and lower-funnel campaigns in parallel on platforms like Google and Meta will be able to run conversion lift tests and employ retargeting campaigns, which can help demonstrate the value of full-funnel spending. And as with the Airbnb example, patience is required to monitor the long-term impact that upper-funnel brand spending has on brand health measures like direct and organic web traffic, brand awareness, sentiment, and customer lifetime value.

If you’re evaluating the role that upper-funnel can play in your marketing strategy, we can help. Please contact us to learn more.