Podcast

The Performance Marketing Trap

Explore the pitfalls of relying solely on performance marketing to drive enrollment results and why integrating brand marketing is crucial for long-term success.

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Transcript

You’re listening to the Higher Ed Marketing Lab. I’m your host, Jarrett Smith.

Welcome to the Higher Ed Marketing Lab. I’m Jarrett Smith. In this episode, we’re going to be doing something a little different than our usual format. Instead of interviewing a guest, I’m going to be trying out a solo cast. It’s something I’ve been wanting to do for quite a while now, and so I’m excited to give it a shot. If it seems to work well, I may do more of these down the road. If not, no big deal and we’ll go back to business as usual.

So without further ado, today I want to talk to you about something I like to call the performance advertising trap, and I want to frame this up by first reminding us all that higher ed advertising is really big business. The numbers can be a little hard to come by and it’s all estimates in the end. But according to The Hechinger Report, in 2019, colleges and universities collectively spent something like $2.2 billion on advertising. After a dip in 2020 for the pandemic, spending bounced back quite hard.

Between 2021 and 2022, higher ed advertising budgets increased by more than 100%. Now, that growth is impressive. Those numbers, they are impressive. But what’s most interesting to me as someone who watches and studies marketing is where that money went. At a time when media spends double, the amount spent specifically on paid search, so the ads you see when you use a search engine like Google or Bing, that amount almost tripled. Now, on one hand, this tripling down on paid search isn’t actually all that surprising to me.

Paid search is one of the fastest and most reliable ways for enrollment hungry institutions, especially those who cater to nontraditional students or graduate students to fill their pipeline with inquiries and applications. It also happens to be one of the most trackable ways that you can spend your advertising dollars, and that makes a ton of sense for marketers who are looking to maximize a small budget and also show their higher ups that they are spending their institutions’ resources wisely.

There’s no doubt that paid search and I would also add to that paid social media advertising really are a marvel of modern advertising technology. But over the next few minutes, I’m going to argue that over relying on paid search and other so-called performance marketing channels is a big problem for colleges and universities, especially for colleges and universities that aren’t just concerned with making their next class, but are also concerned about being seen as a desirable institution over the coming years.

To understand why I think this is a problem, we need to look at what we know about how advertising actually works. Over the last 15 years, marketing researchers have made some incredible strides in lifting the lid of the black box of advertising. In some cases, this work has shown that widely accepted concepts, things like brand loyalty, don’t actually exist. Or if they do exist, it’s definitely not in the way that everybody talks about it.

In other cases, this research has provided empirical evidence for things that marketers always suspected were true, but could never really quite prove like the performance multiplying effect of really great ad creative. One of the most important findings, arguably the most important findings, is that advertising actually works in two distinct but complementary ways.

Now, the first way advertising works is by intercepting individuals who are actively in market, showing them your ad, and then hopefully provoking them to take some useful action like visiting your website or filling out an inquiry form or maybe downloading a program brochure. This kind of advertising has been referred to by many names. You may know it as direct response or maybe sales activation. More recently, it’s become popular to call it performance marketing, and so that’s what I’m going to call it today.

The second way advertising works is by establishing memories and associations about your brand in the mind of your target audience, with the ultimate goal of making your brand more desirable than your next competitor. We typically refer to this as brand advertising or brand marketing. Now, historically, in the world of marketing, there’s been a bit of a divide between the brand people and the performance people, sort of the artsy creative people with the cool office and the Apple laptops versus the data-driven nerds with their spreadsheets and probably, let’s face it, PC computers.

However, research has shown that advertisers see the best returns when they do a combination of both performance and brand marketing. Essentially, performance marketing works by capturing existing demand in the market and then converting it into something your recruitment team can actually use like a name, an email, a phone number, a degree of interest in a start term. The challenge with performance marketing is that in any given moment, there is only a finite amount of demand in the market.

And generally speaking, pure play performance marketing like paid search really doesn’t do a lot to change and influence how people see your institution over time to view you more favorably than the competition. That’s really not what performance marketing is good at. So that’s where brand marketing comes in. Ultimately, the job of brand marketing is to change the way people feel about your brand, to change their perceptions, to reduce their price sensitivity, to increase your reputation.

And importantly, it’s not just about reaching the folks who are in market today. Honestly, it may be too late to change the mind of a lot of those folks, but it’s really about reaching the folks who will be in the market next year or the year after that or down the road at some point. Les Binet and Peter Field were really the first to show how performance and brand marketing work together in a big way, and they even put a number around it.
According to their research, advertisers see the best results when they spend roughly 60% of their budget on brand and 40% on performance, although they and I and lots of other marketers would quickly point out that that number can vary quite a bit depending on your category, the maturity of your brand and your market. But here’s the thing, this relationship between performance and brand marketing is something that is widely discussed in the broader world of marketing, but it tends to get a lot less play in higher ed circles.

And I think it’s not because people in higher ed don’t value brand. I think they actually value brand quite a lot. Strategic plans frequently, frequently cite the need to build our brand or be seen as the institution of first choice. And I’ve sat in, probably you’ve sat in on countless meetings where faculty and staff say things like, “Our institution has to do a better job telling our story.” When I hear this, to my mind, it’s basically non-marketer speak for brand marketing. But the rub comes in when it’s time to plan budgets and actually spend money on brand building.
Often the same folks who insist on doing more to tell our story also want to know how many applications those new billboards or that 30 second spot is supposed to generate. This puts marketing leaders in a tough position. On one hand, every fiber of their marketing experience and, honestly, a good bit of serious research may indicate that investing in brand marketing is the right thing to do. On the other hand, higher ed marketers are rarely armed with the kind of data that marketers in a commercial context might have access to.

As a result, higher ed marketers are heavily incentivized to keep using the same safe performance marketing playbook that they know everybody will accept. So this is what I like to call the performance marketing trap. It’s the idea that advertisers retreat to the safe performance marketing playbook because it’s easier to justify, even though the research is clear this is not the best strategy for most brands in the long run. At its core, I think the problem is really one of measurement.

Research from analytic partners shows that click-based measurement tools like Google Analytics or your CRM overstate the impact of digital advertising channels by two to 10 times on average, and they drastically understate the contribution of non-digital channels by that same amount or even more. As a result, schools who typically rely very heavily on free and affordable click-based measurement tools are often making big strategic marketing decisions based on flawed data.

And when they do, they often end up investing in media channels and approaches that seem to be doing a great job of generating inquiries, but don’t really do much to cultivate demand for the institution in the long run. Now, part of what’s tricky about this is it’s not always super obvious when you’ve been under investing in your brand. It’s not like if you turn off your brand spot or take down all your billboards that all of your website traffic, all your inquiries and applications are going to dry up overnight.

That’s not how it works. Brands aren’t built overnight and they don’t disappear overnight. But there are some things you could look for that can signal that maybe you’ve been under investing in your brand and it’s time for a change. Now, the first and most obvious one that I’ll point out to you is what I call hidden gem syndrome. It’s pretty easy to know if your institution has hidden GEM syndrome because you will consistently hear people inside the institution or maybe even outside the institution saying that your school is a hidden gem.

And I’ve heard this a lot over the years. And when I hear it, I really do empathize with where people are coming from. What they’re saying is, “Hey, we’re A really good school. Nobody knows about it. Maybe if they did know about us, they would be really attracted to what we have to offer and they would enroll here.” I get it. But in 2024 and looking what we have ahead of us in the years to come, being a hidden gem is an existential risk. If you stay a hidden gem, you will probably get trampled underfoot.

Marketers have to remind our peers in the rest of the institution that brand awareness is perishable. Even in your own backyard, If you are not making a steady, consistent investment in reminding people that you even exist, you will slowly fade away. Another but more subtle sign you might see is steadily declining traffic to your website, even though your website is pristine from a search engine optimization standpoint. This happens because in my view, our offline and online worlds are really closely intertwined.

We don’t really distinguish between the two anymore. So as your brand fades into the background, so too do the number of people who are searching for you online. This isn’t just theoretical. Over the last couple of years, researchers have been able to predict changes in market share for individual companies across multiple industries based solely on the volume of branded search for that company. So it is certainly something that you need to pay attention to.

And if you have mysteriously declining traffic despite concerted SEO efforts, lack of investment in brand may have something to do with it. Finally, I would point out that a lack of investment in brand advertising can actually show up as decreased performance in your performance advertising. And this can appear in multiple ways. It could be higher cost per conversion, or it could be something like poor down funnel conversion rates on the inquiries that you generate out of your performance marketing.

The reasons for this, I actually think there are multiple reasons for this, but just consider the intuitive example. Say you’re searching for an online master’s degree in data analytics. You do an online search and you’re presented with two ads. One ad is for a school that you’ve never heard of. The other ad is from a school that you recognize, that you’ve heard has a really great reputation and that you know your employer thinks has a great reputation. All other things being equal, which ad are you most likely to click on?

Whose inquiry form are you most likely to fill out? Whose email are you most likely to open? Whose application are you most likely to complete? These brand effects are real, and it’s one of the reasons that the majority of online students are still within 100 miles of campus. So I’ve done my best to lay out the problem as I see it. So now I want to talk about what to do about it if you think that maybe you’ve been under investing in brand and need to make a change. What practical steps could you take?

So first, the first place I would start is if you haven’t done it in a while, I would recommend investing in some basic research to understand the actual state of your brand. So this should definitely include things like measuring awareness. But most importantly, you need to understand how audiences inside and outside your institution perceive your brand. If you do it right, honestly, you’re not going to love a lot of what you find.

But without this information, you’re going to struggle to set a coherent brand strategy, develop the right objectives, and get internal alignment on the most important opportunities that you need to address. Now, technically you could do this work in-house, but it is really hard to clearly read the label when you’re stuck inside the bottle.

So whenever possible, I strongly, strongly recommend finding an experienced research partner familiar with brand research who can really help you sharpen your research questions, design a really good quality study, and most importantly, shoot straight with you about what they find when the results come in. Second, I’d encourage you to think of brand building as a broader effort that is more than just a splashy new ad campaign. Now, don’t get me wrong, I’m part of an agency.

I love agencies. I love big, bold brand work done by great agencies. That said, brand building is best viewed as a multidisciplinary project. Beyond bang up ad creative and a solid media plan, long-term brand marketing should definitely include things like public relations, alumni engagement, merchandising, organic social media, high school counselor outreach, summer camps, conferences, sponsorships, strategic partnerships. Obviously, a lot of those efforts lie well outside the MarCom office, and I think that’s a really good thing.

Because at the end of the day, a brand is built by the entire organization. Third, I want to talk about measurement. You need to look at moving beyond click-based measurement tools as your sole source of information about how your advertising is doing. And if you can, you need to spend some time looking at things like media mix modeling and incrementality testing. There is so much to get in here. You could spend multiple podcasts. We probably definitely need to talk about this in the podcast in the near future.

But what I will say for today is that these tools will show you things that your click data simply can’t about how your ads are working, and it’s going to lead to much smarter media planning in the long run. Now, unfortunately, there is a big caveat here. If your net media spend is somewhere below 200 or maybe $300,000 a year, it’s probably not going to make sense to invest in those approaches. Unfortunately, certainty does come with a cost. And at those levels, that cost is potentially going to eat up a good chunk of your budget.
But if you’re dealing with a media spend that is in the higher six figures or in the seven figures, then these methods are going to make a lot more sense to you. Fourth, I would suggest that you just start slow and learn as you go. I would not recommend going from say 10% of your money spent on brand to that 60/40 split that we talked about. Definitely wouldn’t do that in a year. Honestly, it’s probably not even the right number for your brand.

But I think it’s smarter in this case to make some incremental changes, maybe mix in some new channels that you haven’t played in before, like maybe terrestrial radio or connected TV. Maybe try changing up some of your approach to your ad creative to lean in more to that brand side and out of the performance side and see where that gets you. Watch what happens, learn from it, and go from there and iterate. I think that’s probably the best approach if this is kind of new for your marketing strategy.

And lastly, I would really encourage you to stay on top of the latest in advertising effectiveness research. There is so much good, interesting, exciting work being done right now, and some folks to look for would be Ehrenberg-Bass Institute, Wark, System1 Research, Les Binet and Peter Field that I mentioned before. There are tons of them out there, and it’s really interesting stuff. It’s not only going to make you a sharper marketer overall.

But if you decide that you need to change your strategy, it’s going to help provide the evidence and the rationale for why that strategy needs to change. So with that, we have now reached the end of our first solo cast. I hope it was interesting. I hope it was helpful in some way. Maybe it sparked some new ideas. But in any case, as always, thank you for listening and I hope to see you next time.

The Higher Ed Marketing Lab is produced by Echo Delta, a full service enrollment marketing agency for colleges and universities of all sizes. To see some of the work we’ve done and how we’ve helped schools just like yours, visit EchoDelta.co. If you enjoyed this podcast, please subscribe and leave a review on Apple Podcasts. And as always, if you have a comment, question, suggestion, or episode idea, feel free to drop us a line at podcast@EchoDelta.co.

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Jarrett is our VP of Strategy and the torchbearer for all things digital. Since joining us in 2014, he’s made it his mission to help clients seize the power of smarter marketing strategies—and reap the rewards.