Similarities and Differences Between Brand Advertising and Performance-Based Advertising

Performance-based advertising (PBA) or Performance Marketing is a more precise approach than brand advertising and allows for the calculation of Return on Investment (ROI). However, once brand advertising captures the full attention of users, its impact is exponentially stronger than performance-based advertising. Both have their advantages and disadvantages, so which type should one choose?

Those of you working in technology companies are likely very familiar with performance-based advertising. Spending money to buy traffic, likes, follows, logins, and downloads is something almost every tech company engages in. Continuing to invest money in purchasing traffic is certainly beneficial. However, with the rapid escalation of traffic acquisition costs, the cost per customer has risen from just a few thousand dong a few years ago to tens or even hundreds of thousands of dong currently. Meanwhile, with Lifetime Value (LTV) remaining unchanged, ROI is steadily decreasing. At this point, finding ways to acquire traffic at a lower cost has become an urgent problem for many tech companies.

Visionary leaders have long targeted traditional brand advertising. Consider this: Are we seeing more advertisements for apps like Momo, VN Pay, and Zalo Pay on TV? In the near future, more utility and service apps are expected to advertise through radio and print media, aiming to drive traffic.

Given that many people still do not fully understand brand advertising, this article will explain the similarities and differences between brand advertising and performance-based advertising based on four aspects below, to help everyone better understand whether they should pursue brand advertising or performance-based advertising for their products.

1. Introduction to Brand Advertising and Performance-Based Advertising

(1) Brand Advertising

According to the encyclopedia: “Brand advertising is a method aimed directly at building the brand image of a product, increasing its market share, and highlighting the established position of the brand in consumers' minds.”

In simpler terms: When a user thinks of a type of product, such as clothing, the brand that comes to mind is the result of brand advertising.

The characteristics of brand advertising are longevity and slowness. The most important aspect of brand advertising is its persistence. Running ads for a short time cannot create a brand. Brands like Samsung, LG, Vinamilk, and Nestlé have continuously and repeatedly advertised their product advantages to consumers over decades, thus dominating users’ minds and becoming deeply ingrained in their thoughts. Unless consumer behavior changes, users will never change the brands they use.

(2) Performance-Based Advertising

According to Wikipedia: “Performance-based advertising is a method that applies techniques and tools for consumers to actively interact with ads, with effectiveness as the basis; advertisers only pay for measurable results.”

In simple terms: Advertising whose effectiveness can be seen is referred to as performance-based advertising. Quite straightforward, isn’t it? In reality, most jobs in life, aside from making chips and rockets, are quite simple.

The characteristics of performance-based advertising are short, stable, and fast. The most significant aspect of performance-based advertising is that investments yield visible results within the same day, which is the biggest advantage of internet advertising. All information about invested amounts, clicks, downloads, and sign-ups in mobile platform ads can be tracked and displayed in metrics. For every dollar invested in performance-based advertising, it can be clearly known which dollars brought in users and which were wasted.

2. Similarities between Brand Advertising and Performance-Based Advertising

Both brand advertising and performance-based advertising cost money. Some might ask if this is an obvious statement. Is there advertising that doesn't cost money? However, in reality, some business owners who have just begun to engage with technology may demand: "We want to do brand advertising, but we will only pay for ads based on activated user counts or order volumes." This clearly reflects a reluctance to spend money!

The spending ratio for brand advertising and performance-based advertising is divided by product attributes and the leaders’ perceptions of these two types. Large companies typically have fixed annual advertising budgets in the hundreds of millions or billions, investing more in brand advertising and less in performance-based advertising.

Both brand advertising and performance-based advertising aim to reach viewers. Whether through TV ads, elevator ads, newspaper ads, social media ads, or mobile ads, the primary goal is to reach viewers, and then guide users to perform various actions based on the content of the ads.

With technological advancements, the boundaries between brand advertising and performance-based advertising are becoming increasingly blurred. For example, a chain store recently invested heavily in elevator ads, creating QR codes on ads placed in elevators. When customers scan the codes, they receive a free skincare product. This not only enhances the brand’s visibility but also includes changes in user behavior.

The purpose of both brand advertising and performance-based advertising is to drive sales. Regardless of whether they are traditional business owners or app developers, and irrespective of their corporate values, organizational structures, and advertising concepts, the consistent goal of spending on advertising remains: to increase product sales and profits for the company. There’s a meaningful saying: “Brand advertising or performance-based advertising, if not aimed at selling, is merely a gimmick.”

3. Comparing the Advantages and Disadvantages of Brand Advertising and Performance-Based Advertising

Performance-based advertising is more precise than brand advertising. Here, we mean “more precise”.

When running brand advertising, the target users are preliminarily screened. For example, an ad during the “Rap Viet” program targets younger individuals aged 20-30. Due to a lack of precision, the demographic range, geographic area, and interests can be relatively broad. However, performance-based advertising on mobile platforms is entirely different. All information about age, gender, living area, income, marital status, spending ability, and even whether they have pets is quite clear. With this information, it becomes much easier to run performance-based ads.

For instance, if you are a producer selling skincare masks, your target user group is likely young female office workers in major cities aged around 25. When running performance-based advertising, you just need to select the characteristics mentioned above, and your ads will only display to users who meet these criteria. This minimizes waste and provides measurable effectiveness.

Brand advertising makes a more lasting impression on users compared to performance-based advertising. This can be seen from the creative aspect of the ads; whether in video, image, or text format, brand advertising highlights the product's selling points and conveys information about the product to users. Of course, if you want users to remember, it is essential for the brand to appear multiple times.

On the other hand, performance-based advertising sometimes results in ads and products being unrelated. For example, many vouchers on apps may have high click-through rates, but they often come with conditions for use or are rarely utilized. However, this is not important; the key metric is the click-through rate. In the world of performance-based advertising, click-through rate reigns supreme. As long as the click-through rate is high, everything else can be overlooked.

Performance-based advertising can calculate ROI better than brand advertising. This is also why performance-based advertising is very popular. When investing in performance-based advertising, people have expected measurable numbers. For instance, if the cost to acquire an Android user is 170,000 dong, then investing 340 million dong in advertising could yield 2,000 users. If the number is below 2,000, the investment is too high; you might deduct bonuses from the advertising booking manager. However, if the number exceeds 2,000, don’t rush to distribute bonuses yet; check the quality of the users first, as everything is measurable.

In contrast, with brand advertising, we all know the classic saying by John Wannamaker: “Half of my advertising is wasted; the trouble is I don’t know which half.” This has discouraged many business owners considering investing in brand advertising, leading them to believe that since half the advertising cost is wasted, they might as well invest everything in performance-based advertising. Consequently, such companies may even struggle to pay their employees’ salaries. In the internet industry, it can be seen that:

• In the early days of the internet, application companies triumphed through innovation, meeting user needs to attract them, like photo-sharing apps;
• In the middle phase of the internet, application companies relied on operations to win. When all app products were functionally similar, companies with more robust operations could retain users better;
• Now, in the later phase of the internet, the focus has shifted to branding. What is most important for an app to survive for decades? It needs a brand!

Once brand advertising captures users’ minds completely, its effect is a hundred times stronger than performance-based advertising. Performance-based advertising is short-term, while brand advertising is long-term. Businesses in the market certainly do not want to dissolve after a year or two; they always aim to build a sustainable business for centuries, which requires user loyalty to products rather than impulsive buying behavior. Achieving this can only be accomplished through brand advertising.

Take a lobster restaurant as an example. First, they could do social media ads offering users online vouchers for discounts when they come in person, which might generate a certain amount of traffic. However, after dining, when asked about the restaurant’s name, customers might forget it! They only remember receiving a discount voucher and enjoying a cheap lobster meal. Alternatively, they could run ads through KOLs on TikTok or fan pages, conveying a slogan that resonates emotionally with users, such as: “Want to meet friends? Let’s go to ABC Lobster Restaurant.” This way, when consumers want to gather with friends, they will remember this lobster restaurant.

4. Advertising Strategy for Products

Through the analysis and comparison above, we can see that both brand advertising and performance-based advertising have their own advantages and disadvantages. Don't stop investing in brand advertising just because you haven't seen immediate results, and don't abandon performance-based advertising due to its lack of continuity.

Based on my many years of experience in advertising, I believe the following two advertising investment strategies yield the best results:

a. Implement brand advertising and performance-based advertising simultaneously, as they support each other to achieve a 1 + 1 > 2 effect.

Performance-based advertising can purchase traffic, ensuring there are always users to maintain server activity. However, when the traffic purchase stops, new user growth will cease. By combining brand promotion with media advertising alongside PR articles in print media, even after stopping traffic purchases, new user numbers will continue to increase for at least three months.

b. Alternate between brand advertising and performance-based advertising—one month focusing on performance-based advertising and the next on brand advertising.

This strategy is suitable for companies with limited budgets that cannot run solely brand advertising or performance-based advertising, as focusing on only one type would not benefit the company.

By alternating both types, you can increase revenue while also enhancing brand awareness. However, it is crucial to remember that advertising must maintain continuity; if it is sporadic and short-term, the advertising costs will dissipate like bubbles.

5. Conclusion

The above article has highlighted the differences between brand advertising and performance-based advertising, as well as their respective pros and cons. Consider the current stage of your product to decide whether to pursue brand advertising or performance-based advertising.