Solo Brands, the parent company of Solo Stove, has sparked discussions about the effectiveness of brand versus performance marketing. The company invested heavily in brand marketing strategies for Solo Stove leading up to the holiday season, including sponsoring a float during the Macy’s Thanksgiving Day Parade and a promotional partnership with Snoop Dogg. However, in January, Solo Brands announced the resignation of CEO John Merris and acknowledged that the aggressive fourth-quarter marketing campaigns did not result in the expected sales uplift.
Christopher Metz, the new CEO, admitted on a later earnings call that while brand awareness was excellent, the company should have dedicated more resources to bottom-of-the-funnel marketing during the critical sales period. These comments reflect the broader challenge many young consumer brands face in striking the right balance between brand and performance marketing.
Brand marketing is about long-term investment in TV ads, billboards, event sponsorships, etc., that molds customer perception of a brand while performance marketing leverages short-term, action-oriented approaches via Facebook and Google ads for immediate results. Startups often struggle to adapt to brand marketing investments due to the lack of immediate payoffs compared to performance marketing results.
Despite that, many experts argue that foregoing brand marketing, especially under budget constraints or declining sales, costs a brand potential customer pipeline build-up. If brands aren’t consistently invested in it and maintaining their presence in the mind of consumers, it may cost more to regain that lost ground.
Solo Brands’ fourth-quarter sales registered a 16.2% year-on-year drop. Subsequently, it decided to withdraw its marketing contract with an external firm that had been handling a bulk of its media spend and replace its current marketing agency. Solo Brands underscores the importance of business partners grasping the relevance of full-funnel marketing.
Today’s business environment, characterized by diminishing venture capital flowing to DTC brands and policy updates affecting ad-tracking, pressures startups to strike the right balance between brand and performance marketing structures. It becomes especially challenging during economic hardships such as the sluggish e-commerce growth recorded in the last quarter of 2023.
Christopher Metz candidly recognized other factors, including the need to enhance Solo Brands’ product innovation pipeline and the overall market trend of “Covid hangover” impacting consumer durable goods.
Source: Solo Stove ignites the age-old brand versus performance marketing debate }}.
