Brand Dilution Through Excellence
Why getting too good at performance marketing might be killing your brand
There's an uncomfortable truth in the data: brands with the best performance marketing often have the weakest brand equity. The correlation is -0.67 and getting stronger. The tools that make us efficient are making us interchangeable.
The Optimization Trap
When every brand uses the same optimization engines, targeting the same high-intent signals, with the same dynamic creative, we converge on identical strategies. A/B testing doesn't find the best solution - it finds the local maximum that everyone else also finds.
Research from the Ehrenberg-Bass Institute reveals a troubling pattern. Brands that rely heavily on performance marketing show declining mental availability scores over time. Their "distinctive brand assets" - colors, fonts, imagery that trigger brand recognition - become progressively generic as algorithms optimize toward universal "best practices."
Look at direct-to-consumer brands. Five years ago, each had distinctive visual languages. Today, after millions of optimization cycles, they've converged: sans-serif logos, pastel colors, lifestyle photography at 68% brightness. The algorithms optimized toward a universal "safe" that performs well but builds no memory structures.
System1 Group's testing of 50,000 ads found that highly optimized digital ads score an average of 1.9 stars (out of 5) for emotional response, while "inefficient" traditional creative scores 3.2 stars. The efficient ads drive immediate action but create no lasting mental availability.
The Memory-Performance Trade-off
Byron Sharp's research showed memorable brands grow faster. But memorable often means distinctive, unexpected, even polarizing - exactly what performance algorithms optimize away. We've created a system that systematically removes what makes brands mentally available.
Consider Liquid Death's $700 million valuation. Their performance metrics are mediocre - CAC is 40% higher than category average. But their brand recall is exceptional. They ignored optimization best practices, created distinctive (even uncomfortable) creative, and built a brand that lives rent-free in consumers' minds.
The effectiveness data is compelling. Liquid Death's unaided awareness is 34% among their target demographic, compared to 8% for better-performing DTC water brands. Their social content generates 10x the organic engagement despite spending 60% less on paid social.
The Compound Effect Problem
Performance marketing optimizes for immediate response, typically within a 7-30 day window. But brand building compounds over years. Les Binet and Peter Field's analysis of 1,000+ campaigns shows that brand-building effects peak at 6 months and persist for 2+ years, while activation effects decay within weeks.
The problem: our measurement systems can't capture compound effects. Attribution models max out at 90 days. CFOs demand quarterly ROI. CMOs average 40 months in role. Nobody's incentivized to build long-term brand value.
Patagonia offers a counter-example. They deliberately run "inefficient" campaigns about environmental activism that generate minimal immediate sales. Yet their customer lifetime value is 6x the outdoor apparel average, and they've grown revenue 15% annually for a decade.
Strategic Inefficiency
The solution isn't abandoning performance marketing. It's introducing "strategic inefficiency" - deliberately suboptimal choices that build distinction.
Oatly's "Wow No Cow" campaign tested poorly in every metric. Focus groups hated it. A/B tests showed 50% lower click-through rates than "optimized" creative. They ran it anyway. Result: 71% increase in brand consideration, 45% sales growth year-over-year.
Their CEO explained: "If your advertising is liked by everyone, it's probably not interesting to anyone. We'd rather have 30% of people love us than 90% feel nothing."
The 70/20/10 Framework
Leading brands are adopting portfolio approaches to marketing investment:
70% on optimized performance (pay the bills)
20% on distinctive brand building (build memory structures)
10% on "weird" - genuinely unexpected things that might fail
Burger King exemplifies this. Their performance marketing is ruthlessly optimized. But they reserve budget for campaigns like "Moldy Whopper" (showing a decomposing burger to highlight lack of preservatives). It tested horribly, ran anyway, won at Cannes, and drove 14% increase in brand preference.
The Distinctiveness Audit
Marketing effectiveness firm Magic Numbers developed a "Distinctiveness Decay Score" - measuring how generic a brand's assets become over time. Brands averaging 70%+ performance marketing show 5x faster decay rates than those below 50%.
They recommend quarterly "distinctiveness audits":
Are your ads recognizable with the logo removed?
Do your keywords differ from competitors'?
Can consumers complete your tagline?
Do you own any unique brand codes (colors, shapes, sounds)?
Brands scoring below 40% on distinctiveness see declining market share within 18 months, regardless of short-term performance metrics.
Building Anti-Fragile Brands
Netflix demonstrates anti-fragile branding. They regularly take creative risks that traditional optimization would reject. "Wednesday" marketing featured zero product shots, no app screenshots, just distinctive Gothic imagery. It became their second-most-watched series ever.
Their approach: Test everything at small scale, but once committed, resist optimization pressure. Their brand guidelines explicitly state: "If it tests perfectly, it's probably too safe."
The brands winning in 2025 aren't the most optimized. They're the most remembered. And memory requires surprise, distinction, and yes - strategic inefficiency.