Full-funnel marketing for ecommerce: why performance alone isn’t enough

In the early days of digital marketing, performance reigned supreme. Marketers could launch highly targeted campaigns at a fraction of the costs incurred through traditional channels, and the results were immediate and measurable.

Armed with unprecedented access to data, marketers became fixated on metrics. Why invest in long-term brand campaigns when conversion objectives could be achieved without them?

That era is over. Today, the most successful ecommerce brands are the ones deploying a full-funnel marketing strategy – one that blends brand building with performance marketing to drive sustainable, compounding growth.

At Nest, we call this approach full-funnel performance. It’s not just a differentiator. It’s vital for your future growth.

What is full-funnel marketing?

Full-funnel marketing is an approach that targets potential customers at every stage of the buying journey – from initial awareness right through to conversion and retention. Rather than focusing spend on a single stage (typically the bottom of the funnel), a full-funnel marketing strategy allocates budget across the entire customer journey.

In practice, this means running brand awareness and consideration campaigns alongside your direct response activity, and measuring their combined impact on business outcomes.

This might sound simple, but most ecommerce brands don’t do it. The majority are trapped in what the industry calls “performance think”. However, this ultimately results in an over-investment in performance-heavy tactics that no longer deliver results.

Why performance marketing alone no longer works

Three fundamental shifts have exposed the limitations of performance-only strategies:

Rising privacy: The rise in privacy movements (most famously Apple’s ATT update) and subsequent platform updates have made it increasingly difficult for marketers to rely on linear, performance-centric marketing strategies. Critically, signal loss and restricted access to user data have hampered the effectiveness of once-efficient performance channels.

Dwindling performance: Performance channels have become more expensive, less effective, and harder to measure. The cost of acquiring customers through pure direct response has risen consistently year on year, reducing the effectiveness of overt DR strategies.

Changing consumer preferences. Consumer behaviour has evolved, with Gen Z cohort in particular gravitating towards those brands that prioritise community and authenticity over hard selling. The brands that invest only in conversion-focused messaging are increasingly invisible to these audiences.

These shifts have left traditional performance marketing with a structural problem. Marketers are under intense pressure to deliver quick returns from their ads, leading them to retreat deeper into bottom-funnel tactics. But this ultimately results in an over-investment in performance-heavy approaches that no longer deliver the results they once did.

This is what we call the lower-funnel cycle of doom – and it’s the single biggest growth trap in ecommerce marketing today.

Brand vs performance marketing: why it’s not either/or

The debate between brand and performance marketing has persisted for years, but framing it as an either/or choice misses the point entirely.

Brand marketing builds demand. Performance marketing captures it. Without brand activity filling the top of the funnel, your performance campaigns are fishing in an increasingly shallow pool of prospects. Without performance activity converting that demand, your brand investment doesn’t translate into revenue.

The most effective ecommerce marketers understand that brand and performance are not competing priorities – they are complementary forces that amplify each other.

This is the core principle behind full-funnel performance: integrating brand and performance into a single, unified strategy where both are measured against business outcomes.

Winning with a full-funnel marketing strategy

To thrive in this new era, marketers must pivot towards a holistic approach that combines brand building with performance marketing – a strategy known as full-funnel performance.

Nest tests have consistently demonstrated the effectiveness of blending brand awareness efforts with performance marketing across platforms such as Meta, TikTok, and YouTube.

By allocating budget for brand objectives, marketers can increase incremental reach and gain exposure to new prospects at a lower cost, thereby decreasing acquisition costs and improving return on advertising spend.

When should a full-funnel marketing strategy be deployed?

Full-funnel marketing isn’t right for brands at every stage of their growth.

Brands still in the early stages of scaling their direct response efforts may find greater value in focusing on testing and conversion objectives. Further, it’s also important to nail down the creative first, ensuring it is heavily branded and geared towards improving awareness.

Ecommerce brands should also avoid focusing on brand awareness campaigns during periods of higher seasonal demand – during these times, budget should be focused on driving revenue.

However, if you are a retailer that has found their reach has plateaued, seeking to reach new audiences or to expand into new markets, it can be a highly effective strategy for increasing top-of-mind awareness and outmanoeuvring competitors.

Other signals that a full-funnel marketing strategy should be deployed are:

• Your reach through conversion objectives has saturated and you’re reaching the same people every month, limiting incremental growth.
• You’ve sustained above-target performance and can capitalise on profitability through reinvestment in brand awareness.
• You’re looking to increase penetration in foreign markets – you can stretch budget further through awareness activity to hit a higher percentage of the overall demographic in new markets.
• You have low share of voice versus competitors and need to become more top of mind in your category.

Conversely, you should hold off if your creative is not fit-for-purpose, if you don’t yet have sufficient budget to drive the desired impact from awareness activity, or if there’s still headroom to scale your direct response efforts.

A useful diagnostic: if your CAC is rising and brand search is dropping, a lack of investment in brand is likely the culprit.

How to get started with full-funnel performance

For advertisers first leveraging brand, our suggestion is to start with 5-10% of total budget allocated to brand awareness objectives, and aim to hit more than 50% of your target audience twice a week. Your approach to upper-funnel should be broad but defined, based on your ideal customer profile.

Across Nest’s portfolio, awareness and traffic objectives combined represented 9% of our clients’ Meta spend in Q1 2024 – and investment in awareness activity increased by 3.5x year-on-year as brands shifted budgets towards driving long-term growth and incrementality.

How can the success of full-funnel marketing be measured?

Measurement is essential to assessing the effectiveness of full-funnel marketing. Here, there are three key methods which can be used:

• Brand-lift studies (BLS)/Multi Cell Conversion-lift studies (CLS): This is the most accurate measurement tool as it’s experiment driven, delivering tangible insights in relation to any uplift in awareness and conversions.
• A/B testing: While still useful, it provides a less robust read on how brand influences platform performance. As it doesn’t prove incrementality or brand lift, it measures correlation but not causation. 
• Measurement tools: e.g. Fospha or Measured.com.

When testing and measuring full-funnel marketing, it’s important to understand that the impact of top-of-funnel activities on direct response metrics are not instant. This is completely natural and expected. 

While there may be an initial increase in customer acquisition costs (CACs), this will be followed by gradual performance improvements that will enable you to hit your targets and scale long term. 

The results: what full-funnel marketing actually delivers

Embracing a full-funnel marketing strategy that integrates brand building with performance tactics is essential for sustained success in today’s dynamic marketing landscape.

Nest data from BFCM weekend 2023 shows that those ecommerce companies which leveraged brand saw a 35% ROAS uplift between October and November, while those that didn’t were limited to a 2% rise in ROAS. 

Further, in aggregating the results of several brand lift tests, we found that running brand activity alongside performance:

• Increased ROAS by 104%.  
• Increased incremental reach by 47%. 
• Increased sales by 62%. 
• Increased conversions by 64%. 
• Reduced CPM by 55%. 
• Led to a 2x increase in overall users within the period of the test.

These results show that full-funnel marketing can unlock real, incremental growth for ecommerce brands.  

Creating new demand is critical. The brands that recognise this necessitates a shift in strategy will be the ones to cut through the rise and yield significant results in the long run. 

Want to know how full-funnel performance can improve your brand’s performance – and get you back into growth? Contact us here.