In digital marketing, a common belief is that everything can be measured – clicks, conversions, and ROI.
Many advertisers assume that brand awareness is unnecessary and that performance marketing alone is enough to drive sales.
After all, brand awareness campaigns don’t always generate immediate traffic or conversions visible in analytics.
Their effects unfold over time, making them harder to measure than performance-driven campaigns.
However, this overlooks a critical factor: brand strength acts as a multiplier for performance marketing effectiveness.
A well-known brand increases ad click-through rates (CTR), lowers cost-per-click (CPC), improves conversion rates, and ultimately boosts profitability.
This article explores:
How a recognizable brand enhances performance marketing results.
Why brand awareness allows businesses to sell more at higher margins.
How multiple marketing levers work together to drive business growth.
Why neglecting brand investment can limit long-term success.
By the end, you’ll see why strong branding isn’t just a “nice-to-have” – it’s a key driver of marketing efficiency and profitability.
Higher brand awareness means a higher CTR
Users are more likely to click on ads from well-known brands that evoke positive associations.
This idea is widely discussed in marketing, though reliable studies directly proving it are scarce.
However, several observations support this claim.
For example, remarketing campaigns using search ads often show higher CTRs for returning users.
While it’s difficult to isolate brand awareness as the sole factor – since market competition and other variables also play a role – user behavior analysis provides indirect evidence.
A reliable randomized controlled trial (RCT) in this context would be nearly impossible to conduct.
Even if some users click on ads without much thought (e.g., on social media), many base their decisions on the ad content and the destination URL.
For search ads, a significant portion of users consider the displayed destination URL.
I conducted a small survey (142 respondents, not representative) and found that 86% of users pay attention to the website URL before clicking on a Google search result.
This suggests that well-known brands tend to achieve higher CTRs in paid search.
Higher CTR means lower CPC
In the Google Ads ecosystem, advertisers don’t pay a fixed rate for clicks.
Instead, Google’s auction system considers Quality Score, where a higher score results in a lower CPC.
Since CTR is a key factor in Quality Score, ads with higher click-through rates typically benefit from lower CPCs.
Why does this happen?
From Google’s perspective, revenue remains the same whether 1,000 impressions generate 200 clicks at $1 each or 100 clicks at $2 each – both total $200.
Therefore, an ad with double the CTR can achieve half the CPC.
While CTR is crucial, other Quality Score factors – such as landing page experience – also play a role, further favoring strong brands.
Dig deeper: How to make your Google Ads brand campaigns more efficient
Higher brand awareness means a higher conversion rate
Numerous studies confirm that brand awareness positively impacts conversion rates.
A well-known brand reduces consumer hesitation by reinforcing trust in product quality and the seller’s reliability.
Strong brands attract loyal customers, enjoy a good reputation (including among experts), and create desirability – significantly increasing the likelihood of purchase compared to unrecognized alternatives.
Stronger brands achieve higher margins
Unlike lesser-known competitors, strong brands aren’t forced into price competition.
Customers trust their quality and reputation, making them willing to pay more.
This allows branded products to be sold at higher prices, increasing profit margins per unit.
Higher prices also accelerate margin growth.
For example, if a product costs $100 with a $20 margin, raising the price by 10% (to $110) increases the margin to $30 – a 50% increase in earnings per unit sold.
Higher CTR means greater sales
With a higher CTR, the same campaign delivers more traffic.
This leads to increased conversions and higher overall margins – driven by greater conversion values and a larger customer base.
Better CPC and CTR, conversion, and margin mean higher ROAS/POAS
Lower CPC, higher conversion rates, and increased conversion values all improve campaign profitability.
While each factor contributes individually, their combined effect is multiplicative rather than additive, significantly boosting overall efficiency.
For example, if CTR and conversion rates double and product margins increase by 50%, profit per sale grows sixfold (2 x 2 x 1.5 = 6).