The Future of Brand Marketing   //   March 15, 2024

Solo Stove ignites the age-old brand versus performance marketing debate

This story is part of a week-long editorial series where we dive into all the ways brand marketing has evolved. More from the series →

The fourth quarter is a big time of year for Solo Brands. And this year, the brand pulled out all the stops to make sure that it saw solid sales — or so it thought. 

Solo Brands invested in a host of brand marketing activities, designed to get more people talking about its products during the all-important holiday season — especially its marquee brand Solo Stove. In addition to Solo Stove, which is known for its smokeless firepit, Solo Brands also owns outdoor-focused brands like Oru Kayak and Chubbies. Solo Stove sponsored a float during the Macy’s Thanksgiving Day Parade. It struck a partnership with Snoop Dogg, who teased the deal by saying that he was going “smokeless” on social media, revealing days later that it was a promotion for Solo Stove. 

But in January, Solo Brands announced that its CEO, John Merris, was stepping down. In that same announcement, Solo Brands warned that its unique fourth-quarter marketing campaigns did not lead to the sales lift it had hoped. That ignited a debate among brand marketers and in various business publications about what exactly went wrong (if anything) with Solo Stove’s campaigns. Did the company have unrealistic expectations in the first place about how much of an immediate sales lift it should see from brand marketing campaigns? Was brand marketing being used as a scapegoat for other operational missteps? 

During its fourth-quarter earnings call on Thursday, the company shed more light on what it thought went wrong with its marketing strategy. “The brand awareness was outstanding, which will help us long-term,” said Solo Brand’s new CEO, Christopher Metz. But, he said that Solo Brands should have been spending more on bottom-of-the-funnel marketing during the fourth quarter, given how important of a sales period it is.

“You want to be spending across the full funnel for the entire year, but you really want to be converting in key selling seasons,” he said. 

Metz’s comments nod to a challenge that nearly every consumer startup encounters at some point: how to balance brand and performance marketing while making sure the two work successfully in tandem with one another. As Mike Duda, the managing partner at venture capital firm and marketing consultancy Bullish puts it, there’s a “day of reckoning” right now as brands try to marry performance and brand marketing.

Many of today’s young brands built their business on the back of performance-driven Facebook and Google ads. These ad formats cost less than traditional mass media channels, and were designed to reach people at almost the exact moment they were ready to purchase something. If marketers could master the bidding techniques, A/B testing and level of creative needed to make these channels work, they could see sales rake in instantaneously.

Brand marketing consists of investing in elements like TV ads, event sponsorships and billboards that get someone to think of a brand, say, three or six months down the road when they encounter the problem that that brand is trying to solve. It means convincing people to instantaneously reach for a Red Bull when they are tired, or to stop by a Warby Parker store every time they need new glasses.

The challenge for startups in today’s environment is getting used to investing in brand marketing when they have grown up on performance marketing. They won’t see as immediate of a payoff from brand marketing as they do from performance marketing. But, if a brand pulls back too much on brand marketing spend as a knee-jerk reaction to declining sales or C-suite pressure to trim the marketing budget, they risk losing out on time could have spent building up a pipeline of future customers.

“[If] people aren’t talking about you, and thinking about you inherently when a problem comes up that you solve, then you aren’t getting [necessary] baseline demand,” Jordan Baines, the vice president of e-commerce and digital marketing at Inkbox Tattoos, said. “And it is really, really expensive to rebuild that if you aren’t constantly investing in it.” 

Nowhere are the stakes higher for getting marketing spend right than on the public markets, where Wall Street has little tolerance for margin erosion and declining sales. That seems to be one reason why Solo Brands has taken such swift action to call out its marketing missteps — and, in its eyes, correct it.

Solo Brands’ sales dropped 16.2% year-over-year during the fourth quarter. In turn, Metz said during Thursday’s earnings call that Solo Brands was ending its marketing contract with an outside firm that had placed much of its media spend and replacing its current marketing agency. He added that Solo Brands needs agency partners who “understand full-funnel marketing.” 

‘Everyone’s trying to be a lot more thoughtful in their spend’ 

Brand marketing has never fallen completely out of vogue.

But there was a time in the nascent days of Facebook and Google’s ad platforms that “it felt like performance was all things,” said Nicole Williams, the vice president of brand and product marketing at infant formula startup ByHeart. Hot young startups like Casper, Warby Parker and Bonobos were able to grow faster than they ever had before thanks to the instantaneous payoff that Facebook ads provided. And, there was a bet that these direct sales would continue to grow exponentially, which led these brands to raise hundreds of millions of dollars in venture capital. 

But, over the past five or so years, a few things happened. Some of these once-hot startups, like Casper and Allbirds, had disappointing debuts on the public market. In turn, the amount of venture capital funding that went to DTC brands decreased by 97% between 2021 and 2023. That has forced many consumer startups to do more with less, as they can’t bet on VC funding to fund future growth initiatives. 

Also around that same time, consumer startups were hit hard by Apple’s iOS 14 update, which required apps to get permission from users before tracking their activity across the web. That temporarily made some marketing channels like Facebook less efficient, and some brands reported CPMs spiking

That’s put more pressure on consumer startups to prove that they do have an effective marketing structure — one that incorporates both top-of-the-funnel and bottom-of-the-funnel marketing — that can help the brand continue to scale.

It’s a tall task, especially during an economically challenging time. E-commerce sales growth during the fourth quarter of 2023 was the slowest on record, according to a Digital Commerce 360 analysis of U.S. Department of Commerce data dating back to 2023. 

Indeed, Metz from Solo Brands acknowledged that a misfire on marketing spend isn’t the only thing that contributed to the company’s recent sales decline. He also spoke to a need to improve the company’s product innovation pipeline. And he acknowledged that consumer durable goods have experienced a “Covid hangover” after the pandemic pulled forward spend into these categories.

It points to the challenge that many consumer brands are experiencing right now: performance-driven brands know they need to keep investing in brand marketing. But, the pressure to do so is coming at a time when it’s already difficult to keep an e-commerce business growing.

Williams — who has also held roles at Harry’s and Mack Weldon — said that the common theme that has come up in her conversations with marketers is that “everyone’s trying to be a lot more thoughtful in their spend.” 

Duda of Bullish said that he has seen a “300% increase” in brand executives coming to his firm this quarter asking, “How do we do more full funnel? How do we do brand marketing?”

“The consistent thing is: they have no idea what they’re asking for, they have no idea how to budget, and they come in kind of reticent, like, ‘we have to [do this], we have no choice,'” Duda said.

Making the jump from performance to brand 

Williams describes the role of a brand marketer as almost being an internal marketer. That’s the first piece of advice she has for brands trying to make the jump from being primarily a performance-marketing driven company to investing more in brand. “I think you have to do the rounds [to different teams] and really sell the dream…and how you can bring the vision to life for what this could be, and really inspire and move people.”

Baines from Inkbox said that when brands plan an “above the line” campaign — which he defines as brand marketing that speaks to major cultural moments — they should be planning at least six months to a year out.

“A lot of startups, they say, ‘this year we’re gonna do a brand campaign, we’re gonna launch it in March’ — and it’s January,” he said. Baines advised that brands should use that time to shop their concept to multiple agencies, and to make sure they (or their agency) has partnerships lined up with the right publishers that they might want to cover that campaign. They might also want to test out different messages for the demographic that they want to hit with that brand campaign. 

Another big challenge that brands run into when making the jump from performance to brand marketing is that they don’t know how to correctly judge the success of a brand marketing campaign. Brand marketing is about driving both awareness and perception. Looking at things like an increase in website traffic or social media visits before and after a brand marketing campaign is the first, most basic way to measure its effectiveness. 

But Baines also said that there is a way for top-of-funnel and bottom-of-funnel marketing to live more closely together. That doesn’t mean taking assets from a brand campaign and shoving them into a Facebook ad. But, what it does mean is if a company is planning out a big brand marketing campaign to run a year from now, it can use its performance marketing channels to test out different messaging ahead of that campaign. If the brand has a certain demographic that it knows it wants to reach through that brand marketing campaign, it can test out different language it thinks would appeal to that demographic on Facebook and Instagram.

Metz from Solo Brands told Wall Street analysts on Thursday that another learning for him was that he believed the company’s bottom-funnel and top-funnel marketing efforts could have been more closely linked. “It wasn’t linked in any way to our website,” he said. We didn’t have a full-funnel product offering that connected back to our campaign.” 

Baines, for his part, said that brands should be using performance marketing to identify different channels, demographics, messages and customer motivations. Essentially, using that channel to figure out “things that people actually respond to and engage with.”

That, in turn, “can help you figure out what parts of your brand work or are functional, [and] you can use that as part of scoping out what a [brand marketing buy] looks like,” he said.