When Growth Plateaus: How Does Brand Marketing Fit In?

This post is the fourth post in an unintentional series on the levers founders reach for when trying to scale their company’s growth. Last time we talked about experimenting with new channels and what prerequisites need to be there to make that experimentation able to drive significant improvements in growth. A more nebulous topic founders look toward as a solution to slowing growth is brand marketing. Let’s dive in on why that is the case, the different components of brand marketing, and what it can and cannot do to fix slowing growth.

A common scenario is that startups find product/market fit by leveraging demand capture channels. People search for a solution, the company provides that solution, and has a high conversion rate from the people saying they have that need. But no topic has infinite search volume, and of course it’s hard to rank higher than #1 on Google Search or Google Ads. Demand capture is basically a variation of the common YC saying: “Make something people want.”

Demand creation is the opposite. You attempt to go into the world, interrupt people, and convince them they need the thing you are selling. Demand creation is “Make people want things.” Now, of course there are many amazing companies that do that like Nike and Apple. But notice how large those companies are and how few software companies specifically win with demand creation vs. demand capture. This is certainly different compared to CPG, which can basically leverage either brand marketing or promotions. But for software, the safer and more traditional option when you run out of demand capture channels is to invent more ways to capture more of that demand that exists and grow organically with hopefully increased demand over time. Rank #1 organically on Google? Well, how about you buy a competitor and rank #2 as well? It’s what worked for Expedia and Booking.com, the two largest travel companies.

When founders talk about brand marketing much earlier in their lifecycle, it’s usually because they are unhappy about either their awareness or positioning. Founders feel like they’ve invented the future, and they do have customers who see it and live in that future, but most of the world is still unaware. If they could just get more awareness of how amazing this service is, or if they could just better describe why what they do is so amazing, their usage would 10x! And founders can point to previous examples of startups providing a new way to do things being quickly adopted. Look at Uber! Airbnb! Groupon! (rip) ChatGPT!

Let’s break the problem down between awareness and positioning first. I’ve said it before, and I’ll say it again. In startups, awareness is never the problem, and never the solution. Awareness building rarely translates into faster growth, can be quite expensive, and is near impossible to measure the effectiveness of. Startups should treat all marketing like performance marketing and measure effectiveness based on payback period even if the creative or medium is heavily brand-oriented e.g. TV or OOH. Why? Because awareness oriented marketing, when it works, which is rare, tends to have payback periods longer than the runway of most startups. So if your brand is compounding, it does so too slowly to save the company before it runs out of money.

Now, let’s talk about positioning. Founders think if only they could figure out a better way to describe their product like world class marketers do at Apple or Nike they would grow much faster. This is also mostly never as big of an opportunity as you think. For most examples where founders think positioning was the driver of growth, the underlying product strength explains the growth trajectory of the company. Uber and Airbnb were better and cheaper than existing alternatives. It’s pretty easy to do positioning when you’re better and cheaper. When founders raise this positioning problem, usually the issue is they are better, but not 10x better than existing alternatives, and they’re certainly not cheaper. Your product/market fit just isn’t as strong. As the kids would say, skill issue. That does not mean more consistent positioning or more appealing brand design can’t increase conversion on ads or the website, but it’s an optimization, not a game changer.

As you get to massive scale, normally well after becoming a public company, one can lean into brand marketing, and might need to especially if competition catches up on price point or value prop. Airbnb is a great recent example of reconfiguring the entire company to run less like a marketplace and more like a hardware company by bringing in a bunch of Apple execs. This is because they are no longer cheaper than hotels, and no longer tend to have unique inventory compared to other marketplaces like Booking.com that now have the alternative inventory you used to only be able to find on Airbnb. So their strategy is to leverage all of the good will from having lower prices and cooler inventory into an enduring brand by running the company like the best brand in the world. It’s a bold strategy, Cotton. And it’s not going to be right for your startup. Booking.com of course does brand marketing too (and I’m sure Idris Elba isn’t cheap), but the core of their strategy is still performance marketing. Don’t try to emulate these companies too early in your company’s lifecycle, or you’ll tend to just waste a lot of money.

–
Brand marketing is a force multiplier, not a life preserver. If your product isn’t yet meaningfully better or cheaper, and if you haven’t exhausted high‑intent channels, pouring money into awareness or clever taglines will merely extend the runway on your burn, not your growth curve. Optimize demand capture first, measure every dollar like performance spend, then graduate to brand when scale and competitive convergence demand it, which is normally much later than you think. Until then, keep your cash and your focus on being the obvious choice, not the loudest voice.

Feel free to ask Casey AI more about this topic.

Currently listening to Orchestra of Bubbles by Ellen Allien & Apparat.