Brandformance
Performance funnels vs. Growth funnels: what you need to know
September 2025In today’s digital advertising landscape, understanding the distinction between the performance funnel and the more expansive growth marketing funnel is essential for crafting effective paid acquisition strategies. Both models leverage paid media, but they differ significantly in structure, scope, and media planning approach.
This article breaks down the two funnel frameworks from both a strategy and media planning perspective, so you can identify where each fits your business goals.
Performance funnel: Driving immediate results
The performance funnel is a traditional paid marketing approach focused on quick, measurable outcomes: clicks, leads, and sales. It’s built around three stages:
- TOF (Awareness): Campaigns aim to introduce the brand, maximising reach through platforms like Meta, YouTube, and programmatic display.
- MOF (Consideration): Ads promote engagement, highlighting USPs and differentiators to build interest and drive evaluation.
- BOF (Acquisition): Tactics are conversion-driven, using urgency, promos, and strong “Buy Now” CTAs to close the sale.
“Performance marketing is about data-driven precision: optimize, test, and target to gain customers fast and efficiently.”
Strategic view: Performance marketing is grounded in data-driven optimisation, relying on ROAS, CPA, and conversion metrics. Strategies like A/B testing, ad rank tuning, and precision targeting are central to success. The goal: acquire customers as efficiently as possible.
Strategic view: Performance marketing is grounded in data-driven optimisation, relying on ROAS, CPA, and conversion metrics. Strategies like A/B testing, ad rank tuning, and precision targeting are central to success. The goal: acquire customers as efficiently as possible.
- Google Search
- Shopping Ads
- Dynamic Remarketing
- Retargeting on social
Campaigns are often short-term, highly optimised, and conversion-focused.
Growth funnel: Full-Funnel, sustainable marketing
1. The growth funnelDemand generation at the very beginning expands the performance model by adding two additional stages:
2. Retention at the end
This approach is holistic, combining brand building, performance, and post-purchase strategies for sustainable, long-term growth.
Growth funnel stages
- Demand generation (Topmost): Educates and informs, highlighting problems and presenting solutions. It raises the need for your product or service even before people realise they need it, creating a new interest category and positioning your brand as a thought leader.
- Awareness: Focuses on brand visibility and USP messaging to build recall and credibility.
- Consideration: Drives deeper engagement by reinforcing value, solving objections, and guiding the user closer to purchase.
- Acquisition: Uses strong CTAs, urgency, and offers to convert interest into action.
- Retention: Ensures post-purchase value through upselling, cross-selling, loyalty-building, and lifecycle marketing.
“Growth marketing is about the lifetime journey, turning awareness into loyal customers while driving long-term value, revenue, and brand impact.”
Strategic view: Growth marketing extends beyond conversion, building a full journey from awareness to loyalty. It values experimentation, customer lifetime value (LTV), and long-term brand equity. It blends performance KPIs with broader business impact metrics like retention rate and average order value (AOV).
The channel mix is wider and more balanced across all funnel stages:
- Demand Gen: Thought-leadership content amplified via LinkedIn, Meta video, and YouTube
- Awareness & Consideration: Targeted display, contextual ads, influencer amplification
- Awareness & Consideration: Targeted display, contextual ads, influencer amplification
- Retention: Email remarketing, paid loyalty campaigns, CRM-driven upsells on Meta and Google
Campaigns serve both brand and revenue goals, ensuring acquisition efforts feed future growth.
Stage definitions with paid media examples
Key differences: Strategy, definition, and media planning
Media planning considerations
“The performance strategy delivers quick returns but struggles to grow in tough markets or for new brands.”
The performance funnel is ideal for driving short-term revenue and immediate ROI, especially in mature or high-intent markets. But it struggles to scale efficiently in saturated environments or for new brands.
On the other hand, the growth funnel, however, aligns better with long-term business goals. It’s about building a predictable and sustainable revenue engine by:
- Generating demand before intent is expressed
- Strengthening brand preference through ongoing engagement
- Extending customer lifetime value through retention strategies
For example, rather than stopping at a purchase, you can retarget buyers with upgrade or cross-sell ads a year later, offering them a higher-tier product based on their past behaviour. This not only boosts revenue but increases loyalty and brand affinity.
Why growth funnels matter in paid acquisition
The growth funnel framework recognises that paid acquisition doesn’t end at conversion, it starts there. Two key elements prove this:
- Demand Gen: Builds new market segments by informing before intent is expressed. For example, a LinkedIn campaign highlighting inefficiencies in a current process can prompt curiosity before the user searches for a solution.
- Retention: Paid media helps maintain and grow relationships post-sale. A well-timed upsell campaign targeting previous buyers with higher-tier products (e.g. one year post-purchase) increases LTV without acquiring a new customer.
In a competitive and saturated market, this kind of proactive media strategy creates a defensible position and fuels compounding growth.
Growth funnels for One-time and Subscription products
A well-executed growth funnel can be a game changer for both one-time purchase products or services and subscription-based models. For one-time products, the retention stage opens the door to selling complementary or upgraded versions, effectively turning a single sale into multiple transactions over time. For subscription products, growth funnel strategies help extend subscription periods by continually reinforcing value, offering tiered upgrades, or re-engaging lapsed users with personalised campaigns. In both cases, the goal is to maximise the lifetime value of each customer, ensuring that acquisition efforts lead to sustainable, compounding revenue rather than one-off wins.
Choosing the right approach
- Startups or brands pursuing rapid short-term sales may lean heavily on the performance funnel, focusing on paid channels that provide speedy ROI.
- Brands seeking defensible, compounding growth integrate growth funnel thinking, using paid acquisition across the customer journey, from demand generation to retention.
“The most effective strategies blend performance, growth, and brand marketing to deliver results today and long-term impact tomorrow.”
In practice, the most effective marketing strategies blend both models, balancing the precision of performance marketing with the long-term vision of growth marketing. This is also what we call Brandformance: driving conversions today while building a brand that keeps paying off tomorrow. If you’re a CMO or marketing leader looking to master this balance, our free eBook Brandformance for CMOs is packed with strategies, examples, and media planning tips to get you started.
