1. A real gap in the industry
Performance marketing is an experience gap in many businesses. Not so long ago, one or two forms of online marketing channels used to work quite well but as competition is rising and more money is switching over from traditional media to online and digital, that’s not the case anymore. We are seeing channels like Google Ads, Facebook and Instagram costing more and more for clicks and impressions which is obviously driving the cost of acquisition higher. Now there is a tremendous need for performance marketing especially with the abundance of channels and sources you can use to generate traffic including Paid Search, Paid Social, Referrals, Influencers, Email Marketing, Organic Search and Programmatic. There isn’t a challenge specifically with driving traffic but more so on driving traffic at an affordable or attractive cost with impressive returns.
There is an abundance of talent when it comes to managing specific channels. We see Facebook Marketing experts everywhere. We also see SEO experts everywhere. And so on. But we don’t see performance marketing experts that understand the ever-evolving complex digital marketing landscape, who know and understand how to create the right channel mix or at least run accurate testing across the board to determine what the digital marketing framework should look like.
Is this trend aka the need for performance marketing experts – a temporary phenomenon or more of a long-term shift that brands need to embrace and act quickly on?
According to sources, a few large brands like Hyatt Hotels and Coca-Cola have gotten rid of the CMO positions as part of merging the commerce functions under one hub and under one executive who is responsible and accountable for both; the marketing budget and revenue targets. Having marketing budgets sitting under CMOs who are typically not accountable for sales and revenues is a thing of the past – at least for some for some organisations.
We are also seeing smaller brands and start-ups ditch paid media altogether and achieve incredible results. For example, the bedding brand Parachute that believed paid social and paid search were too expensive for a competitive product category like mattresses. So instead, they relied on PR, influencers and word of mouth to market the new product. Working with a PR firm, they got their articles and stories organically shared online through editors and influencers and according to them, the impressions they received would have cost them $2 Million on Facebook – a 100 times more than what they had spent. This proves that once again, that earned media and organic reach has its place and role in branding and sales.
The current marketing landscape has an abundance of channels, backend solutions, and platforms designed to get people’s attention and drive traffic to your door. Marketing technology is one of the fastest growing industries. It’s no longer a question of what technologies are available but rather what and how we use them.
So, how do you improve the state of your performance marketing and your ROI?
You essentially need to find and hire a Full-Service Digital Marketing agency with strong capabilities in performance marketing, creative, online marketing, UX and copywriting.
2. Adopt an ‘always-on’ testing framework
What should you be testing? Well, almost everything with an emphasis on creative changes whether on the ad side like ad length, ad creative, ad message, etc. as well as changes on your conversion platforms like website, landing pages, app, etc.
Essentially, your testing and attribution framework should be used to understand how different channels perform and the net positive or negative impact your changes (including channel mix) have on sales and other acquisition metrics.
This is not only essential for your digital marketing strategy, it’s an absolute must.
Regardless of the channel, and as long as you can measure to some degree the impact through metrics that matter, you should be constantly testing different variants of your campaign. Even in paid search where the room for variations especially with creative side is limited, testing will give you insights on what’s working and what is not. Your conclusions and learned lessons can be applied to other channels. For example, you run Google Search Ads and have found that Ads that use ‘why not try our new …’ performs better than ‘give our new … a try’. You can make a case that the choice of words in the former engages your audience better and perhaps decide to test it in your YouTube videos.
Your performance marketing depends on a multitude of factors including the channel, business model, and campaign objectives. But at the end of the day, it ultimately boils down to whether your creative engages and compels your audience to click through or not and how that cannibalises on other channels and what return on ad spend you are getting.
3. Set up your measurement and attribution framework
Brands that heavily rely on digital channels haven’t fully figured out their attribution strategies and quite possibly, there isn’t one size fits all when it comes to attribution anyway. But it doesn’t seem that anyone has found a formula that they’re quite confident about. The problem we are trying to solve has multi-variate components that seems to expand as we continue to have more and more channels, ad types and formats.
So, how do you set up your attribution framework? Build your own
The truth is that there’s no single, correct way to measure attribution. Some performance marketers rely on last-click attribution which means you are basically saying that the last ad a customer clicks on before buying a product is the one that is brought the sale. This strategy often leads to brands ignoring the top-of-the-funnel advertising which many argue with data, that top-of-the-funnel is just as important if not more important than bottom-of-the-funnel advertising. And vice versa.
Even attribution requires testing! The good news is, attribution software like tray.io can quite possibly help solve this puzzle by helping you create a custom multi-touch attribution model that goes beyond first-click or last-click to get real insights.
Through a platform like that, you can connect any channel including email, display, social, paid search, SEO, mobile, and video to understand the impact of your ad spend by normalising your data and ranking it across different multi-touch attribution models. This will ultimately help you build and refine your own multi-touch attribution framework.
4. Focus on a balanced funnel
In the Direct to Consumer world, it’s been easy to get sucked into the lower funnel especially over the last few years. This is sometimes called ‘navigational media’ where you take someone who has expressed some interest in your product or service and try to convert them using whatever sales and conversions strategies you have in place. But primarily focusing on that approach means you are not really differentiating your business or brand and sooner or later will end up in an inevitable war with your competitors.
But as in the last decade established brands have shifted their marketing budgets away from brand-building advertising to offerings, we are seeing the opposite happen now where mega brands like P&G have realised they need to tilt back the ship and give enough focus and spend on the upper funnel to fight pressure on sales and market share.
Before the cost of advertising in paid search and paid social has become quite expensive, a lot of brands poured a large portion of their budgets into digital channels without completely understanding the nature of those channels – in efforts to capitalise on new trends, technology and lower cost of advertising. But many channels being more so on the bottom-of-the-funnel end, have led to brands leaving the top-of-the-funnel to competitors and as a by-product, under optimised performance marketing. The end result is a lower performance of the brand. Why? A research conducted on the correlation between the reduction in true top of funnel brand spend and poor performance in sales. This is also consistent with McKinsey’s research that stresses the importance of winning at the consideration stage. The rationale here is that engaging potential customers early in the purchase cycle and getting your brand ingrained in their minds before it’s time to make a decision.
An organisation with a mindset of pursuing immediate results tend to get them spending budgets on immediately measurable media which can be effective for brands with established names and awareness. However, that kind of marketing doesn’t create emotional connections with your consumers. Instead, brands need to have a balanced funnel building strategy. To do that, you need to tackle the following
- Research exactly who your customers are
- Find out where and what channels they spend most of their time
- Analyse the nature of content and communications and ads on those channels
- Start with allocating at least 20% of your budget on top-of-the-funnel content & channels
- Measure top-of-the-funnel and bottom-of-the-funnel metrics to assess effectiveness at each stage
- Measure ROI on each channel and overall through an attribution framework that works for you
5. Experiment new channels and new ad and content types to boost your performance marketing
If you are like most other businesses that are focused on performance metrics to be on top of your performance marketing, you care a great deal about driving new customer acquisitions, subscriptions and purchases. You know, the ‘metrics that matter’.
Have you maximised your potential on YouTube?
YouTube is stepping up its DTC efforts at a time when brands, driven by performance marketing, are on the hunt for alternatives to saturated platforms like Facebook, Instagram and Search. These platforms still contribute a large portion of DTC brands’ digital ad spend as we speak. The current trend is diversification and branching out of these channels to eliminate complete reliance on them and improve return on Ad spend. Google has been focusing on YouTube recently to monetise and leverage the platform to capture more Ad spend their way especially from DTC brands. With pre-roll ads which are relatively cheaper than other alternatives, and leveraging video, brands can leave an impact on consumers. Another option on YouTube is the new ad format called Discovery Campaigns which let’s you reuse existing image assets and render them across the Google network including of course YouTube and it’s home feed.
Are you advertising on podcasts?
Podcasting is a viable channel and still in the infancy stages. In 2018, advertisers spent $479 million to advertise on podcasts in the U.S., a whopping 53 percent increase from $314 million in 2017 and estimated to reach $1 billion by 2021. What makes podcasting quite different compared to traditional media is that it is relatively decentralized yet far more accessible, considering that the barriers to entry are significantly lower. Anyone with basic audio and video equipment and software can start a podcast.
Perhaps the downside at the moment for podcasts is attribution and reporting but brands are tackling that with promo codes and surveys to understand the impact. Think of podcasts like influencer marketing. You are tapping into the world of the loyal fans of the podcaster (influencer) which when executed properly, can bring high returns.
If you decide to give podcast advertising a go, here some valuable tips
- Front-Load Your Ad: Put your important content first
- Study your audience and understand their state of mind when listening (check this guide)
- Tailor your Ad messaging to the podcast audience
- Include A Measurable Call To Action
- Mention your website and leave a link when possible
6. Focus your performance marketing on short-term and long-term wins
We live in a world where instant gratification is dominant. And, with purchases only a click away and smartphone in every pocket, brands and businesses are fighting for attention more than ever. It’s a game of who gets more attention especially if you are a business that transacts online. Typically, those brands tend to have more focus on quick gains and short-term strategies. While long-term strategies always provide short-term results, short-term tactics practically never have long-term benefits.
The downside to focusing on and measuring success on a short-term basis is that it sometimes leads to inaccurate conclusions about effectiveness and returns. For example, if you run a Google Search Ads campaign and generate $5 Million in revenue from a $1 Million in ad spend in that month, your ROI is 500%. But, what about all the other prospects and visitors that didn’t purchase or sign-up because they haven’t made up their mind yet? Businesses with month-in month-out ROI focus, tend to ignore that cluster of buyers and often leave money on the table to their competitors because they are focused on converting buyers now. This can be of cost to the brand growth in the long-term as well as your sales and margins.
When it comes to performance marketing, you need to be clear and set on your short-term objectives as well as your long-term goals.