If you are still using the age-old adage: “Half the money I spend on marketing is wasted; the trouble is I don’t know which half,” you are most likely sitting on the wrong side of the table.
Marketing has evolved beyond just creating and deploying messages to convince buyers to engage with a product to leverage advanced marketing technology to target select demographics, monitor feedback, optimise deployment, and measure marketing efforts to deliver better results on a budget. This entire process can be broadly referred to as performance marketing.
Simply put, performance marketing refers to data-driven marketing and advertising programmes that are designed to pay only after specific actions are taken. These actions could be clicks, installs, leads or even sales and they can be evaluated and adjusted in real time. This medium is completely transparent in terms of marketing spend and can undoubtedly deliver the desired marketing outcomes when used effectively. As a result, it has become the preferred medium for marketing professionals, particularly those under pressure to deliver results.
In the last five years, there has been a significant increase in the adoption of performance marketing across industries, particularly in consumer-focused industries. Global ad spending is expected to increase 17.6 percent from 2021 to $1.8 trillion by the end of 2022.
However, because it is mostly paid acquisition, there are some reservations about how effective this medium is in helping brands build genuine connections with their audiences.
Performance marketing is becoming more popular, particularly among early-stage businesses seeking rapid growth and customer acquisition. In order to build genuine brand connections with customers, performance marketing must be balanced with a creative organic strategy.
Andrew Chen, in an article titled Paid ads addiction, explains how paid acquisitions, despite its potential for quick results, can kill small organisations, suggesting that the numbers gained during paid acquisitions lose effectiveness over time without the other organic acquisition activities that help brands build an emotional connection with customers. The absence of an emotional anchor creates a gap in the authenticity of the brand’s messaging overtime.
Strict targets assigned to marketing teams by management can be attributed to the need for quick results to meet set KPIs. However, because performance marketing channels change frequently due to internal algorithm and data, campaign results are sometimes influenced by changes in channel features rather than the team’s direct efforts.
A high level of transparency with performance metrics, whether they are great or not, is required because these metrics provide critical data that can be used to improve the performance marketing flywheel.
When organisations do not create an environment in which teams can be honest about their results, marketing teams feel pressured to inflate their results in order to meet KPIs by using lowest common denominator platforms that deliver just enough traction to hit set targets but are low on impact and customer engagement. As a result, seemingly successful campaigns fail to deliver on impact in practice.
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Despite the barriers that performance marketing creates in developing genuine connections between a brand and its customers, we cannot ignore the quality of data that can be harnessed through these channels. The data obtained is useful for effective planning of marketing processes.
In line with the importance of data in creating impactful campaigns, search marketing is one performance marketing channel that is highly effective in delivering significant results. However, it is most commonly used as a bottom-funnel channel for ad deployment and brand visibility.
What most marketers overlook – and this is quite interesting – is the level of data and insights available through search marketing platforms. Simply paying more attention to the habits of search platform users can assist digital marketers in effectively distilling insights provided by search marketing. These insights can help in the design of consumer journeys to improve marketing results.
Search marketing insights could include the content type, format, or language (indigenous or mainstream) that will best resonate with the intended audience. These insights can also be applied by other teams within the organisation, such as product development, to improve overall user experience and functionality.
To generate significant data over time, performance marketing practitioners should explore an open budget system that allows for experimentation and testing through the use various channels, creatives and audience targeting parameters to determine which channels work best and leverage them.
To generate insights from data obtained through performance marketing, data analysis tools such as BI, traditional spreadsheets, and SQLs could be used. More advanced marketing practices deploy a dedicated data analysis team to analyse large caches of data to guide subsequent marketing decisions, improve campaign performance and product designs.
Performance marketing has also improved marketing automation over the years, and this is likely to continue as AI/machine learning evolves. Automation eliminates the possibility of human error by reducing repetitive tasks in digital marketing such as ad bidding, creative uploading, and ad optimisation.
The core of a brand is embedded in its messaging, a fine balance of organic strategy to create brand resonance and performance marketing to provide the radical push for conversion is required for impactful marketing.
As a result of increased adoption in performance marketing, automation and AI are significantly replacing non-strategic human marketing tasks. Hence, channel managers and marketers must focus on aspects of campaigns that are geared towards creative strategy and integrated channel planning. There are still several marketing functions that AI/machine learning cannot currently perform, but practitioners are optimistic that future advances in technology and consumer behaviour, combined with proper data use, will help improve.
Akwuruoha, lead strategist at GURUU Consult, writes from Lagos
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