Performance Marketing Is Underperforming
“Performance,” which connotes desirable traits like efficacy and enhancement, crops up as a descriptor for everything these days — from clothing to auto parts to body wash and, yes, even to marketing. Every channel and aspect of advertising parades as “performance” to appear accountable to outcomes. As a result, the category of performance marketing — once wholly focused on search, social, native, and affiliate marketing — is diluting. This dilution, along with three trends, is causing performance marketing’s underperformance:
- CMOs are under pressure to create financial value. This pressure is exacerbated by the fact that 40% of CFOs believe marketing investments should not be protected during a downturn. Fears of a recession make this fact increasingly ominous.
- Data deprecation hamstrings marketers’ “most effective” tactics. Marketers who exploit audience targeting to lift return on advertising spend (ROAS) are punished by data deprecation, which causes broader audiences, weaker intent, and worse performance. One CMO shared that, because of iOS 14, her Facebook cost per acquisition is “up triple digits and spend is down 90%.”
- Diminishing returns demand channel unification. Search and social can feel like sources of endless ROI, but they have diminishing returns. When marketers increase spend past the point of diminishing returns, they saturate core audiences, cause excess frequency, and force spend on less responsive audiences.
To lift performance, marketers must unify offline and online channels. This requires embracing people-led (not channel-led) planning, developing more compelling creative, and optimizing for marginal (rather than average) costs. When marketers unify offline and online channels, they can profit from the halo effects that offline channels — like out-of-home and TV — have on channels like search and social. Exposure to TV ads, for example, causes consumers to search for branded keywords at the expense of generic keywords, lifting impulse buying intent. Similarly, exposure to out-of-home ads delivers high levels of memory encoding, which lift mobile response rates.
Check out our just-published report which explains in more detail how you can take advantage of performance marketing’s dilution to make $1 perform like $1.50. If you have questions or want to discuss how to make this shift within your own company, schedule a guidance session.