Profitability is often one of the first words that come to mind when you think of performance marketing. Yet even with the channel's far-reaching financial success, there's still some way to go until the broader marketing sector can truly comprehend the benefits of performance.
We broached the very subject of performance understanding with six industry figureheads. Some will also be taking part in a panel debate as well as a roundtable discussion on this and a number of other topics at a4uexpo London next week.
Gary Bicker from Affilinet was also polled for his network opinion. As a merchant, Holiday Autos' Kevin Currie shared one or two choice words and Julia Stent from uSwitch provided a publisher perspective.
How widely discussed is the performance channel by big global media agencies?
Melanie Mack: In general brand planning terms, not at all, but in the direct/digital/search divisions a lot. It forms a major part of our integrated strategy when talking about digital, either in ensuring it’s managed internally and tracked/deduped/credited accordingly; or if managed elsewhere, that it’s not inadvertently inflating client costs for traffic that could be gained more cheaply through brand search.
Mary Keane-Dawson: Widely discussed, but not always understood. Often large media agencies see 'performance' as a catch-all swag bag, one that will involve a great many 'added value' over deliveries (i.e. publishers wont get paid for leads or sales) and invoice reconciliations, which will justify their need to control the spend.
David-Joseph Brown: From a large agency perspective, there is reluctance to commit entirely to the term. It can be a very difficult financial model to live with, since not all elements are within their control and their livelihoods are at much greater risk.
Gary Bicker: If we consider the industry in the older “affiliate” guise then it would be safe to assume that planners and buyers were traditionally responsible for the channel. However, in recent years there has been a definite shift towards creating dedicated teams, demonstrating that media agencies have been increasingly investing in the channel. The larger media agencies, which were not historically focused on affiliate marketing, have been working with performance media for many years but more recently we have seen a shift towards what we would all define as performance marketing - a broad range of digital business models are working on a pure pay-for-performance model. You only have to look at the agency names and brands using the channel to see how seriously it’s being taken.
Let’s face it though, Performance Marketing is the resultant evolution of affiliate marketing, not the culmination of pure traditional agency practice, whether offline or online.
Performance Marketing has grown in popularity and become mainstream as a result of the current economic climate. This makes sense since budget constraints and fiscal sensibility now prevail over brand marketing and non-directly correlated ROI generating activity.
Kevin Currie: I doubt it’s on their radar as their business model is based on selling media.
Julia Stent: In my experience, very. Agencies that do not consider performance to be a key part of their marketing mix are going to find themselves rapidly left behind. There’s probably a distinction that needs to be made as to exactly which part of the big media agencies we’re talking about here. For example, many of the digitally literate groups have very extensive performance and affiliate arms within their portfolio of agencies. However, more ‘traditional’ media buying agencies on their books might not have this same level of understanding, and to a certain extent might see acquiring that understanding as “someone else’s job”. We’ve made massive leaps forward over the last five years in that these performance marketing arms now actually exist and we shouldn’t undervalue that. Now is the time for the industry to be supporting those agencies in getting the rest of their group to sit up and take note - arguably, that’s where the future money lies.
Is the uptake of performance no longer a question of professionalism, but of boosting its recognition by more traditional marketers?
MM: Many higher level marketers haven’t ever spoken to an affiliate or network, so have no concept of levels of professionalism – good or bad. The negative PR is held more at the digital performance operations level (client side or agency) where affiliates are seen as entrepreneurial/greedy for everything they can get, and willing to try anything if they can get away with it. Most agency/client side marketers accept that this is understandable when people are working on a pure performance level, but in a sector where resourcing is always under pressure the costs/effort of policing activity is seen as a disincentive, especially when the marginal sales uplift is unpredictable.
MKD: Clients get performance because it's a pretty transparent medium that agencies, especially strategic agencies, have been slow on the uptake. Consequently, a lot of clients are controlling performance spend directly, especially in tier two and below.
DJB: It’s not a question of professionalism but a question of evolution. Our business model has been formed from this current sensitive economic mindset in the first place and been successful as a result, but for many agencies, there is still a commitment to the ‘retainer’ based model and a fear of giving in to solely a Performance Marketing incase all elements of their service end up going down the same road. They need to embrace it where necessary rather than seeing it as the poor relative to mainstream marketing services.
GB: I definitely think there is some way to go with professionalisation in terms of how we present ourselves as an industry. However the bigger issue here is finding the right people within advertiser businesses and working closely with them to apply the channel most appropriately to their needs in order to become an integral part of the mix. With the breadth of marketing professionals out there we cannot pigeonhole and define them as “traditional” or otherwise. Broader recognition can only be achieved when we are speaking the same language as the marketing professionals and their board executives, and ultimately delivering results and performance based on their KPIs.
KC: Professionalism remains an issue as does bringing in visitors who are still in the early part of their research process before committing to purchase.
JS: I think the key here is about being recognised for the right reasons. When I started out back in affiliates (longer ago than I’d care to admit), every other ‘industry’ conversation seemed to be defending ourselves from the backlash of ASOS CEO Nick Robertson’s oh-so-useful “grubby little people in grubby little studios” comment. I think affiliate marketing was well-known even back then, but the connotations were far from useful. I love the fact that those conversations really do feel like a thing of the past now - to hear a marketer bring up that debate, they might as well be talking about pop-up campaigns on dial-up internet. Flip back to modern day and the focus is so different - now we’re all grown up, it’s about us proving ourselves and I think our rebrand to performance marketing is a fantastic step.
How can the performance industry educate the wider marketing sector on its benefits?
MM: I think it’s about proving marginal sales growth without impacting margins. The dominance of voucher sites have been a step backwards for this and are mostly used as a way to prevent leakage rather than to inspire growth.
Sustainable growth is all about honest tracking & attribution – for both clients and affiliates. Clients need to stop seeing it as cheap channel and being lazy or stingy about their models, and affiliates need to stop expecting to be paid handsomely for just adding an extra click to the journey.
MKD: Publish some audited figures, raise its profile and emulate successful organisations such as CMA et al.
DJB: Segmentation is the key to online operations. Using Data the right way drives greater efficiency. It may be a hard pill to swallow for some channels since segmentation exposes the cannibalization of markets, i.e. various campaigns reaching the same consumer and a lack of correct attribution post-campaign fails to expose this. But it is the way it will be and marketers need to learn how to face the music, re-position and then get on with it, after all, it may also expose some wins they weren’t necessarily being credited for.
GB: For me this is quite simply being in the places where people, brands and businesses who are not familiar with the channel are operating, doing their research, networking and learning. As an industry being consistent and using the same language when promoting the true virtues of pay-for-performance across the digital mix, will get the ears of more relevant people and decision makers. We have to not only consider the what, but also the how. Many other marketing channels have very clear and consistent ways of researching, planning, preparing, implementing and measuring, and I believe that if the performance channel can find standards in the quality and value of its approaches, not just state the case that it offers great ROI, then we will be taken more seriously in marketing plans across the board.
KC: By clearly and convincingly communicating how it adds value to the marketing mix.
JS: By living them, every day. I would say it’s widely held that our key currencies are innovation and accountability. If that’s how we’re going to sell ourselves, then we have to be able to back it up in practise. If we say performance marketing is the fastest moving and the most dynamic, then we need to make sure that our conversations with marketing stakeholders reflect that - we can’t keep rehashing the same old one-trick-ponies of search and incentivised traffic. Equally, if we’re going to sell ourselves off the back of our accountability then we need to make sure data is accessible, accurate and insightful. We can easily fall into our own trap of over-complicating what should be a simple conversation with inscrutable technical jargon, or on the other hand failing to make proper use of the substantial data resources we have at our disposal. If we can be living, breathing examples of the benefits of performance then this is the biggest education piece we could ask for.
Do you think there will be one substantial innovation that will bring performance into the marketing limelight or a more incremental chipping away?
MM: PR from a large advertiser would be good, but it’s difficult to see as advertisers may not want to tell their competitors how much they rely on any one channel. I think it’s a case of going client by client, and being honest about campaigns that will simply not provide enough volume to be worth the effort on client or affiliate’s side.
MKD: I think that if performance marketing specialist aren't mindful, media agencies will obliterate them.
DJB: I think our VeAnalytics platform will break the mould. It is free and will be more powerful than Google Analytics and built with segmentation in mind. Overall, the industry will thrive on data driven solutions and marketers need to embrace Performance Marketing technologies and networks in order to keep up with the attribution they are starting to report to merchants.
GB: I think we need to be careful as innovation can take many forms and to some degree is very subjective dependent on your position in a conversation. Sitting with a client last week, I found the ‘brilliant basics’ approach he and his senior staff were taking quite innovative. They wanted to ensure that they did not compromise success by getting distracted as a result of all the data, ideas, challenges and opportunities that they were being inundated with every day. Also, the question assumes that overall the channel is not ‘in the limelight’ but I would argue that many businesses and brands operating at all levels and from all sides of the performance mix are already very much in the spotlight.
KC: Without some major innovation it will suffer from incremental erosion as a smaller number of publishers take a greater share of the space.
JS: I would be surprised if one major innovation could completely change the landscape. Looking back, the last ‘substantial’ changes were arguably well over ten years ago (the launch of AdWords, CD Wow!, Amazon, first UK affiliate programmes, etc.), and were all to do with the very early days of our industry. The only contradiction to this I can see would be if a major player changed substantially (dare I say ‘Google’), although recent evidence suggests even then change would be slow-burning. However, I think we’re underestimating the serious progress we’ve made in our brief history - I would argue “incremental chipping away” should be rephrased to “continued leaps and bounds”. Technology, business practises and company sizes have all changed for the better at a rate that I believe is rarely emulated in other industries. We’ve grown up pretty fast, and I see no reason at all why we should think this will slow down!
What part do smaller publishers have to play as performance pushes for mainstream marketing popularity?
MM: I think they can be very influential, but need to have bullet proof tracking and to negotiate if possible for greater recognition/share of commissions for being the first click/content affiliates rather than being lost amongst the voucher/ppc behemoths.
MKD: Innovate in terms of driving traffic, sales and data.
DJB: Smaller publishers are key in many areas but they often lack the big picture, positioning elements that agencies are good at. They will be well served to recognise the value of marketers and agencies in order to not only drive mutual value but also, to maximise the holistic approach on behalf of merchants, rather than making a merchant’s job harder by making them have to manage multiple data sources without helpful segmentation.
GB: The same as any other; they provide new and innovative opportunities to marketers who are working within the channel. Again, publishers should be distinguished by their requirements and offering, rather than by their size. As this industry continues to evolve and mature, we should be careful to ensure that we standardise terminology and how we reference our tools and resources. All publishers who take their business seriously should, in the first instance, be seen as an opportunity, it then comes down to relevance and appropriateness to the advertiser’s goals and desired results. By creating commercially-viable partnerships this will ultimately be what proves the value of performance.
KC: Smaller publishers add credibility and allows for a greater spread of risk.
JS: My advice to smaller companies would be to bear in mind that their behaviour today will directly affect their performance in the long-term. The successful small companies of today are, of course, the big companies of tomorrow. Now is the time to be building a reputation for transparency, innovation and accountability, really taking the time to help the advertisers you work with understand your approach. Not every small company can afford to pay for expensive memberships or spend days out of the office attending seminars, but as I said before the best way to help push forward the industry is to live its values. If there’s one thing I’ve learnt about performance marketing it’s that we all have very long memories. The right approach now shapes not only your future reputation but also helps us to grow the industry for tomorrow.
Attendees of a4uexpo London will be able see more debate about the subject of performance marketing’s perception, professionalisation and more during a panel titled, ‘Performance Marketing – The Value & Perception Debate!’
The session’s on day two at midday in Balmoral. Mary Keane-Dawson will be moderating David-Joseph Brown, Chrisian Hauth, Melanie Mack and Julia Stent. If you have a burning question or topic for the panellists, then you can email it to Christine Traub or Chris Johnson.