The recent IAB / PwC study on online performance marketing (OPM) made one thing clear: the state of the performance marketing industry has never been stronger. Growth, both in the UK and US, is surging. Increasingly, senior brand marketers, agency executives and advertisers are recognizing the value of OPM as brand- and sales-building channels.
One critical group requires performance marketers’ dedicated attention: chief marketing officers. As their influence grows within organizations, performance marketers will need to allocate additional time and resources to properly educate CMOs.
That education can start with a basic 101 guide to performance marketing. A more advanced guide will be provided during my presentation, “The CMO’s Guide to Performance Marketing,” at the Performance Marketing Insights conference, March 12-13, in New York City.
Here’s a brief overview of what I plan to discuss.
The Long View of Performance Marketing
Long dismissed as a niche form of online marketing, OPM has become a powerful force in the digital media ecosystem. According to a source, performance marketing generated $21 billion in online advertising revenues in 2011. Affiliate marketing comprised the largest share of revenue growth for this marketing channel.
For CMOs, performance marketing is no longer a channel they can ignore or delegate to junior-level managers. It is now a driving force for their brands’ online growth and customer acquisition efforts. It requires CMOs’ devout attention to properly utilize and scale in order to realize long-term customer-acquisition value.
A central driver of the success of many OPM campaigns is affiliate marketing.
Affiliate marketing has existed for more than a decade. It helps advertisers achieve their ROI goals by utilizing publishers (affiliates) to conduct their marketing efforts via multiple media channels on a pay-for-performance basis.
Affiliate marketing can be used for any vertical, brand, company, language, timeframe or demographic. The Internet is open 24/7/365, so actions can be tracked and reviewed with detailed metrics whenever desired.
Affiliate marketing is a useful testing ground for CMOs who desire online marketing channel options, instant gratification, speed and a clear measurement of Return on Advertising Spend (ROAS) or Return on Marketing (ROM) investment. Many affiliate marketers are experts in industry metrics and traffic sources. They can help CMOs develop campaigns based on long-term brand and customer-acquisition. This is critical as the industry evolves into a larger mobile-consumer target. These experts are at the forefront helping accelerate knowledge and results for the next growth center of performance and affiliate marketing. This will be similar to what occurred with social media, as sites like Facebook, LinkedIn, Pandora and others went public from valuations made primarily on affiliate marketing ad spend revenues.
The Benefits of Affiliate Marketing
Affiliate marketing is the smartest online advertising investment CMOs can make. Here are five reasons why that is the case:
- Twenty-one billion. Performance marketing generated $21 billion in online advertising revenues in 2011. This isn’t a niche segment of the online marketing industry. Affiliate marketing is a mature and profitable industry in and of itself and one that CMOs should invest in as part of their integrated marketing campaigns.
- Small investment leads to big results. It takes a very low investment to test into various media channels, at a recommended spend of $10,000 per three media channels.
- Multiple channel reach. Affiliate marketing includes all types of online marketing, allowing a CMO to launch his test campaign(s) in up to three different channels, such as email, search and social media.
- Speed to market. Once an affiliate marketing campaign launches it often takes as little as one to two days to fulfill the budget and measure results. This is unparalleled in any other marketing vehicle.
- Measurable results. CMOs pay their affiliate network only when an action occurs, be it a sale or a lead. They also receive critical analytics from users’ activities across their website. There are no other channels in marketing that have such a specific and actionable ROI focus, making affiliate marketing easy to evaluate.
The future of digital marketing will include a mix of performance-based lead-generation campaigns, social media engagement, search, and online advertising. Performance marketing is the right answer to CMOs’ evolving digital marketing and customer-acquisition challenges.
Join me at 09:30 EST March 12 at Performance Marketing Insights for more on how CMOs and brand marketers can incorporate performance marketing into their online advertising strategies.