Performance marketing has come a long way in the past decade. While once we were talking about the impact of PPC affiliates running direct to site activity and brand bidding, the talking points in 2014 revolve around multi-channel customer journeys and tracking activity across multiple devices.
While the landscape has altered considerably and performance marketing is challenged to a greater extent to demonstrate its value in driving incremental activity for advertisers, the principals have remained the same.
Performance marketing has always been premised on paying for the desired outcome for advertisers. Whether this is generating sales and receiving a percentage of the basket value as commission (CPA), increasing the volume of traffic to a site and paid on a click (CPC), or generating leads (CPL).
A wide range of publisher types make up the performance marketing ecosystem and it is important for advertisers to understand how to work with them effectively to achieve their goals. Where once publishers with the same promotional methods would be considered the same, they have now demonstrated they have varying audiences and customer profiles.
For example, the traffic quality of various voucher code sites can vary from one to another. By looking at the data available, advertisers are able to understand the publishers that are effective at driving profitable customers and reward them accordingly.
Performance marketing has evolved with the technology that has driven its growth, providing more opportunities for publishers to enter the space, and for advertisers to benefit from their activity. For years we had discussions around “the year of mobile” but it is only in the past couple of years this has really accelerated.
With traffic originating from mobile devices exploding over the past year, advertisers are now thinking mobile first rather than merely having this as an afterthought. Across Affiliate Window we now see almost a third of traffic originate from a mobile device. With half of this coming from smartphones, it is clear how mobile is shaping performance marketing and will do so increasingly over the next few years. Advertisers without a mobile strategy will be missing out on a considerable number of opportunities.
Moving away from mobile, advertisers are running increasingly sophisticated campaigns. While once the sole objective of advertisers was to generate sales, they are now focused on generating more valuable customers. Value can be seen as customers staying with the brand for a long time, purchasing frequently and spending increasing amounts.
Value of a customer
The KPIs of determining a valuable customer will vary from advertiser to advertiser but with the sheer volume of data available, some sophisticated modelling can come into play to determine the publishers that are generating valuable customers and a commission structure that rewards this favourable activity.
Increasingly, advertisers are also focussing on attribution. Understanding the touch points within a customer’s path to purchase in order to spend marketing budgets effectively. Attribution should not be about splitting commission (this provides a number of problems in itself), but about spending budgets effectively to increase ROI. We have previously written a white paper to share our thoughts on attribution.
Personalisation is set to play an even more significant role within performance marketing. The leading publishers are using their data to understand their visitors and provide them with personalised offers. Cashback sites for example, are using their member data to target customers with relevant offers and also understand the product categories they are likely to be purchasing from..
In summary, performance marketing has grown in sophistication. This is not surprising considering the growth of the channel. The latest OPM study from the IAB in conjunction with PWC indicated the channel drove £14bn in revenue for advertisers. With this increased spend, advertisers are further questioning the value of the channel. While the levels of sophistication, reporting and analysis have grown, the principals of performance have remained the same – paying for a desired outcome.