Nearly six months into 2014 and the rapid growth of the prosperous performance marketing industry shows no sign of slowing down.
From IPOs and takeovers to big hires and venture capital booms, it seems the success stories from 2013 have spilled over to 2014. As the performance marketing and advertising space continues to firmly cement its place across multiple channels and business sectors, I thought what better time to review the landscape and share my views on the subject.
A Paradigm Shift
It seemed to me that 2013 was a huge year for product development across the industry, and following on from this I feel certain that 2014 looks set to be the year that even more advertisers and publishers begin to take advantage of the burgeoning performance marketing scene.
While paying on measurable results makes perfect sense, I think the concept seems to have sparked a real paradigm shift of late as more and more companies are now discovering the benefits of the performance-based marketing model.
On explaining the performance marketing concept (for those that aren’t as au fait), it is simple really - with all of the available digital content out there today, performance allows you to buy digital ads and only pay for the ads that are performing.
You can still get all of the exposure of traditional spray-and-pray digital spend, but you are only paying for the ads that are converting into whatever that actionable item is that you want. So if someone fills out a lead or somebody purchases something, you are only paying that publisher for that specific action – if you think about it, that’s really where all digital spend should be going as it’s a measurable action.
Put simply, performance marketing and advertising is for anyone selling a product or a service with the aim of expanding their reach beyond the local environment.
From big time retailers to small niche businesses, anyone who wants to track how their marketing and advertising campaigns are converting, and then only pay for those leads that do convert, needs to be in the performance space.
Technology is the Industry’s Backbone
While this all makes complete sense, and seems a logical concept, we have noticed a more sudden increase in interest from advertisers and a boom in business, not just at CAKE, but across the wider industry.
I attribute this to the advancements in technology and an increase in tools. Such technological developments are finally giving marketers the core and vital information they have been craving, to prove exact ROI across multiple channels. They are also now able to cultivate the data they now have in a more proficient manner.
It’s what we do at CAKE that we see as the backbone to the whole performance marketing industry - and that is technology. The development of unique technology, the access to real-time analytics and tracking for online activity, and utilizing and then nurturing the data available are all key factors in ensuring a real ROI.
I can’t stress enough the importance of “marketing intelligence” and how this has given marketers a fresh opportunity to discover the vast pools of data they now sit on.
Signals of Growth
While the Internet Advertising Bureau (IAB) may not have such a big presence in the US, compared to the UK, this doesn’t stop results from the local IAB UK and PricewaterhouseCoopers’ (PwC) Online Performance Marketing study making an impact across the pond here in the US.
The UK-commissioned study, unveiled earlier this year, but relating to 2013, showed that affiliate marketing and lead generation ad spend hit £1 billion, up by 15% (on a like-for-like basis) compared to 2012. For us this was yet another great benchmark for the whole industry and again, was a strong indicator that 2014 looks set to trump this figure in the next study.
Another sign of the industry evolving is the amount of consolidating companies are doing. For example, Tel-Aviv-based global performance marketing company, the Matomy Media Group, bought U.S. affiliate network MediaWhiz. It then retired the brand and folded its services under the one company name.
ValueClick Media then decided to consolidate its portfolio of brands under the one new name, Conversant, and Rakuten LinkShare, which continues to add to its digital content offerings by making more acquisitions, also consolidated its affiliate marketing, display, re-targeting and paid search management and lead generation businesses under a new “Rakuten Marketing” umbrella brand.
Investment, Heavyweights and Specialisms
Three other major signs of growth across the industry include the investment of capital into performance marketing companies, big global companies acquiring performance-related companies, and the launch of more specialized performance businesses.
Such examples include HasOffers securing $9.4 million investment and call marketing company Invoca raising $20 million in Series C funding. This year has also seen the likes of Google and AOL making their move into the attribution side of things with their recent purchases.
Only last month (May) Google bought online advertising attribution company, Adometry; AOL snapped up marketing attribution software business, Convertro; and Rakuten Marketing acquired DC Storm.
By having such huge heavyweight companies invest in the space gives added validity to the industry and acts as great testament to the fact that the performance space is the future for digital ad spend.
In addition to this, as the industry grows, another trend is that more specialized performance marketing companies are also appearing, such as advertising fraud detection company, Forensiq.
While all this is great news, we just need to make sure that as an industry we are shouting about it too. All too often brands like to keep their cards close to their chest when it comes to their marketing successes and endeavours, which is why we, as an industry, need to keep talking about it, highlighting developments and celebrating achievements.
When it comes to looking ahead for 2015 (which yes we are already doing believe it or not!), I anticipate a continuation of the above growth trends, big players exploring more performance-based channels, extra interest in the industry from firms previously unfamiliar with the space, and development in attribution and understanding of the customer journey.