With the performance marketing industry beginning to look back at the events of 2016, the time has come to take stock on the key happenings in what has been a fast-paced year.
PerformanceIN took the opportunity to speak to four performance marketers from across the Atlantic, hoping to get to the bottom of how the US (and Canada) viewed the practice, as well as their memories from 2016.
Provided by four experts from GDM Group, SourceKnowledge, AppsFlyer and Taptica, the following words span unique definitions of performance marketing, its challenges, successes, predictions for the coming year, and more.
Summarise performance marketing in 50 words or less...
Dmitry Atamanyuk (CEO, GDM Group): I’ll be able to make it four: ‘the land of opportunity’. Performance marketing is the best marketing model to date, with diverse and flexible ways to achieve any promotional goals and measure the efficiency of your every step, constantly adjusting campaigns to their peak output.
Patrick Hopf (president and co-founder, SourceKnowledge): In the sphere of digital advertising, we define performance marketing as the antithesis of brand advertising. Performance marketing differs from traditional marketing in that it tracks and evaluates KPIs that have a direct business value, and are correlated to measurable actions carried out by users. By analyzing post-click behaviour, campaigns can optimize marketing collateral to lower costs and increase revenue.
Jasper Radeke (director of marketing, North America, AppsFlyer): Performance marketing is any marketing activity with measurable, quantifiable business objectives - from awareness to sales and ROI. In our digital age, even upper-funnel brand campaigns have come under the performance marketing umbrella when they are properly measured and optimized toward their stated objective.
Galia Reichenstein (Galia Reichenstein, COO and head of sales, Taptica): Performance marketing is results-based marketing - no fluff and completely dependent on actions. It’s about defined and measurable KPIs - which can have multiple layers - that ensure marketers are optimizing their ROAS [return on ad spend].
What's behind the industry's soaring growth to date?
DA: Performance marketing works for businesses of all scales. It’s a straightforward, transparent process that provides control over all aspects and variables of the conversion funnel for all parties involved. Publishers have a lot of data to optimize around and find the right pitch for the right audience, while advertisers get to control the channels they promote through and the way their brand message gets delivered. Anyone making the right decisions with their data can make money, and from that point on the only concern is growth and maintenance.
PH: There are a number of factors, the most prominent being ad viewability and fraudulent traffic. In fact, 30-50% of ads served can be attributed to one of these factors. Performance marketing strips away this issue, and synthesizes delivery to high value audiences. The results are immediate and measurable.
JR: While the marketing team has delivered media models that show correlations between advertising and sales, or marketing and brand preference, many number-crunchers remained skeptical, regarding marketing as more of an art than a hard science. However, performance marketing's focus on the funnel, sales and ROI created a direct, measurable link between marketing performance and bottom-line business results, demonstrating not just correlation, but direct causation. This hard performance data puts marketers on equal footing with sales, affiliates and other business functions that are viewed as revenue generators rather than expenses on the corporate balance sheets.
GR: Multiple factors supported and ignited the growth of performance based mobile advertising, including a mix of technology and education of the market. The tipping point was when tracking partners solved the challenge that marketers were faced with back in 2013, by allowing marketers to work on cost per install [CPI] and have the right technology in place to measure this.
In 2014, we saw the introduction of post-install analytics and tracking, creating a whole new level of optimization capabilities which really set the mobile scene to become the most data driven and measurable advertising channel. This enabled mobile marketers to buy on performance based models, including CPI, cost per registration [CPR], cost per acquisition/sale [CPA/CPS] and ROAS goals.
How has performance marketing disrupted the day-to-day workings of the digital marketer?
DA: The arrival of performance marketing was a big influence on tech growth, stimulating companies to create more elaborate tracking, optimization algorithms and quality control solutions. That reflected on the overall quality of online advertising, providing new capabilities and opportunities for all digital marketers. The competition brought in by the performance model’s broad availability is another major cause of the industry’s growth. Small to medium scale businesses innovate to compete, contributing new ideas to the field and filling niches that were previously overlooked.
PH: Digital marketers have been conditioned to review campaign performance based on impressions, click-through and completion rates. Fraudulent traffic actually boosts these erroneous metrics, making it difficult to understand where users are coming from and how to optimize your campaigns to convert them. Performance marketing requires digital marketers to align their business objectives with their KPIs in order to drive real results. With the constant shifts in the ad tech space, it's more important than ever that marketers listen to their data in order to gain a better understanding of their campaign performance to move ahead of their competition.
JR: The rise of performance marketing blurs the boundaries between analysts and marketers. Today’s marketers need to be extremely savvy when it comes to defining measurable goals, as well as measuring, analyzing and acting on data. Performance marketers are tasked with using right-brain creativity to drive left-brain performance. Where some teams prefer to segment these capabilities into distinct creative, media and analyst roles, we are seeing an increase in cross-capability collaboration across the industry, as well as centralized capability development in performance marketing teams.
GR: Performance marketing gave marketers clear guidelines of optimization and the ability to cut out the fluff of sales pitches and look at black and white KPIs. The granularity of optimization to post-install events allowed marketers to have clearer benchmarks to work towards.
What hurdles have companies had to overcome in adopting performance-driven campaigns?
DA: The diversity in scale I mentioned in the previous question presents some challenges as well as benefits. A wide variety of traffic channels and sources creates opportunities for non-compliant promotion and plain fraud. Blackhat marketing has always been an issue, and small businesses tend to reach for easy money because they don’t have brand reputation to sacrifice. Our field is filled with developing businesses, so we take it upon ourselves to maintain the quality of the services we offer, which means a lot of monitoring and maintenance.
Advertisers entering performance marketing also tend to struggle with tracking. It takes a lot of communication to make a successful campaign, as data is required from both sides to make the right decisions. Getting that data often requires a platform update on advertisers’ side, and employing new tech doesn’t come easy for most.
PH: We're seeing a trend where companies have lost confidence in ad networks and ad agencies with their ad budget. Too many cases of summary reporting based on erroneous material. Too many cases of ads being delivered to poor quality websites via programmatic and RTB. As performance based ad platforms are becoming more prevalent and easy to operate, more and more companies are bringing their digital strategy in-house.
JR: Traditionally, marketing fell into neat silos. Distinct teams or agencies handled direct-response, PR, digital, branding, product, media, promotions, events and loyalty. However, there are two trends that are increasingly challenging this dynamic. Firstly, in the interest of improving the customer experience and streamlining costs, businesses are increasingly aligning around their customer journey rather than areas-of-practice. Secondly, as each individual capability becomes increasingly data-savvy, the thirst for performance data in context grows exponentially. These two trends have led to the rise of performance-driven marketing as a cross-disciplinary marketing strategy. There are real hurdles to organizing a business around performance data and the customer journey. Established team structures are often disrupted. Employees must be trained on how and when to use each type of performance data. Internal business intelligence teams must also evolve to meet each company's needs and integrate each of their vanity metrics and data sources.
GR: First, selecting and implementing the right tracking system. Second, knowing how to manage the different vendors and keeping realistic yet aggressive metrics to optimize by and set joint goals. Finally, and the most challenging of all is having the patience to give vendors time to reach these metrics; as everything is so black and white some brands were quick to kill their campaign, whereas with a little more time, ROI would have reached fruition.
Throughout 2016, what's been the biggest landmark for performance marketing?
DA: Mobile marketing has been making strides years prior, but 2016 is the biggest year yet for mobile. Tech growth in this segment is rampant and large international marketing companies have taken notice of that, acquiring solutions and employing new practices to provide efficient brand-safe promotion. The amount of new ad formats alone is enough to indicate the speed of the industry’s progress this year. The latest developments in personalization and data mining open up whole new levels of targeting, clearly showing that 2016 itself is a landmark for performance marketing and online promotion is only getting sharper with time.
PH: We're seeing bigger and bigger brands, not just e-commerce companies, testing performance marketing strategies. We're also seeing a trend moving away from last-click attribution, and more towards a full funnel approach to gain a better understanding of brand impact.
JR: In 2016, performance marketing has dramatically increased, in part due to the performance driven app marketing campaigns that have started on major media sources like Pinterest and Snapchat, which have been traditionally associated with branding.
GR: Cross-channel advertising and being able to use previous data to create lookalikes has been a big driver for increased performance. Being able to marry between the different channels [video, social, mobile RTB] has given brands an opportunity to really maximize spend.
Where do you see performance marketing heading in 2017?
DA: Mobile is obviously going to evolve further in 2017, taking up a bigger share of the market with performance video leading the charge. This format is finding more and more applications in mobile, while offering unparalleled freedom in terms of forming brand identity and illustrating the product’s benefits. SmartLink tech is sure to see more widespread use and improvement, at some point becoming a staple element for all platforms as optimization mechanisms get automated further. Mobile engagement marketing is likely to become more demanding in 2017, because the market is aware of the levels of traffic quality possible with new targeting solutions, and user retention is already a major factor in determining the success of mobile campaigns.
PH: We'll see more performance marketing campaigns make their way onto mobile devices. Mobile provides a challenging opportunity as traditional video advertising on preroll and out-stream doesn’t on a mobile handset. The ads have to be much shorter in duration, provide geo-based targeting and a clear call to action. However, the shift presents a great opportunity for brands as consumers interact with their smartphones in a completely different way than a desktop. It’s expected by 2018 that mobile will account for over half of all internet advertising - so it’s important that brands start optimizing for mobile.
JR: Performance marketing is going to see divergent trends. On the one hand, increasingly powerful data-integrations across mobile providers will help fuel the growth of mobile programmatic, targeting and marketing automation. Over the past two years, we have seen many marketers engage in far deeper retargeting and lookalike targeting efforts as it became easier to sync their customer data across platforms. On the other hand, we are also seeing many marketers reallocate performance marketing budgets to very broadly targeted campaigns rather than the narrow targeting that became popular over the last few years. This trend is likely the result of an over-exuberance for targeting that has pervaded our industry. By the end of 2017, these two divergent trends will normalize, creating performance marketing models that are broad at the top of the funnel, and highly targeted and automated lower in the funnel.
GR: 2017 will be the year of cost per engagement [CPE]. CPIs are slowly being left behind as brands have more information on their KPIs and higher expectations for their ROI. Data will continue to be a big driver, and the vendors that can integrate unique data points for smarter buying will continue to take the lead in offering brands and marketers the ability to work on CPE. Performance video continues to be a strong media channel, with high engagement by users and solid performance to back it up. Social advertising will continue to take bigger chunks of advertising dollars with the deep insights and targeting it offers - predominantly Facebook and Instagram.
Finally, what area of performance marketing do you admit can still alienate you?
DA: Pay per Call. It is a unique and undoubtedly fruitful segment of our industry, but the common requirements for a conversion and the tracking required to measure performance in that area are far from a welcoming environment. Important campaign parameters remain quite abstract in Pay Per Call, and that poses a challenge in which we don’t see an adequate payoff. There are way more promising prospects we would sacrifice by pursuing it, so for now we are simply maintaining proven partnerships in that area.
PH: There are concerns that user privacy, intrusive advertising methods and bad ad tech players are slowing down page delivery and driving user adoption of ad blocking. This will impact all manner of digital media in the near future. We see this both as a concern and an opportunity. A large percentage of users understand the tradeoff between content and commerce from the publisher's perspective. We believe effectively targeted advertising, delivered in a respectful manner, is acceptable to most internet users and this isn't happening today.
JR: There are many areas of performance marketing that are still in their infancy, and it's hard to predict how this industry will mature. The biggest challenge, the challenge that keeps me up at night, is how we can use our digital capabilities to connect offline media and offline conversions. For example, offline media can and should be connected to measurable, quantifiable sales objectives. Demonstrating not just correlation, but causation between a print or TV ad and the purchase of detergent at a retailer remains a challenge. In the mobile space, we have been working with marketers to connect their TV advertisements with their mobile app installs, engagement and purchases.
However, this is only the beginning. The end game for marketers is to attribute their brand awareness, product preference, sales and loyalty performance to the marketing campaigns that drove them. While we are doing our part, connecting mobile data and engagement to the broader customer journey, the mecca of measuring the offline customer journeys via digital channels, is still a way away.
GR: Performance marketing is all about testing new partners, new strategies, new technologies and constantly optimizing this mix in addition to optimizing intrinsically, such as optimizing user flow, promotions, in-house processes, etc. It is a machine, the more you get into it the more work you uncover. As the mobile industry grows, so do the options and solutions out there, and of course with these come trial and error and mistakes. Marketers that aren’t able to get the right budgets or support in-house might find themselves too quick with the trigger, similar to stopping mid-cycle, thereby throwing all their hard work down the drain. As the industry grows, so do the number of publishers trying to make an easy buck, and fighting this quality can make marketers uneasy in terms of navigating the playing field, and being in the forefront.