Last Tuesday (April 20), PerformanceIN attended Rakuten Marketing’s Symposium in London, an annual event bringing together leaders in performance marketing.

After opening the event, Rakuten Marketing’s CEO Tony Zito joined us to talk about the state of performance marketing, the RetailMeNot buyout and the network’s plans for the future.

A recent study from IAB and PwC revealed that in the UK, affiliate and lead gen activity took £1.578 billion in spend last year – a 12% hike year on year. Quite simply, what do you think is driving this spend?

Tony Zito: It’s a combination of things; advertisers are going to be looking for solutions that drive performance since the business is centred on that as a core KPI of what we do. Ads drive more spend when there’s uncertainty on the market – what happened last year in the UK and in the US politically meant there was a lot of uncertainty in consumers’ mind. It hasn’t necessarily been a bad thing, but I think when times get tough, advertisers tend to look more for performance.

I think coupled with that is that we’ve seen publishers become much more effective at marketing in general, and doing a great job of monetising their audiences as well. We are seeing a concentration of consumers on specific publishers and because those publishers are monetising really well and creating great value for the consumers. They are growing faster.

So, it’s combination of things, but a good thing for the industry overall.

Within the OPM study, the finance vertical was shown to take nearly a third (32%) of spend, with travel and leisure following at 18. Could you touch on some of the reasons that certain verticals see more success with OPM than others?

TZ: Some of the verticals have been underdeveloped historically and now they are catching up, advancing faster than some of the traditional publishers have. So that’s where we are seeing the most growth.

There are very innovative companies and each of those verticals are doing interesting things with content and/or acquiring audience through emerging channels like social media versus methods they used historically. As a result, they are growing their audiences and seeing great new customer acquisition, so the growth has been driven by innovation and adapting to current marketing conditions for each of those verticals.

How do you see performance marketing “evolving”? Or in other words, what kind of developments should we be paying the most attention to?

TZ: Publishers are getting smarter, investing more in understanding consumer behaviour and then ensuring that they are delivering the right products to their consumers or the audience they acquired.

Advertisers are also becoming smarter about the distribution of their budgets across the various performance channels by using attribution. I think, certainly within Rakuten Marketing’s business, we’ve seen large shifts in the distribution of budgets based on the transparency that we are providing with cross-channel insights – and even in channel insights. So that’s a big thing.

What’s also very exciting is that we’re starting to see advertisers recognise the value of the upper-funnel activity that’s happening with longtail content – publishers, bloggers and so forth.

We’re seeing influencers aggregating large audiences on social media or in other environments, and historically they weren’t necessarily the last touch or the last click – they weren’t given credit for that influence. Now we’re seeing a big shift there – and a lot of interest in the upper-funnel activity. That’s where I think some of the growth is going to come from – and will continue to come from – because it’s not necessarily about keeping budget from publishers who are driving lower funnel activity or who are driving the last click. It’s incremental, it’s about finding ways to reward those who are creating demand in the upper funnel, and those dollars should be incremental, not taken from converting channels. They should be coming from public marketing budgets and the advertisers’ organisations. I believe that will continue to grow in the coming year.

Taking a broad perspective on the performance marketing industry, what do you see as the biggest flaws holding back its development?

TZ: It’s certainly slow to adapt new technologies. When you think about the level of real-time personalisation that’s employed in display - or even in email - publishers are still pretty slow to adapt personalisation at scale. And the reality for this is that for the most part, any consumer gets the same experience no matter who you are. I’d still think there’s a lot of work to do on the technology side and it’ll require publishers to become more willing to share data the way that we do in other marketing channels. If they do that, I think we will see the incremental performance rewards for that, but historically as an industry – at least in affiliate – we’ve been really slow to adapt personalisation.

Looking at some recent news, the sale of Retailmenot – many compared this to Rakuten Marketing’s acquisition of Ebates. What’s your take on the buyout, and what does it mean for the industry at large?

TZ: I think the acquisition of RetailMeNot – from a strategic standpoint – makes sense, and I can understand why those two particular companies would partner up. There’s clearly a place for what RetailMeNot does in that combination with traditional distribution.

The Ebates buyout is very different in terms of Rakuten being more e-commerce focused. Ebates and ShopStyle we view as both discovery platforms as well as creating value for the consumer through discounts and so forth. For Rakuten, Ebates and ShopStyle fit very well, with our fundamental core value proposition around e-commerce versus just deals and offers being delivered at scale.

There are very different strategies being employed by the two companies but I do understand why [they would be compared].

Finally, please tell us about some of Rakuten Marketing’s plans for the rest of the year.

TZ: It will be investing very heavily in our combined data sets, not just within Rakuten Marketing but leveraging the Rakuten ecosystem data we have access to with our partnerships, with Slice, and with Viki and Viber, some of the holding assets of Rakuten.

We’re actually able to create unique insights on consumer behaviour; we’re using advanced data science and deep learning to mine that data to create interesting strategies and it’s working really well. So, we are going aggressively into the data science and machine learning aspect of our business in combination with investing in infrastructure. That’s what we are really focused on right now.