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Performance Marketing: the Race to the Bottom
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Performance Marketing: the Race to the Bottom

Is performance marketing's main selling point also the path to its downfall? Ravit Ross, from Berlin-based YouAppi, addresses how marketers can improve their work with vendors and partners to benefit the entire industry eco-system.

For years, digital marketing was heralded as the marketing platform which would finally enable advertising accountability. Every Dollar, Pound, Euro, Ruble or Yuan spent on advertising would be attributable to an action – a click, a page view or even a sale.

Though accountability is important in marketing, in the last few years, it's become an arms race to the bottom, creating a market dynamic where marketers and agencies are demanding KPIs which will provide their marketing partners with paper thin margins at best.

Truth be told, part of the problem lies with marketing partners, who make promises which become difficult to keep. Sometimes, these low margin deals are made to close out a competitor.

No one really wins when the margins are paper thin. Obviously, the marketing partners don't win from thin margin deals, but in most cases, the marketer doesn't win, either. Whether it's from fraudulent or low quality, low profitability downloads, the marketer doesn't win from this supposedly 'good' deal because there are no free lunches.

So how can we stop this race to the bottom and instead create a situation where we all win? Here's my advice for agencies and marketers and for my fellow marketing partners.

Agencies & marketers

If it seems too good to be true, it probably is – We all have bosses who are analysing our performance, but some deals are just too good to be true. If someone is undercutting their competitors, you need to ask yourself why they're doing it and what they hope to gain from it. Sometimes there is a clear reason to why the deal is too good to be true – maybe a major advertiser cancelled a campaign at the last minute – but marketers need to ask questions to ensure that there isn’t a hidden agenda.

It pays to be nice – When a service provider comes to my house to fix something, I start by offering them coffee or a cold drink and even something to eat. Why? Because I want them to feel good when they're working in my house; it's been proven to improve the quality of the work. Likewise, when you're evaluating bids from marketing partners, it's in your interest to be nice. There is a lot of campaign optimisation work which gets done after the deal is closed, and you'll want your account team to feel good about working with you. The best way to do that is to ensure that their compensation is fair. Want to make your biz dev contact pull out all the stops for you? Take their proposal and add 5-10% to the bottom line. In more cases than not, it will be money well-spent.

Marketing partners

Sometimes you have to 'Just Say No' – As hard as we all work to win new business, marketing vendors need to know when to say 'No'. Some clients aren't worth the effort, particularly for a very low margin.

What's the buzz in the industry on this client? – A good way to judge the quality of the prospective is by listening to what your industry contacts say about them. Though you should take everything with a grain of salt, where there is smoke, there is fire.

By ensuring that all participants in the performance marketing ecosystem are allowed to perform to their best ability, marketers and their marketing partners will benefit by achieving the best results possible as they race to the top.

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Ravit Ross

Ravit Ross

Ravit is the Berlin-based Director of Media Management at YouAppi (www.youappi.com), a fully managed growth marketing platform for premium mobile brands. Ravit has more than a decade of experience providing a range of clients with technology-driven solutions that address their business needs.

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