What once was the TV ratings, nowadays is represented by impressions, views and clicks. In the era of online marketing, the topics “Analytics” and “Measurability” have picked up speed tremendously. Performance Marketing is celebrated in many marketing departments (at least in the online world) as the only true marketing. What can’t be quickly shown by numbers, what can’t be simulated and optimized, will be rejected and not considered any further – where you can’t clearly show numerical success, success is not possible.
Performance marketing is the new holy cow!
Sacred cows are, however, not been slaughtered per se and this is probably the biggest problem of all performance marketing worshipers.
Let’s get to some basics, before we explain in more detail why AdWords and Co are not necessarily the cure for everything which so many want you to believe. Performance Marketing is of course an pretty awesome new thing in the marketing mix. However, this is precisely the point. For large, effective and efficient marketing success, you can’t look at it as an island, but must see it as a component of the marketing mix. What every business student learns in his first year, seems to be forgotten by some experts. Most marketing tactics complement each other and not one can unlock all the great possibilities and potential alone. How you design your marketing mix in detail, of course, depends on the particular product and brand strategy. However, the further statements apply for pretty much every product – from french fries to sports cars.
Pros & Cons of Performance Marketing
One benefit of performance marketing is the possibility that the explicit reactions of consumers are directly visible and measurable. I can see exactly how many people saw my ad, how many responded with one click and how many bought afterwards. This is at least possible as long as the user does not leave the tracking paths. Accordingly, one can optimize the way from the ad to the sale iteratively and gradually increase the conversion rate.
Ratings in better.
At the same time, the focus on explicit reactions is also the biggest catch. It is neglected that the advertising impact is (with absolute majority) an implicit process that rarely shows itself explicitly by a direct reaction. So, an ad that does not generate a click does not have to be bad per se, as it might prepare for a future purchase in the mind of the consumer (Google recently started to consider this in AdWords at least a little bit). However, offline activities obviously can’t be integrated into the data that easily, which can strongly distort purely data-based conclusions.
Similarly, the effect of classical offline advertising is thereby often underestimated. However, this can influence potential customers emotionally much stronger than any online banner and thus also significantly affect subsequent clicks on ads.
Effects on other advertising activities
Along with the depreciation of other advertising channels, the move to performance marketing can also directly negatively affect other measures. Thus, some try to partly integrate offline activities into the performance data by the use of special URL’s (for example). This is well thought of, but it often also brings some disadvantages of Performance Marketing to those channels (e.g. too much pushiness) and limits the original benefits (e.g. emotional priming).
But why is this dangerous?
The danger of this development is to be illustrated by a small product placement example.
The success of performance marketing is always determined by explicit effects. Now imagine two (extreme) product placements.
- Two naked ladies dance with the brand’s logo at a afternoon children’s program and promote a special URL by which the direct success is to be tracked (alternatively without this URL).
- The advertising company rather uses a subtle product placement in the same TV format.
The first case would most probably lead to a significant increase in online traffic (with or without URL) – simply because of interest and the little scandal. According to the definition of success of performance marketing, the campaign would be defined as success. Probably one would even see a small increase in sales. Only the conversion rate would drop enormously, but that’s of course what one could also consider the “by-catch” of such a brought campaign. The negative effects of a possible damage in reputation would occur only over time.
In the second case, no one would possibly be interested to directly visit the website of the product. The measure would be defined as a total failure. However, of course this advertising campaign (like any kind of advertising) has led to implicit effects. Consumers will choose the specific brand more likely in the supermarket or are more likely to click on a Google Ad 1 month later. The classification as a “failure” would remain, although the action might have led to a significant increase in sales (those long-time effects are hard to see, since you usually also do other marketing activities).
But what does this mean for my business?
As mentioned at the beginning: Performance Marketing and the attempt to make marketing measurable is not wrong at all. I’m a big fan of Google AdWords and Analytics myself! However, it should be noted implicit effects often can not directly be integrated into the data, but at the same time, they have enormous potential. This applies especially for traditional advertising tactics that may not fit into the portfolio of online marketers. Even being aware of this is half the battle.
A statement like “we won’t do this, because we can’t measure it” should not be accepted. There is always a way to measure marketing. Bear in mind that even the numbers of certain Google products only offer a spurious accuracy because many action effects can’t be tracked and considered. Looking at the beautiful site of performance marketing, we must not forget the even greater advantages of other marketing tactics.
The magic word is, as also mentioned at the beginning, “marketing mix“!
Do I have simply to accept that some advertising isn’t measurable?
Another problem not mentioned is certainly that “measurability” is often equated with reach and number of clicks. However, the success of marketing can also be measured with different KPIs and this should definitely be done anyway! After all, the reach alone says nothing about the impact and success (as some time ago already described here). The advertising effects of any advertising campaign can be determined by empirical studies whereby implicit effects can be captured very well.
For measures such as product placement, we have developed Placedise just for this reason.
In the near future, there will be almost certainly a way to integrate all marketing activities in the performance marketing data. Until this day, one is well advised to think a little out of the box of clicks and impressions (or TV ratings).
Who now still thinks of the holy cow as a cure-all, should definitly take a deeper dive into the topic of “consumer behavior”.