Q&A: Is more effort needed to educate advertisers on the power of performance marketing?

Performance marketing continues to move up the value chain, with the sector generating £14bn in sales from £1bn ad spend in 2013. Yet despite commitment to education and transparency from key industry players, a lack of awareness persists around this type of digital marketing activity.

For example, according to research from Paid on Results, 20 per cent of online retailers (of 975 surveyed) don’t fully understand performance marketing.

The Drum spoke to some players in the performance market to discuss whether more education is needed to provide clarity for advertisers, and which stakeholders are responsible for this.

Ben Sutherland, head of performance, Vizeum UK

The dirty truth is that every agency is in the business of making money and the art of selling what we do remains out of the grasp for far too many. The simple solution is to prove the impact that the work has on a client’s bottom line.Performance marketing is critical to achieving this, but has perhaps suffered due to an image akin to a pencil pushing geek that limits creativity and inhibits the big idea. The reality is very different. All marketing activity should be driven by performance to showcase the tangible results from what we do. Unfortunately, too many agencies isolate their performance offering, treating it is a merely as an add-on. Obviously, better education is an important first step in demonstrating the value of your marketing activity but there remains a fundamental flaw in the structure of many agencies. Too many keep performance marketing separate when it should act horizontally across all clients in all sectors from FMCG through to retail. By doing this, all personnel within the agency will have more experience working with performance disciplines like CPC, SEO etc. This in turn will increase understanding, help agencies communicate the tangible benefits of their work to clients and, most importantly, open up the potential to upsell.

Ben Wood, global president, iProspect

We don’t help ourselves. It’s not necessarily about education, more importantly I think as an industry there is still far too much jargon and nonsense spoken around the different facets of digital marketing, and too often agencies hide behind complexity rather than striving to make things simple. More simplicity would help clients to embrace the powerful opportunity that exists through fully integrated performance marketing. The other sad truth is that whilst data and technology should drive transparency and value – in many instances they don’t. Margins are often cloaked and in many instances the strategies employed to drive performance in and cross channel are unsophisticated at best (many agencies for example are still not offering their clients a properly attributed view of success for optimisation purposes). It is this complexity, lack of transparency and poor implementational practice that is creating confusion – which of course is a huge shame given the great business transformation these channels can drive.

Kevin Edwards, strategy director, Affiliate Window

It’s a well-worn statement to make that more education is the key to better performance marketing and whilst there is an element of truth in the assumption, we need to assess the situation more widely.I think one of the major challenges we face is there is a credence that because a certain channel exists it’s fit for purpose for all advertisers: mistake number one, performance marketing isn’t right for everyone.It certainly can work for SMEs (and should work for almost all brands) but it’s a hard slog and that’s the second challenge: resource investment. Performance marketing isn’t plug and play. You don’t flick a few switches and watch the sales roll in forevermore. It’s a relationships as well as a bread and butter channel that requires perseverance, toil, dedication and tenacity. This can switch off advertisers who see more instant (and maybe less ROI focused) returns elsewhere.Finally the third challenge is we’re a sales channel and whilst this is our greatest strength (it makes us leaner, hungrier and more determined), it also means there will always be people who want to do something more creative within their businesses, the irony being that performance marketers often bring some of the most innovative solutions to the table.

Andy Oldham, managing director, Quidco

Advertisers cannot fail to notice the impact performance marketing can have on their brand and bottom line. A channel that experiences a 15 per cent increase in investment returning an ROI of 14:1 is critical in any marketing mix.The ‘paid on results’ model is something that any lean company should know about. Especially in online retail as the recovery of consumer confidence has not been as fast as some would have wanted.The figure mentioned is testament to the education needed that will provide clarity for advertisers around this opportunity. Here at Quidco we work with our partners, devising marketing campaigns that provide the most cost effective results, all based on tailored objectives. Driven by our data insights, it is this approach that will see retailers execute on the most cost effective campaigns. This will see a further increase in the channel as more traditional marketing avenues fall out of favour.

Helen Southgate, managing director, Affilinet

In my view to help advertisers get on board with performance marketing, we need to stop talking channels and instead start thinking like them. Advertisers are customer-centric in their thinking. They want to understand the customer journey and the points at which they can be influenced to purchase their goods or service. And so that is what we, as an industry, need to do to. Performance is a microcosm of different digital disciplines that can be optimised to drive more traffic, grow sales and enhance brand awareness. Insight into the consumer path to purchase enables us to deploy this arsenal of tools in order to positively affect an advertiser’s objectives.Rather than focusing on what we do as a channel, we need to talk about what we can deliver in a language that advertisers understand. If we do this, we’ll carve out a more distinct proposition that is better aligned with advertiser’s marketing objectives.

Matt Bailey, commercial director, Performance Horizon Group

I disagree that brands don’t understand performance marketing. Every single one of the IMRG’s Top 100 Online Retailers spends significant amounts of money in the performance marketing arena and it would be naïve to intimate that marketers of this quality don’t know where their money is going. However it is a dynamic area and therefore there is a need for continuous knowledge sharing.In my opinion, this will be achieved through two methods. Firstly by brands cutting out middle men and building stronger relationships with top partners directly to understand better how to achieve success together. Secondly, and I know it’s a cliché, but access and interrogation of data. Performance marketing can no longer be seen as a one size fits all solution and brands need to be able to access real time views on the impact that different initiatives are having on their sales.This article was first published in the latest instalment of The Drum's regular performance marketing feature, published in the 19 March issue.

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