Moving on up: Performance goes premium as marketers shift to outcomes model

Performance advertising has generally operated on a binary model. Elicit response, get paid. Whether driving downloads, sales or sign-ups, the focus is on delivering specific actions at the lowest possible cost. Under this definition, the best performance advertising is strictly quantitative. A sale is a sale. A download is a download.

Of course, what has become increasingly clear is that this is not, in fact, the case. All sales aren’t equal. Some will lead to long-term customer relationships; some will lead to returns. In the real world, this dynamic is best illustrated by the frustration retailers have expressed when offering deals through collective coupon deal sites. Yes, they drive near-term sales, but these sales can have a dispiriting tendency to be one-off, discounted transactions rather than entrée into ongoing retail relationships.

For performance marketers, nowhere is this effect more evident than with app downloads. Driving app downloads is fairly easy if you know what you’re doing. Driving app downloads with high lifetime value is much more difficult. A full 25 per cent of apps that are downloaded are used only once. 66 per cent of downloaded apps are used 10 times or less.

Against these odds, the challenge isn’t strictly about driving results, it’s about driving the right results.

Enter premium performance or premium outcome advertising. Premium outcome adds an extra layer to the performance marketing equation with the goal of driving a high volume of high quality outcomes at a positive value-to-cost ratio. Meaning success is defined not just quantitatively but qualitatively as well.

Needless to say, generating quality outcomes at scale is a significantly more advanced proposition than going for pure volume and requires a number of additional interlocking data and creative technologies to be successful. This includes superior audience intelligence, personalized and compelling creative, accurate post-action measurement and ongoing optimization.

If the traditional performance marketer looks to reach anyone likely to respond, the premium outcome marketer looks to identify and target only those audiences who are likely to respond and who represent long term value for the client. For instance, someone who downloads a high volume of apps or has a history of signing up for free, introductory subscription products might superficially be a good target for a performance campaign. But unless they actually intend to use a specific app or to convert to a paying subscription, their initial action doesn’t have much value.

Separating the truly relevant audiences from the larger pool of general responders requires a data platform to meet two stringent requirements. First, it needs to deliver a strong degree of predictive accuracy in identifying the high value audiences. (This accuracy gets verified post response when we measure whether the audience shows the positive engagement attributes we would expect). Secondly, it needs to be massive enough to tolerate a large amount of winnowing down but still deliver the necessary scale of high value audiences.

Further complicating the equation is the fact that the most relevant audiences may also be pickier than the average performance marketing target in terms of how willing they are to respond to ads. To address this issue, marketers need to make sure the creative they deliver is as personalized and compelling as possible.

With no way to create individualized ads to match the thousands or millions of different targeting situations, the solution comes in the form of programmatic creative, aka self-assembling ads. These are ads that build themselves at runtime using free standing creative elements – pictures, copy, videos, etc – to perfectly match the targeting opportunity.

For example, a multi-line retailer looking to drive app installs would be able to create personalized ads on the fly that take into account audiences’ age, gender, location, time, purchase intent, past purchases, interests, travel plans, what they are currently doing, the weather where they happen to be, what device they are using and dozens of other attributes.

Generating the initial response is only the first part of the challenge. What happens afterwards is equally important. Marketers need to be able to evaluate what audiences do post-action to see if they are engaging in a positive manner. They also must have the ability to successfully re-engage audiences with additional, relevant messaging to drive the desired, high-value responses.

Finally, each audience outcome (download, sale, etc) needs to be rated in terms of how successful it was in delivering the expected value. This information is then fed back into the system as a learning event to continually sharpen the platform’s ability to accurately determine how to match audiences to desired, high-quality outcomes.

The last part of the premium outcome equation is premium media. Premium media delivers higher outcome value as consumers are more likely to trust brands that advertise on recognized media properties. Meaning, the reputation of the media property burnishes esteem – and likelihood of a desirable outcome – for the advertiser. An additional benefit is the fact that high value audiences are simply more likely to be found on name brand versus unknown sites. When this premium media is combined with quality audience targeting the efficiency gain returns premium outcomes.

Greater accountability. Higher value. More engaged audiences. Premium outcome brings a new level of, well, performance to performance advertising.

Bob Walczak is CEO of Light Reaction

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