Three strategies for dealing with post-GDPR disruption to digital marketing

The marketing sector can be a complicated place as new marketing tools and techniques are launched, almost on a weekly basis. Powered by The Drum Network, this regular column invites The Drum Network's members to demystify the marketing trade and offer expert insight and opinion on what is happening in the marketing industry today that can help your business tomorrow.

Caution around affiliate digital marketing will drive up the price of PPC across all channels.

GDPR compliance has been top priority for businesses ahead of the recent deadline - and rightly so. However, the majority of businesses have yet to realise that they could be facing further disruption to their digital marketing in the form of increased competition in the pay-per-click (PPC) markets.

There are a number of ways businesses generate new business leads online. These can be split into two categories:

  • Affiliates, brokers, email and third-party databases;
  • Direct marketing such as PPC, SEO and paid social media.

While most marketers will expect GDPR to affect the first category, in actual fact both could be affected in the coming months.

The need for first-party opt-in under GDPR has caused problems for affiliates and lead generation networks. While many affiliates have likely worked on GDPR compliance, the complexity of using these types of networks increases the risk of marketing collateral being used to advertise to non-compliant data.

If you give collateral to an affiliate network, they will pass it on to sub-affiliates, and so on. If one of these affiliates down the chain uses your marketing collateral in an email to a non-GDPR compliant list, you are liable. Therefore, for many companies, the risk of the unknown coupled with the threat of fines of up to 4% global turnover, mean this type of marketing is likely to be avoided.

The second group generate their own leads and get first-party opt-in, so you’d expect them to be unaffected. But, with fewer marketing options many companies – especially those in industries that use a lot of affiliate marketing such as finance, insurance and retail – are likely to put more investment into paid advertising online.

PPC offers an immediate solution to make up a shortfall in leads or online sales. However, PPC in search ads such as Google and Bing, and social media platforms such as Facebook, Twitter and LinkedIn are priced based on competitive bidding. This will push up the cost-per-click (CPCs) for everyone as a large number of new companies enter the market at the same time, as a knock-on effect of GDPR.

Three strategies for dealing with disruption

Conversion Rate Optimisation (CRO)

Marketers often prioritise traffic over conversion, despite the evidence of a higher return on investment from CRO. I’ve yet to discover a business that has exhausted all opportunities for improving conversion rates.

The best way to offset the higher CPCs resulting from increased competition in PPC is CRO. If you could have the highest converting website in your industry you can pay for all the traffic. Here’s an example:

Let’s assume that a website is currently converting at 1%, and the cost-per-acquisition (CPA) is £100 because the current CPC is £1.00. If the CPC were to increase to £2.00, the CPA would go up to £200. The way to bring this back down to £100 CPA, is to increase the conversion rate of the website to 2%. If the conversion rate is increased even further, to say 4%, the CPA would drop to £50 even at the higher CPC of £2.00, and the volume of sales would have quadrupled.

Attribution and the 80/20 rule

Historically, most businesses have used ‘last-click’ attribution, where a sale is credited solely to the channel the customer most recently interacted with prior to purchase. However, this ignores factors such as the first time a customer hears of a company or visits their website, which may have played an important part in the sale. If a business uses full attribution modeling, the credit is assigned more accurately to multiple channels, better informing their traffic and CRO decisions.

How then do you prioritise your efforts and budget to optimise channels? According to the Pareto principle, 80% of your effort drives 20% of results. What marketers often forget is that you can chunk this up. So, the top 20% of the top 20% (4%) will bring 64% of revenue. Ultimately, optimisation is about prioritisation. With more competition you need to optimise the journey for your most valuable customers.

Leverage remarketing with content marketing

Remarketing is a low-cost, high impact marketing method, which will be particularly useful post-GDPR when email lists could potentially be smaller. One of the big mistakes people make with remarketing is to stick with the default Google setting of 30 days. Did you know this can be increased to 540 days? If you do this and deliver valuable thought leadership content that’s interesting and useful to target audiences through, for example, banner ads, YouTube videos, sponsored LinkedIn, Facebook or Twitter posts, you will become ingrained in their minds as thought leaders.

Weathering the storm

In summary, the three strategies are:

  • Conversion Rate Optimisation (deal with higher CPCs)
  • Full attribution and 80/20 analysis (need fewer leads)
  • Advanced remarketing (stay front of mind and be a thought leader)

Implementing just one of these strategies can increase the effectiveness of your digital marketing. All three together, however, is a powerful combination that will compound ROI over time and offset any disruption to CPCs from GDPR or future algorithmic updates.

Marcus Hemsley is the founder of Fountain

Get The Drum Newsletter

Build your marketing knowledge by choosing from daily news bulletins or a weekly special.