Is it time for a long-term mindset shift in performance marketing?
Does performance marketing need a rebrand? For The Drum's Predictions Deep Dive, Ben Wood of agency Hallam opposes the obsession with attribution, arguing for longer-term strategy.
Should marketers be more mindful when assessing the viability of a long-term strategy? / Alex Gruber via Unsplash
Despite recent news that the UK may avoid a recession (for now), it's widely predicted that we'll see consumers and businesses cut back on spending in 2023 when soaring inflation starts to bite. With consumer confidence at its lowest point since 2008 and demand slowing across categories, it’s time to rethink your growth strategy.
The year ahead will require a mindset shift in how we approach our digital campaigns; a balance of data and strategy, brand and direct-response, technology, and creativity. If you’re relying on mopping up leads and sales from existing market demand, you risk sales plateauing or even declining in the year ahead.
But we don't need a long list of changes to consider; just two principles could fundamentally alter the trajectory of your marketing performance.
1. Ditch your obsession with digital attribution
We’re entering a new privacy-first era of marketing measurement. Our ability to make a direct link between advertising and sales growth has been weakened by the measurement challenges we've encountered with heightened data protection and the impending loss of third-party cookies.
We now need to ditch our obsession with digital attribution and get comfortable with ambiguity as a result of the shift toward data modeling (essentially, filling in the blanks) offered by platforms like GA4.
Reporting and attribution are among the biggest challenges for marketers in 2023; these challenges are triggering an increasing focus on alternative measurement practices like marketing mix modeling (or econometrics).
The problem with digital attribution models is that they give too much credit to the short-term, direct effects of marketing, lending focus to activities like paid search and shopping ads. But platforms like Google Analytics will struggle to report on incrementality (how many incremental sales are related to an interaction with an ad).
Our one-dimensional approach to measurement is a leading cause of short-termism in marketing. It's a key challenge that must be solved to accurately assess the effectiveness of different marketing activities. Google suggests one way forward: supplementing digital attribution with econometrics to ‘triangulate’ ROI.
Investing in alternative solutions like econometrics and reducing our reliance on digital attribution will help us make more informed decisions about where to allocate budgets, and what’s really having an impact on bottom line.
2. Rethink your perception of ‘performance’ marketing
‘Performance marketing’ is a commonly used label for tactics like paid search, social media advertising, search engine optimization, conversion rate optimization, and many other forms of digital marketing. This classification is hugely misleading; performance is not limited solely to these activities.
Research proves that digital attribution gives too much credit to short-term tactics and under-reports on the long-term marketing impact of other investments like TV and radio. Both of these can drive significant improvements in sales performance.
Recently, we’ve seen brands like Airbnb and Adidas admit to over-investing in short-term, direct-response advertising. These brands have since shifted more budget toward brand-building activity to try and drive business growth.
There’s a common theme here: brands experience initial success with short-term marketing tactics that are very easy to measure due to digital attribution. We put X in knowing that we can get Y out, and therefore pour more budget into these tactics at the expense of things that are more difficult to measure but (in many cases) will still likely have a significantly positive impact on long-term business performance.
One commonly cited piece of research backing this up comes from the Ehrenberg-Bass Institute, which shows that up to 95% of customers are not ‘in-market’ to buy your product at any one time. Of course, this will flex depending on your category and purchasing cadence, but the principle holds true: there will always be more people in the category who aren’t ready to buy than those who are.
The cost of not investing in your brand
In the potentially turbulent months ahead, your brand must find the right balance between broad-reach brand-building activity and targeted direct-response activities. When existing demand dries up it’s time to invest in brand building to drive mental availability, ensuring a customer is not only aware of your brand’s existence but also knows what it does and what it stands for.
It’s time for an improvement in our ability to assess the business impact of long-term marketing investments; we know we can’t rely solely on digital attribution to guide marketing investments in the face of budget cuts. Marketers can no longer afford the long-term damaging effects of ignoring brand building, which will linger for years to come.
For more takes on the year ahead, by and about marketing agencies, check out our Agencies Predictions hub.
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