Chief Innovation Officer
Previously featured on ANA
Performance Marketing has had its time as a buzz word, but amid the current economic climate, it's more important than ever. Consumer behavior has always been unpredictable, particularly in the last few years, and 2023 waters are looking to be quite murky. However, marketers can find clarity in measuring and optimizing performance.
Performance strategies often lead marketers to focus on closing the attribution gap, specifically how their efforts drove the ideal outcome – growing revenue. And yes, revenue matters, but so do clicks and likes, returns and refunds, time on page, and bounce rate. The list goes on, with no shortage of things marketers can and should measure to prove their effectiveness and improve their strategies.
Executing and refining nimble performance marketing will be one of the most important aspects of advertising this year. Performance is a discipline that, when executed well, can preserve customer relationships and revenue.
Here are a few specific strategies marketers can employ as they look to budget wisely, increase return on ad spend, lower customer acquisition costs, and build lasting customer relationships.
Get Comfortable with Budget Flexibility
Economic forecasts for 2023 vary, but generally everyone seems to agree that marketers need to stay nimble on a quarter-to-quarter basis. While managing budget and targeting strategy for the year ahead, do so with an emphasis on monthly or quarterly performance.
In addition, your expense and revenue budget, tie in KPI budgets that align with those dollars. For example, if you aim to spend big in paid social this year, clearly define what KPI's signal success against that spend. This should include multiple metrics across revenue and engagement.
By creating a performance budget, brands can set a baseline for measurement. Advertisers can then look at how ad dollars are driving engagement, conversions and real-world revenue on a quarter-by-quarter basis and have a better sense of what levers to pull as they move through the year.
Engage Partners to Help Meet Your Goals
While brands may not totally alter their approach after one quarter, they do need wiggle room to reassess. Part of this adjustment will come down to negotiations with partners and suppliers. Ensure partnerships, media buys and other major expenses are flexible and can be adjusted as you carefully navigate the quarters.
In addition to baking in flexible partnerships, many media sellers and data vendors can provide performance-based pricing models that can help brands manage costs while hitting their goals. This was common in the more traditional concept of performance marketing, and it's something that brands should embrace. Share your KPI budget upfront and ensure that your partners are aligned and ideally compensated for hitting those goals.
Qualified Audiences Above All Else
Marketers faced with tighter budgets often face a choice: continue buying the same amount of scale (albeit lower quality) at a reduced CPM or prioritize qualified audience segments with the available budget. Of course, the ideal situation is achieving a targeted audience at scale, but if you need to choose, pursuing a qualified audience over scale is the best path to performance.
Advertisers need to divert their spending towards customers who are most likely to convert. Defining "qualified" and "priority" audiences by combining historic response with predictive analytics is an ideal way for brands to confidently achieve KPIs.
This is where brands can really develop a sharp strategy that drives performance. Depending on the overall campaign goals, brands may choose to pursue financially qualified audiences, new customers with high lifetime value, or lapsed consumers.
Addressable TV to the Rescue
Finally, brands need to pursue channels that help them measure performance and reach qualified audiences. This should lead many to addressable TV, a channel that is coming into its own at the perfect time.
Addressable TV strategies are maturing. Advertisers can deliver targeted ads that have the power of TV messaging and the ability to track real-world outcomes. Scale has been a concern, but more inventory is hitting the market as platforms launch AVOD models, which creates more opportunities for brands to experiment, and thus, a lot of performance to measure and respond to.
Building a marketing plan focused on audience, performance and outcomes may represent a big change in thinking for marketers. It requires a lot of discipline. Developing a performance plan as a third element in your multichannel budget will provide the guard rails to stay on course this year, as well as the information and direction to course correct. This flexibility is the best way for brands to set themselves up for success and meet 2023 goals.
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