Undoubtedly, this past year has been unusually tough in every aspect of our lives. We have all had to adapt to new and increasingly digital ways to live, work, educate, shop and entertain. Work from home, lockdowns, restrictions and remote education due to COVID-19 hastened the consumer jump in media usage and streaming video. According to Nielsen, the massive spikes in media usage reflects a permanently altered media landscape. The shift to online retail generated 33% of all retail sales in 2020. The first half of 2020 saw an increase in e-commerce equivalent to that of the previous ten years.
Technology has played a critical role in enabling businesses to quickly adapt to service customer needs. The Chief Marketing Officer (CMO) responsibilities have evolved from brand and marketing to include improving business results and demonstrating return-of-investment (ROI), harnessing data-driven insights, and owning the customer experience. There is a great opportunity for success if CMOs are more confident to partner with their CFO and CIO and seed team cross-collaboration. Data-driven performance marketing demands that brands and companies redesign their marketing and media plans to focus on boosting lifetime value and customer experience. The pandemic has created a spotlight on those successfully navigating through this difficult time.
What performance marketing companies have in common is:
Agility -- A deliberate methodology to manage and improve the way work gets done for short-, mid- and long-term plans.
Flexibility -- The ability to respond to changes quickly and efficiently. It can refer to several different ideas including physical workplace, employee benefits or marketing budgets.
Data and Technology --Identification of existing or new data repositories, tools and systems that provide business and customer data. Data and analytics to uncover and analyze insights into segmentation, buying and behavioral analyses.
According to a Gartner research study, nearly 30% of marketing leaders believe the lack of agility and flexibility has negatively impacted marketing execution. "One key element of effectively building and planning scenarios is data," said Lizzy Foo Kune, senior director analyst, for Gartner for Marketers.
The performance indicators or key performance indicators (KPIs) must be agreed upon with cross-team collaboration. With the right technology, tools and infrastructure, the KPIs include brand and demand generation. Data-driven optimization may include creative, brand awareness lift, impression, test results, target segment delivery, tactic, media vehicle, marketing mix, product, message, offer, unique web site visits, conversions, leads and sales.
The Legacy Definitions of Performance Marketing
The term performance marketing has traditionally been used to refer to only digital advertising programs where advertisers pay only when a specific action occurs. The digital channels include search engine marketing, social media advertising, sponsored content, native content or affiliate marketing. The specific action or key performance indicators (KPIs) focused on lower-funnel metrics such as cost per impression (CPM), cost per click (CPC), cost per sale (CPS), or cost per lead (CPL).
With a new view of the entire consumer journey funnel across all digital and offline touchpoints, performance marketing has been redesigned to include all marketing and media activities. Brands want all media to act like digital media. With this new approach, all media is performance media. In addition to digital, this now includes TV, video, OOH, point of care, audio, etc. This new focus is complicated because the traditional consumer journey funnel is not representative of the complex navigation taken by today's modern customer.
Demand generation or direct response marketing tends to focus on optimization of the lower-funnel purchase metrics. Data-driven performance marketing can be applied to upper-, mid- and lower-funnel using different key performance indicators (KPIs). The new performance marketing has shifted to mainstream and is no longer a digital tactic.
A good example of a growing category using performance marketing is the Direct-to-Consumer companies, they are well-positioned within performance marketing as they are not laden with legacy infrastructure. The Video Advertising Bureau (VAB) reported 60 new DTC brand entrants first entry to the TV marketplace in 2020. Many brands are testing linear TV earlier in their lifecycle and see an immediate impact of unique visitors % increase.
According to McKinsey, "Data-driven performance marketing, however, can now be applied much more effectively to branding and demand-generation activities. With a clearer understanding of consumer preferences and behavior at the early stages of their buying journey, companies report marketing efficiency gains of up to 30 percent and incremental top-line growth of up to 10 percent without increasing the marketing budget. On average, the impact is significantly higher than that of established marketing ROI (MROI) methods for branding activities."
Performance marketing is no longer focused on short-term lower-funnel metrics.
Data-driven performance marketing companies that are successfully navigating the pandemic have proven to be agile, flexible and harness data and insights. Data and Technology contribute heavily to the source of one truth. A company's culture is most important with internal partnerships at the CMO/CFO/CIO level. The measurement plan should include the entire customer journey metrics with agreed-upon KPIs. Test, Learn and Apply.
Chart above courtesy of VAB.
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The opinions expressed here are the author's views and do not necessarily represent the views of MediaVillage.com/MyersBizNet.