Performics: What it takes to be more strategic about performance marketing

Performics global and Australian chiefs discuss the maturity of performance marketing, how to make it more strategic, and why intent is key to its future success

Performance marketing has never been more effective as a strategy, but securing short-term efficiency gains is just the tip of the iceberg for how it should be harnessed by marketers looking for build effective, omnichannel and consumer-led strategy.

Sounds obvious, but it’s something many marketers are still struggling with and therefore is a big priority for the leadership team at Performics. The 20-year old performance marketing agency was established initially in Chicago and recognised as one of the first affiliate agencies in existence, building a name in search marketing with a bid management technology eventually acquired by DoubleClick.

Following Google’s acquisition of DoubleClick, Performics was sold off to Publicis in 2008. Today, it reaches into 57 markets, with 3500 people, offering end-to-end performance marketing services and technology under its own brand name as well as through the group. The Australian division, meanwhile, offering was originally built off the back of acquisition and rebranded in 2016 to Performics.

CMO caught up with Performics global president, David Gould, and Australian CEO, Jason Tonelli, in the lead-up to the agency’s local event this week to discuss the state of performance marketing, and how an intent-based approach can not only deliver campaign efficiency improvements, but also inform end-to-end creative, strategy and planning.

Not surprisingly, the pair agree modern marketing is a science. But more than that, it’s a science informing creativity, Gould says.

With the rise of big data in recent years, people have realised creativity can be informed by data and science. It’s an alchemy of both,” he tells CMO. “This has always been the case to some extent. But the idea we can collect data now and put hygiene around it allows us to bring it to the next level.

“That’s why you’re beginning to see more collaboration across creative and media agencies. When media agencies were born 20 years ago, it was because you weren’t able to combine data on media buys and use it to inform creativity, so we spun out the media piece to be all about scale.

“Today, we can use data to drive efficiency and performance; we can also draw insights out that fuel and inform planning, creative and strategy. Because of that you’re seeing the bifurcation of creative agencies and media agencies begin to bleed together and work more closely together.”  

So what does that mean for performance marketing and media? Here, Gould and Tonelli further explore its maturity further.  

The concept of performance marketing has matured significantly in the past 20 years. Do you think it’s still an effective media strategy?

Gould: I think it’s become even more important in the holistic mix. You’re seeing performance move from being an outlier to be much closer to the strategic centre and how marketers think about how they engage with consumers. To that end, it’s becoming an more effective media strategy and a key element here is data.

We don’t just have performance driving bottom of the funnel activity, we’re using performance to derive insights, fuel and drive planning strategy that not only moves consumers through the path to purchase, but also to engage with them beyond the purchase to drive consumer loyalty and engagement.

Today, there’s an emphasis on brands having omnichannel experiences and marketing activity seamlessly connected. Equally, we have seen backlash against short-term thinking and the reliance on performance-led digital marketing tactics to get quick campaign returns, at the expense of brand. How should performance marketing be positioned in that wider strategy?

Tonelli: You’re right, marketers have seen performance marketing historically as a panacea for hitting short-term KPIs. It can work, and performance has the ability to deliver some short-term gains relatively quickly to achieve certain outcomes. But more and more, it’s part of a longer-term strategy to create experiences for customers and build engagement - from understanding what problems your brand can solve, to customer loyalty and advocacy.

As an agency, we have seen the conversation at our end changing from what can you do for me today, to what can you do now plus what does that look like in 12-18 months’ time. What’s the investment I need to make and how can you help me make the most of that investment? It’s helping find that initial 20 per cent improvement in efficiency, but also helping think about what my digital experience looks like in the next 12-18 months.

Is that the case globally, or do many marketers still think performance is just about quick wins?

Gould: Maturity varies market to market but also from client to client. We’re in the midst of a change of mindset. Performance marketing has had that specialisation feel to it, but we’re moving more towards the strategic centre.

Historically, performance was defined as the very bottom of the funnel, and getting someone to convert, or fill in a form. Now, marketers are beginning to understand that as consumers are empowered, it’s no longer a linear path to purchase. Performance marketing is about how we can touch that consumers with the right message and the right time, no matter where they are in that path to purchase. It’s not just the last click or action.

As we change that mindset and definition of performance, we begin to see performance take a more elevated role in how marketers think about their holistic communications and media plan.

What’s potentially stopping performance being perceived as a strategic activity?

Gould: It comes back to data, and hygiene – it’s so important. Having that data accessible is something companies are still struggling with that. Some are further down the path, and those are the ones that have evolved their thinking as they see the power of what performance and data can do for them. Those still struggling with managing data, developing a data strategy and applying it are less further along when it comes to performance.

Performics is attempting to move this forward through its intent-based approach to performance marketing. Can you explain what this is about?

Gould: Intent-based marketing is not so much a change as an evolution. Back in the day, we started with targeting demographics as a proxy for what we believed people wanted. It’s the best we had. Then we moved to audiences and identifying people, which is extremely valuable. But even then it doesn’t fulfil the goal of right message, right time, right context.

Intent is the next step layering on top. Audience tells us if it’s the right person. But intent gives us the insight of what context that person is in that moment. I’m the same person six months from now but it doesn’t mean I want or need the same message 10 minutes from now. Intent is getting us closer to the holy grail.

Tonelli: Our intent-based officering was born out of research we did with Northwestern University in Chicago and the psychographic department to understand the motivations and mindsets driving consumers to make the decisions they make. By understanding that intent, we can marry up right message at the right time via the right channel. We call this the ‘psychological distance’ – simply put, it’s the difference between someone being close or further away from a purchase decision. But we know that’s not linear.

Gould: We’ve also done bespoke research with Microsoft and Google, and this all led us to develop an intent algorithm. We initially applied that to search campaigns, with a quantitative value to each search query. That value represents the distance from purchase and conversion. By doing that, it allows us to align messaging with queries when they appear. By applying that, we can begin to develop creative that make sense depending on the point in the journey or the mindset they have.

Can you share an example of this in practice?

Gould: One client we’ve used this with is US gym company, Equinox, which really aligns to a workout culture. We applied the intent-based algorithm to not only improve efficiency on engaging with consumers, but to also then inform and improve creative.

For example, we saw that when consumers were in the exploration phase, using imagery in advertising that showed pictures of the gym was most effective. As people got closer to purchase or conversion, and they moved to comparative assessment, then imagery of people working out was more effective in driving conversion. It’s not just activation and optimisation but drawing insights to drive creative, strategy and planning.

It’s been very successful, leading to a 38 per cent year-on-year lead increase, with 20 per cent decrease in lead costs.

How does this change the way performance marketing should be measured?

Tonelli: Measurement changes a lot. Traditionally, the brief was hitting a CPA in this timeframe, or selling X number of widgets. That is short-term and might gain you some wins. But what we’re talking to customers about is changing KPIs across what we have learnt from psychological distance and setting new KPIs in each area.

For example, when someone is starting to understand and explore your brand, it’s a non-transactional commitment from the consumer. That’s ok. So we need to measure time spent on site, engagement, different click paths. They’re more brand-centric metrics. As we move closer to purchasing, KPIs come closer to end-of-business KPIs. All are tied to that end-to-end process of taking customers through a consumer journey.

This is where performance marketing has failed in some marketers’ eyes. They’ve looked at it through one metric. No other channel I know gets one metric. We need to think holistically about how we measure Internet and performance-based advertising and help our customers deal with that in the right way. There has to be investment in getting people to websites, in creating great content that’s sticky, and in driving people into purchase. You have to understand what you’re measuring in each to assess them in the right way.  It’s business metrics, not just media-centric results.

What should marketers do internally to embrace performance marketing more strategically?

Gould: The stumbling block often is the structure in the organisation, which creates silos and huge chasms to cross. As  we see democratisation of data used across these silos, they start to break down. There also has to be a mindset and a bit of a burning platform. Anyone who has studied change management knows there has to be a reason for you to change. Many organisations are reaching that now.

Everyone understand the consumer path to purchase is not linear anymore. But that also means touching and engaging with consumers in different ways. That’s not just about media either; it’s content as well. A consumer may search and we serve them a search ad, but at the same time, they may land on a website and you may need to have content. All of these have to work together.

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