An undercurrent of performance-based marketing tactics is surging beneath the traditional waves of advertising and gaining momentum and sophistication in the Australian market, but there is a lack of understanding of the discipline among senior marketers.
Simply put, performance marketing is a type of interactive advertising which pays on a performance basis: tactics such as search, PPC lead generation or affiliate marketing – where payment is made based on the fulfilment of specific outcomes and measurable results an advertiser is looking to achieve.
The accountability of performance marketing is much higher than that of traditional models, says Jeremy Crooks, MD of Criteo Australia and New Zealand, adding that as marketers become more focused on outcomes and less on the old reach and frequency metrics, more marketing budget will be directed towards channels that perform.
“The ability to drop a cookie on a user and follow them around the internet with display advertising is a fairly easy thing to do,” he says. “Where it gets more complicated, is actually understanding the‘propensity value’ of each consumer and how likely they are to do something that makes the advertiser money, coupled with deciding which impressions to buy according to this value, and then what are the most relevant products to display in the banner when you find that user again somewhere on the internet,” Crooks says.
Criteo’s commercial model is based on taking the risk between the impressions it buys on a CPM basis from publishers and the CPC it charges advertisers. It absorbs the buying risk and delivers campaigns against the advertisers’ ROI targets.
John Matthews, CEO of online customer acquisition business DGM, which specialises in affiliate marketing, SEO, paid search, lead generation and performance display, said the performance marketing industry is growing at a solid rate year-on-year as an increasing number of advertisers are becoming aware of the various channels available to them, but that clients and agencies alike must stay abreast of these developments to maintain a competitive edge.
In the last two years there has been an 800% increase in the number of the top 25 Australian advertisers by ad spend engaging in affiliate marketing, says Matthews, with the likes of Chemist Warehouse, Super Retail Group and Woolworths all pushing in.
Since 2006, Lenovo has worked with DGM and achieved a 43% increase in revenue, year-on-year, and ROI in excess of 15:1 through affiliate marketing. It is now Lenovo’s most cost-effective channel, delivering 15% of the company’s total business in Australia.
“The fact that we can target cost-per- acquisition and that budgets can be allocated and adjusted according to effectiveness and ‘bang-for-buck’, offers clients optimal returns,” Matthews says.
“It allows advertisers to reach their target audiences, minimise wastage and justify their spend.”
Rakuten MD Anthony Capano says traditional forms of media are more understood in general, but as the uptake of performance channels increases, shifts in ad spend will also increase – but there needs to be more buy-in and understanding from up high.
“Education on the performance marketing channel is still needed,” says Capano.
“However, that knowledge gap is certainly closing.” The level of understanding and drive to utilise these approaches is driven a lot by company culture, says Phil Ely, Asia-Pacific head of communications for performance at Lowe Profero. Some clients are more comfortable with traditional models and would rather not “rock the boat” he reckons.
Others are more “forward-thinking” and help agencies “push performance as a tangible option,” he says.
In mobile the gap is even wider, although Jon White, regional director and GM Australia and New Zealand at performance-based mobile ad network InMobi, has seen an increase in agency and client interest in the last four to six months.
“This has then caused an inevitable flow-through delay for performance (and other) forms of advertising on mobile. However, when clients fully understand the possibilities with performance, they tend to latch on like limpets,” he says.
“The boundaries between brand and performance are actually blurring more and more. Digital, and now particularly mobile, allows an audience to be made aware of something, provided additional information through a deeper engagement, then directed to an outcome or action-based end result. All in the space of minutes,” says White.
For more news:
Affiliate marketing sector beefs up as new US entrant launches in Australia
AOL goes for optimal attribution with Convertro buy
Online video advertising to rocket to $780 million in 2019
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