DigitalMoses: Brands and Performance Marketing

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DM CONFIDENTIAL – A handful of weeks ago, we went to a small event that featured a panel of incredibly high-powered agency holding company executives. To give a sense of scale, one of the participants’ company employs more than 1,000 people, and that is in New York City alone. This same executive was also leaving shortly to participate in a panel to give a keynote talk at Cannes. Those joining him weren’t off to Cannes to speak, but they might have been sharing the same first-class cabin.

It was a truly spectacular gathering at an event whose audience was quite small, the location an odd choice for a media panel and the audience there to network for social purposes more than business purposes. In other words, it was a fitting experience for a topic that has long since confused us — the intersection of agencies, brands and performance marketing.

Listening to this mix of agencies and brands (the CMO of L’Oréal was also there), half of the brain focused on taking furious notes that were to be turned into a post. The other half of the brain sat befuddled at the differences between the agency mindset and that of the performance marketing mindset. Rather than learning what we wanted to know, how to bridge the gap between the agency/brand world and the performance marketing world, we came away feeling better about our lack of understanding.

Our worlds are very different. It isn’t just the clients but the process, the vocabulary and lens with which we view the world. Just trying to talk to them about leads for example is a sure-fire way to reduce a conversation to less than a minute. Yet everyone wants more accountability in their spend and performance-based marketing offers that. So why — we ask for the hundredth-plus time — have we seen little more than a handful of co-reg campaigns and a few one-off landing pages mainly for cosmetics or the occasional over-the-counter drug?

As we sat (and have sat) pondering the state of brands in performance-based advertising, we started thinking about the relationships. Brands have people in-house who help devise strategy, placements, messaging, etc. They often work with agencies on the execution of this strategy and for any of the heavy lifting.

In many cases, agencies will then turn to a third-party technology platform or specialized marketing firm if they do not have that competency in-house. It would be here that agencies would interact with the performance marketing companies. That’s where the problem, or at least the disconnect, seems to exist.

Like any company, the agencies want to make money. They will either pitch their brand on a new vendor/source/technology or seek one out after being asked to look into a certain direction. By and large, how much they make depends on how much they can spend. For them, scalable solutions are best.

Even more important are relationships where the agencies feel as though they can control their own destiny. That, in our opinion, means a combination of safer bets — easy sells to the client, along with less ongoing work. It’s that combination, but especially the last part, that from what we have seen — and admittedly, it’s not a lot –makes us think agencies like to front-load work.

That is very different than performance-based marketing, where you don’t just throw money at building something and then create an auto-pilot campaign that hits a certain objective. It means continuous work, continuous dialog and a measurable end goal. Therein lies the original vocabulary challenge — the definition of an end goal not being sale-driven.

Brands are for spending big once on customer acquisition. They and their agencies are demanding measurable objectives. The problem is that they aren’t demanding our objectives — sales, leads, etc. As a result, we are actually experiencing the biggest intersection between performance-based marketing and brands that interactive has ever seen, but it has for the most part passed over the traditional cost-per space.

What happened was the inadvertent invention of new cost-per metrics — “likes” and “follows.” These new metrics also coincided with the hottest platforms and trends being discussed within agencies and brands: themes like social, conversations and two-way communication. They weren’t demanding that social spend be on a cost-per, but the cost-per model helped unlock the big brands budgets and have them feel comfortable with social media. It gave them the fulfillment they needed in a way that could be sold.

Are those servicing brands cost-per needs any better than those in the performance marketing space? Is that how they are becoming the performance experts?

Not at all. They knew the right people. They had the budgets already. It was their business to win by coming to them with the methodology. It was a way for them to keep or expand the budgets and, most importantly it was a type of work they could do. They weren’t given a task that they couldn’t do, one that would have had them turning to a third party.

What does it mean for the more traditional cost-per-performance marketers? It means that we must either have technology or platforms that others need. We have to have them feel as though they must have it — we must pitch it versus sell their clients and themselves on why to do it.

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