By Liz Telford

What’s the performance drug and why is it dangerous?

Performance marketing is a compelling proposition because it’s trackable and measurable down to the click. Advertisers can measure everything from the cost of acquisition to incrementality (for example, the number of new customers or the average order value).

But when you’re an ecommerce company there are some serious potential pitfalls. Online-only brands can forget there is a whole offline world available to them, and that world is just as important in your marketing mix. This has been proven by marketing and advertising experts Les Binet and Peter Field, the so-called “godfathers of effectiveness,” who wrote an influential paper called The Long and the Short of It in which they analysed data from 1000s of Institute of Practitioners of Advertising Gold Effectiveness Award winning companies to see what they could learn. What they discovered is that there’s an optimal split for brands between how they invest their budget between brand building and what they call sales activation, which many of us might call performance media or more short term activity.

Binet and Field talked about an optimal 60/40 split for all companies, with 60 per cent of marketing budget going into brand building activity with the remaining 40 per cent going into performance media. They have recently revised that for online only companies and what’s interesting is the split becomes even higher for brand building. For digital-only companies they recommend investing 70 per cent into brand building activity to account for the fact that people aren’t seeing your brand on high streets around the country. You don’t have that same bricks and mortar presence reminding people you are there and people aren’t necessarily seeing your carrier bags going up and down the road. But the irony here is that for many online-only brands the split can look almost the opposite. They tend to invest heavily into performance media because working online they are so used to being able to measure everything to the click and seeing the immediate impact, but this can come at the expense of building their brand over the longer term.

The theory works

I’ve been in businesses that have tested this theory and I’ve seen that it works. When I was Head of Brand at MoneySuperMarket, a FTSE250 technology company in the UK, we flipped our performance media and brand building spend in an experiment we ran for 18 months. That was a pretty major shift for the business, so it was critical we had real confidence and evidence behind that decision, but ultimately it worked. What we saw was that the long term ROI increased significantly and brand health increased dramatically, which also helped to drive the acquisition of new customers. That test was then rolled out nationally. It was no longer a test – it became the status quo.

Do the research

It’s easy to get hooked on the performance media drug because as a marketer you are under so much pressure to deliver and prove ROI. With performance media you are able to measure the return on what you are doing immediately, so in those conversations marketing always has to have with finance or the wider business around proving value, it’s often a lot easier when you can demonstrate instant returns. So I would suggest doing the research about making the shift and then testing that shift in a way you can measure.

The Long and the Short of It is a great place to start and you’ll find some really powerful charts to use within your business to start a conversation. Then test the theory for evidence that it works. Identify a representative audience sample – that could be a regional split or another grouping that makes sense for your business – and actually run the test. Be mindful that you’ll need to run it for a decent period of time to see the real results.

Why offline marketing is powerful

As marketers working in technology we consume so much digital material that we can forget we are not the consumer. According to the ThinkTV statistics for Australia for July – December 2020 the average person consumes 64 hours of broadcast television in a month. That is huge. And that’s not video-on-demand or catch-up, that’s actual television. Over the same period of time the average monthly reach across the total adult population was 85%, so while we consume a lot of digital media, people are still consuming offline channels to a huge degree. 

People always talk about TV as being the king of offline channels, particularly for brand building, but there are other more cost effective options for brand building offline.

Radio has always been an affordable yet powerful medium, and out-of-home advertising is also a strong channel, particularly if you know you have a really distinct audience and know exactly where you can find them.

DIY also works

Video in general is a powerful channel for the same reasons that TV is so effective, so if you don’t have the budget to buy into offline media, then pick up your iPhone and just get started.

It doesn’t always have to be done by a professional, and things that are homespun and more authentic can actually perform better on Facebook and other social media channels. If you are a smaller business, creating a video with a smart phone and using something like Adobe Spark to edit is a great place to begin. And who knows where it will take you.