By Alyona Petrova and Luise von Tiedemann
This article was first published in Lebensmittel Zeitung, no.16, 18 April 2019, page 34.
With the rapid spread of the Internet, marketing directors (CMOs) are increasingly finding new ways of exploiting their marketing channels. They can complement or even replace classic TV or print advertising with digital campaigns. Thanks to social and digital media, CMOs today have the opportunity not only to analyze their customers' preferences but also, to get in personal contact with them.
In addition, the Internet is leading to a democratization that allows even the smallest players ("microbrands") with little resources to be present in the digital media and thus to compete with the greats of this world. One example is the start up The Honest Co, founded by actress Jessica Alba. It has managed to earn a brand equity value of € 1 billion for The Honest Co within just six years through targeted influencer marketing (a type of digital advertising where influential people promote a specific product or service).
In the traditional marketing world, it has been a major challenge for companies to understand what the added value of individual marketing activities is
To benefit from these new opportunities, more and more marketing experts use so-called performance marketing. Here are our five steps of how to succeed in it:
1. Create data transparency
The CMOs of pure online players like Zalando invest only in marketing measures, where he knows, that the effect is also measurable. The so-called "tracking" is used for this purpose. The common challenge of tracking for stationary retailers is often to combine the online and offline worlds. One possible solution for this challenge is the comparison of the airtime of commercials on TV and the customer traffic on the company website. Solid tracking and data infrastructure also provide the foundation for advanced activities, such as fully automated campaign control using artificial intelligence and machine learning.
2. Interpret data along the customer experience
The logic by which online sales can be attributed to a marketing channel is called attribution modelling. Each channel plays a different role in the customer experience. If a company uses a wrong model, there is a risk of misinterpreting the tracking data. Typically, the "last click" model is taken, in which the last used channel receives all online sales and is thus overvalued. Therefore, it is recommended to select the attribution model that reflects the real customer journey and that helps you to make informed marketing budget decisions.
3. Continuous optimization
Continuously testing of the new channels and advertising materials to get the best results is a must. The CMO has several methods available: A / B testing, multivariant testing, user behavior analysis and many more. "Mobile optimization first" is the motto of many CMOs today, as the use of smartphones has long outdated the number of laptops and tablets in many industries and has also demonstrably enhanced customer loyalty.
4. Establish performance management process
In order to initiate a data-driven work, it is important to make the data visible to employees - for example, using large screens that present the most important key figures. Next, the marketing chief should regular appointment to discuss the numbers with the team. Incentive structures should also be rebuilt: Where in the past brand managers got marketing budgets with no concrete or measurable goal behind, in times of performance marketing stringent goals must be set.
5. Build and expand skills
The skills required for performance marketing can be built up internally or externally. Agencies can close or bridge the skill gaps; In the medium and long term, however, building up internal capacities make usually more sense. Finding the right talent is usually a big challenge, as the skills you need are very much in demand and the applicants have a lot of job opportunities.
In the traditional marketing world, it has been a major challenge for companies to understand what the added value of individual marketing activities is. Today, it's different. By leveraging the right tools and the data infrastructure needed for control, Performance Marketing delivers data-driven visibility, enabling companies to achieve significant efficiencies in ad spending.