Why It’s Time to Rethink Performance Marketing

When digital marketers hear the words “performance marketing,” they tend to think of cost-per-click or cost-per-acquisition models. After all, “performance” is really shorthand for “the ability to measure performance.” And when marketers are only paying when specific actions have been taken — clicking on a search ad, making a purchase, etc. — measuring performance is straightforward enough.

The time has now come to think about performance marketing in a different light. Why? Because many types of digital campaigns that aren’t currently thought of as performance marketing actually can be measured and optimized in much the same way as search or email marketing.

Take the example of a display advertising. In the good old days (that is, a few years ago) display was thought to be the opposite of performance marketing. Display was not about driving specific actions, but about creating awareness for a brand. Sure, you couldn’t know exactly how well it was working, but you knew it worked, because, well, that’s how advertising was always done before digital came along.

But digital display has come a long way since then. The days of buying up a bunch of display impressions and just hoping for the best are largely over — or, at least, they should be. Thanks to the advent of real-time bidding and more sophisticated measurements, display campaigns can now meet the definition of performance marketing as put forward by the Interactive Advertising Bureau (IAB).

According to the IAB, to qualify as “performance marketing,” a campaign should be able to meet the following criteria:

  • The intention of the campaign is to drive consumer action, as opposed to raise awareness.
  • The cause and effect between the advertising and consumer action can be clearly measured.
  • The buyer can optimize their buy in real or near real-time based on the measurement.
  • In many cases, payment is made based on consumer action (this is not necessarily required if the other three criteria are met).

Thanks to RTB, the ability to optimize a display campaign is no longer in question. With RTB, the marketer can look at the performance of a campaign as it’s playing out across the Internet and make adjustments the moment the measurements indicate they’re necessary.

This leaves us with the IAB’s second criterion: measuring “cause and effect.” When it comes to thinking of display as performance marketing, the measurement question has been the big hold up for many marketers. After all, what good is it to be able to make adjustments in real time if you don’t know for certain how well your campaign is performing?

What many of the marketers who still have this concern about measurements don’t realize is that many so-called branding campaigns can now be carefully measured with more advanced attribution models. And with these measurements in hand, the campaigns function in the same way as traditional performance marketing.

Attribution models are a notoriously complicated topic, but one fairly straightforward model that shows why RTB-powered display can be thought of as performance marketing is view-through attribution. The truth is that digital display isn’t really like traditional display in magazines or billboards. The same online tracking that makes RTB possible, also makes it possible to know whether someone exposed to an ad later visited a site or made an online purchase – regardless of whether that someone actually clicked on the ad.

In other words, if Amazon runs an RTB display or pre-roll campaign today that no one clicks on, it can still keep tabs on which people see the ad and whether they make purchases, and then it can optimize the ads in real-time based on the extent to which they’re driving purchases.

That sure sounds a lot like measuring performance. And that, in short, is why it’s time for us all to expand our definition of performance marketing.

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