A wise man once said that “you always fear what you don’t understand” and, despite being over a decade since its initial conception, people still fear performance marketing.
The wise man in question was Carmine Falcone in Batman Begins, and for a brutal leader of Gotham’s criminal underworld, his philosophy certainly rings true.
I don’t think there are obvious comparisons to performance marketing and Batman, although it is nice to think that our industry is the anti-hero striving for universal approval, but his simple ethos has been resonating loudly throughout the performance channel recently.
The prime example of this is the EU e-Privacy Directive; a misguided, ill informed piece of legislation that was thrown together by those that fear and misunderstand how the digital industry works.
The repercussions of this directive, had it been as stringent as first interpreted, could have crushed a multi-billion pound industry overnight by making legitimate cookie based tracking on the internet a heinous crime.
This is arguably further emphasised in the continual misunderstanding of performance marketing in the national press. The recent witch hunt by the Daily Mail for one entrepreneurial publisher was so savage that their business lost over 40 partners in the space of one week. The publisher’s response was that it was like an “atom bomb being dropped on a mouse”.
Admittedly, there were genuine concerns with this type of affiliation, however the entire article was written with an uneducated view on a business model that had won many admirers for its innovation.
So how do we, as an industry, go about safeguarding publishers in order to harvest innovation and creativity?
The IAB has long been trying to raise the awareness of performance marketing to a wider audience through events, blogs, seminars, best practice guides and the implementation of the new councils, but the penetration is still minimal.
Many of the networks have equally tried to engage with senior stakeholders in agencies and advertisers, and where successful; businesses have thrived and stretched the boundaries of performance marketing. However these “affiliate huggers” represent a small percentage of the overall industry and, by in large, the channel is still treated like a poor man’s cousin feeding off the scraps of the online table.
In some instances publishers haven’t even been afforded the privilege of representation alongside more established marketing channels. It seems more and more that our channel is the one that misses out or gets punished for being more transparent and flexible.
There are still advertisers, who haven’t integrated affiliate tracking on their mobile sites, leaving publishers to drive free traffic because the channel is considered are a lower priority!
Let’s take the New vs Existing customer chestnut as an example. This is a KPI that many advertisers have visibility on but not many channels can track and report on this in real time like publishers can. Furthermore, not many channels can apply different commission rates to these KPI’s in order to influence new customer acquisition and pay out on the value of the individual customer.
Millions of pounds get pumped into CPC and CPM activity through Search and Display respectively but I have never heard of an advertiser paying Google different commissions for a new and existing customer.
Why? Because the model does not allow that kind of up-front flexibility.
It therefore seems logical that advertisers should maximise a channel like performance marketing that offers such flexibility, but unfortunately this rarely seems the case. The money an advertiser saves by lowering commissions on existing customers is rarely reinvested back into the channel that made the initial saving.
I can understand that Search, and in particular Google, is considerably influential in consumer purchasing behaviour but a fully optimised affiliate programme can offer significant revenue and, thanks to its unique flexibility, unparalleled returns on investment.
Ok, so this raises the whole incrementality conundrum again (the industry’s in vogue topic) and to be honest I have no new theories on this. There will always be division and debate over incrementality and until we have a clear view on what is going on in the consumer’s mind when purchasing a product we are merely acting on assumptions.
Due to the last click model it is unlikely that publishers will ever slip away from the incrementality spotlight but if advertiser’s start to move away from the channel their competitors will gladly step in and reap the rewards.
The current situation reminds me of a quote Roy Keane once said where he lambasted a section of the Manchester United fans as the “prawn sandwich” brigade.
His tirade was a deliberate attack on the fans that attended their home games and enjoyed the luxuries of corporate hospitality whilst failing to fully understand the game of football. Keane felt that certain sections of the crowd had not been vocal enough in their support, and at times were too quick to criticise minor mistakes. Sound familiar?
I could write paragraph after paragraph of why this channel represents a more valued proposition than the likes of Social, Re-targeting, Search and Display (all of which you can do on a CPA basis through publisher partnerships) but publishers would still be a home match that people turned up to and never fully understood.
It’s this lack of knowledge and understanding that is holding the industry back. Most people are unaware that the performance marketing industry has moved on from the “Wild West” days and has evolved into a professional, multifaceted era.
The line we once represented in the digital industry is so far away now we can’t even see the line; the line is a dot to us.
It’s time for us, collectively as a channel, to stop advertisers from just dipping a toe in the water. We need to drag them in, kicking and screaming if necessary, and submerse them in the wonderful, colourful world of performance marketing; a world that can incorporate attribution modelling, intelligent commissions, sophisticated data analysis, multichannel purchasing, unparalleled reactive marketing, phenomenal reach and a high return of investment.
How can something offer so much opportunity and still be so feared?