- Performance media is probably the greatest innovation of this century in the field of communication. A small miracle. It fulfills historic advertising promises: segmentation of campaigns for interested audiences and measurement in real time. And most importantly, you pay only for the result.
- The purpose of performance media is to capture existing interest and convert it into sales. If the consumer has no interest in the brand, the media will lose efficiency.
- To escape the trap, it is necessary to sustain healthy levels of investment in awareness and consideration before the end of the funnel saturates. OOH, Influencers, and CTV are good entry alternatives for this job.
Performance media is probably the greatest innovation of this century in the field of communication. A small miracle. It fulfills historic advertising promises: segmentation of campaigns for interested audiences and measurement in real time. And most importantly, you pay only for the result.
- Also read: Introduction to Marketing Mix Modeling (MMM)
It's the perfect world. Finally, CMOs and CFOs can be friends, reducing the doubt that hung over the true usefulness of the marketing budget. Hal Varian, the Google economist responsible for inventing the word auction system, would have saved the advertisers.
In the performance media gold rush, more and more resources were concentrated at the end of the funnel. The CMO began to live with the CGO (Chief Growth Officer), indicating the new media imperative: clear and proven growth. Everything went well, but since everything good is short-lived, eventually problems started to appear.
The purpose of performance media
Before talking about the pitfalls of performance media, it is worth recalling its original purpose. It is an instrument focused on demand capture. That is: converting existing interest in a category or product into sales.
This purpose is due to the performance media segmentation architecture, which displays advertisements to those who search for terms associated with the product, or those who have an interest profile on the social networks associated with it. In both cases, the interest already exists and, therefore, the propensity to buy.
Vision problems
The problems mentioned below were empirically mapped to every type of client: from early-stage startups to large advertisers. The narrative follows a common flow:
- Pressure from top management for cost reduction and income statement
- Managers focus on performance, concentrating almost any budget
- Initial euphoria. Sales continue even with less investment
- Conversion cost increases, growth slows
- Performance shows signs of exhaustion, requiring a return to the beginning
This narrative is becoming increasingly common. It is created by the inherent operating mechanics of performance. Without media that renew lead generation, finding new interested consumers becomes increasingly difficult, making acquisition costs more expensive and slowing growth. Eventually, the source dries up, and the growth stagnates.
In addition to the indirect effect of increasing CPM (Cost per Thousand Impressions) resulting from the mass migration of advertisers to performance media, and we have the perfect storm: weakened brands, low demand generation and rising acquisition costs.
Escaping the Trap
Despite the problems, avoiding the trap is simple. Use performance media sparingly, understanding its true purpose and taking advantage of its synergy with other acquisition channels. In other words:
- If you're a B2C startup, don't wait for your performance to wear out to invest in branding and consideration. Niche content creators, OTTs, and OOH are good options for nurturing your leads at a moderate cost.
The most efficient conversion funnels are those startups that worked on awareness and consideration from an early age.
- If you're a big advertiser, parsimony when it comes to cutting. There is always room for adjustment, of course, but removing all investment of awareness and consideration only generates results in the short term, where the residual brand strength is still large. In the medium term, this strategy can cost a lot.
And to measure the result of all this, be sure to talk to Uncover:)