Is Marketing Evolving towards or Away from Performance?

As we collect more data we can make more rational, performance based decisions. This we all agree upon. But how often do we change our ways once we have better data? Often times ingrained habits take precedence over actionable information solely due to the fact that it’s a habit. Further, if a large group of people who have the incentive to mirror each other’s actions are faced with the above dilemma – how long until they act?

First consider the power of habit. Some say if you do something for 21 days, it’s a habit. What if an industry has been doing something for 21+ years? Individual inertia is much easier to create or halt than industry inertia. A much larger machine, or network of machines cannot be replaced as quickly as a personal computer.

So, just how much money is wasted on advertising? How many times will people quantify “engagement,” and “interaction” in an attempt to justify purchasing media. Probably numerous times, no…many more times yet.

So is performance marketing the future? Is the Internet, (the best context we have for behavioral ad targeting and data collection) going to revolutionize the way companies spend advertising money? Yes. It’s the only way things can ultimately play out, with a few caveats.

The scaling of the above will be proportionate to our ability to segment, target, and re target groups of users. There needs to be many more definitions of “user” that exist already. Emo, or young adult, senior citizen, etc……this isn’t enough to let performance marketing overtake banners and the current waste we see now. One day, the musician from your Myspace page will follow you as you surf the net to be sure you’re aware of the new CD coming out on the 11th. Cookies will be placed on your PC once you log into your social network and they’ll get paid based on their ability to target effectively.

The keys to success are data and the ability to analyze and act upon it…most people won’t be able to and this will reduce efficiency & publisher profits will prevail for a while longer, but something will breakthrough, or the government will intervene (as if most often the case). As for now – I very much doubt your neighbors knows people have cookies on his browser waiting to meet Mr. Pixel over at Amazon.com! Long way to go folks.
watch out!
I bet he wants Chinese food! Based on some future metric that one day will be collected from his sniffing cellphone which regresses day/time with food consumed. Monday night at 7pm , really high R^2!

What’s your fortune?

Cheers!

Jeff

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paid search expert, sitecatalyst/omniture consultant, professional search engine optimization

Posted in future of search marketing, performance marketing
3 comments on “Is Marketing Evolving towards or Away from Performance?
  1. Rick Brown says:

    Jeff-

    Interesting obsevation about habits driving media buys. “So, just how much money is wasted on advertising? How many times will people quantify “engagement,” and “interaction” in an attempt to justify purchasing media. Probably numerous times, no…many more times yet.”

    Our company is working almost exclusively with industrial manufacturers who sell to other businesses. We have found that in the absense of hard data – it is very difficult for many maketing managers to pull away from what can only be described as “sentimental” advertising.

    So, to help leverage the power of advertising that DOES work and allow clients to see that first-hand, we created a lead tracing system that tags website response with a point of origin. Someone calls on the phone from the website? We know how she arrived. Someone else fills out a request for quote, we know how he got to the website in the first place.

    As for taking action based on that knowledge – it is still up to the client to cut unproductive advertising media from the budget. But at least we’ve created a measurement tool for them to honestly evaluate the media.

    John Wanamaker, legendary retail merchant and father of modern day advertising, once quipped,

    “One half of all my advertising money is wasted…..
    I just wish I knew which half.”

    Now we know.

    Like

  2. Jeff James says:

    Rick – I just saw this comment and I apologize for not responding quicker. Yeah – I think waste is trending somewhat lower for smaller to medium sized business in light of the push to online channels where measurement is much easier.

    Large companies though, it seems that they’ll persist in wasting money whether or not they can measure it. AdWords seems to be beta testing a feature where if you can’t spend your daily budget, it finds related keywords to show your ads for — this is really an attempt to hang people upside down and shake the last $.50 from their pockets.

    What kind of paid search programs are you running with your clients?

    Jeff

    Like

  3. Rick Brown says:

    Jeff-
    No problem – I just happened to be in the office late last night…

    Most of our paid search is running on Google (and partner search engines.) We typically wind up generating and running ads on about 10 separate ad campaigns developed and subdivided around specific phrases and with varied ad copy. But as you know – it varies based on what the client is selling.

    We also try to help clients evaluate the relative strength/value of ads shown on Yahoo and MSN and provide advice on this ad spending. As appropriate, we will develop and place ads to run within these networks. Due to the nature of our primarily industrial clients, these ads have been significantly less effective – therefore not encouraged.

    I completely agree about your observation on shaking the last $.50 out of the overturned clients. Holy Smoke! With this kind of tactic Google is in danger of ruining the benefit they created in being able to only target GENUINELY interested prospects.

    Like

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