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Marketing has never been easy, but inflation has challenged the majority of CMOs to do more with less and stretch their constrained budgets without compromising results. Now more than ever, marketers must spend smartly and hit their KPIs in the most cost-effective way possible.
And yet, over one-third of CPG marketers are unsure if they’ve made the right trade spend allocations, invoking the classic John Wanamaker quote: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”
Seeking more certainty, we asked marketers in our recent State of Spend survey about where and how they’re spending to achieve their goals. We found marketers are still investing evenly across the top and bottom of the funnel, but are trading traditional channels for shiny new performance tools that promise to engage and motivate consumers at scale.
However, not all performance marketing tactics are created equal.
(Re)defining performance marketing
Earlier in my career, I was part of the Whole Foods global marketing team that developed some of the first performance marketing programs, including the first card-linked offers. Even in the early days, these programs were true pay-for-performance solutions, where we as the retailer only spent money when we drove the desired customer behavior.
These programs were also measured using direct, deterministic purchase data, rather than inferred or modeled behavior. As a data-driven person who subscribed to the philosophy of “buy what you can measure and measure what you can buy,” I loved the targetability and measurability of these campaigns relative to any other marketing tactic available to us at the time, including the ability to measure incrementality through A/B testing.
These programs both attracted new customers and drove them up the loyalty continuum. The performance solutions were powerful.
The primary objective of any marketer is to drive incremental sales, not impressions, clicks or even brand awareness. Those actions may lead to sales, but you can have strong brand awareness and still go out of business (i.e.: Blockbuster, Hostess, Toys R Us).
Impressions are irrelevant if they don’t convert to actual sales. I’m perplexed by marketers’ continued aggressive investment in top-of-funnel tactics before they’ve exhausted smarter, more effective performance options. It’s also why many pay-per-click platforms attempt to position themselves as performance marketing, despite their inability to guarantee sales.