Be Careful What You Ask For with Performance Marketing


performance marketingTry paying your salaries, your vendors, or your overhead with clicks, shares, or time on page. It’s funny how these terms have become measures of performance that brand builders pay for, but none of them will really pay your bills. Bills are hungry for bucks, real bucks. So why do millions of dollars change hands every week to achieve behaviors other than sales? It’s because the brand builders have been sold on the idea that something short of an actual sale is so desirable that you should pay for it.

It’s not a whole lot different than buying display advertising except that you may be able to target it a little better. We have spent hundreds of thousands of dollars on online marketing. Typically, the marketeers get paid whether or not we make a sale. To make up for this, they charge for things that may or may not lead to a sale, but they have convinced us that their offerings are necessary and desirable.

The Performance Marketing Association

What is PMA? The Performance Marketing Association, or PMA was founded in 2008 and touts itself as “the only trade association representing the performance marketing industry.” Their goal “is to champion and protect accountable performance marketing.” The PMA attempts to rein in this anything- but-actual-sales approach by adding actual sales to the other non-sales metrics that you may be paying for. We think this is a step in the right direction.

Aside from lobbying against threats to the marketing industry, such as new taxes, they attempt to help define terms for advertisers and add a level of respectability to a profession that some brand builders (like us) have had a less than profitable relationship with.

They start off with a basic definition of Performance Marketing that describes it as a process where advertisers pay when a specific action is completed, “such as a sale, lead, or click.”

We like the inclusion of the term, “sale!” After all, isn’t that the purpose of spending the advertising money? It seems incredible to us that brand builders would pay for anything short of sales. But, if you get excited enough about clicks, you just might find yourself going “click broke!”

Paying for the Results

We think it’s imperative to keep a clear head when all around you are marketing folks talking to marketing folks and scrambling for new things to measure short of a sale. We believe the only metric worth paying for is a sale.

But with performance marketing, the advertiser pays for the results they define. Herein lies the real challenge. Are you asking for the right thing?  Do you think that clicks, shares, or time on page are somehow building your brand? If so, they’ve got you! You may be increasing your brand’s visibility but what is the relationship to actual sales?

Leads are more to the point, but still short of a sale. And they are ground zero for yet another very expensive and relatively inefficient email marketing campaign. We hardly read our email anymore because it’s so jammed up with marketing campaigns. Can we expect others to do so? But wait, now there’s another metric they can throw at you, “open rate.” And if it’s high, it’s still way short of a sale. Our experience with the whole funnel approach has been expensive, onerous, and inefficient..

The PMA says that sales “is the most common way that retailers pay.” This is really a commission based approach where the marketing entity must perform with a sale to get paid. “It requires that a visitor to a publisher’s Website not only click on the advertiser’s link but also make a purchase in order for the publisher to receive a commission.”

There are Key Success Metrics… Then There’s Sales

For an advertiser focused on branding, what are the key success metrics? Reach and frequency, clicks and impressions. Sure, you need clicks. But clicks by themselves don’t mean much. You need clicks that lead to actual sales. Sure, you need leads. But you need leads that lead to actual sales. It’s actual sales that enables you to pay for the advertising in the first place. It’s not enough that the marketer got you clicks. And it’s not enough that they even got you conversions. They have to get you sales.

Interestingly, the metrics short of sales have been sold to advertisers as justification for fees. You could pay for a lot of actions that look very busy but may not be productive. Watch out or you could get what you paid for!