we ask performance marketing experts

Marketing budgets will continue to be under scrutiny as the cost of living crisis continues. But the growth of digital media in particular appears robust.

I recently asked a few performance experts about the state of the current digital media landscape and how brands should adapt their strategies accordingly. Here are five trends that have emerged.

Performance budgets remain stable (for now)

Gal Ekstein, President and Managing Director EMEA & LATAM of AppsFlyer, summarizes the various factors that currently impact marketing budgets.

“Higher interest rates, rising costs, a war in Ukraine, an energy crisis, supply chain disruptions and post-pandemic shifts in consumer spending are all contributing to slower growth. economic,” he explained. “While estimates vary as to how long this downturn will last, companies have already begun to take steps to tighten their belts and expand their runway.”

“We’re also likely to see some companies aggressively increasing spending in an effort to take advantage of the recession and increase the gap to competitors,” he said.

“Regardless of whether budgets increase or decrease, they will always come under greater scrutiny, so it’s more important than ever for marketers to optimize their output while delivering value. Work with a smaller budget, smaller team, and prioritize faster conversions, high LTVs, increased revenue, and reaching the right consumers, while being able to justify ad spend, should be at the forefront of every marketer’s mind.

Emma Welland, co-founder and director of House of Performance painted a similar picture in the field of performance marketing.

“Budgets have remained consistent, with most advertisers acknowledging that they need to continue to invest in marketing to maintain market share and drive growth in the second half of 2022,” she said. “The volume of data available and the ability to optimize key performance metrics (eg ROAS) means advertisers are able to push budgets in areas that drive the right level of return for their business.”

Interestingly, Welland cites a bigger challenge with budgets, which she says is driven by changing privacy laws. “The Shift to Implicit Data in the Paid Social Arena [is] leading advertisers to question the validity of the data and the impact on their bottom line. »

“As we head into a recession, we will likely see budget and marketing activity implications as advertisers will need to react to the behavior of their target audiences. brand awareness will be reduced based on overall business performance.”

CPC on the rise, brands need to look at margin and CLV

Another trend identified by Welland is the rising cost of CPCs. However, she says it’s difficult to pinpoint the exact cause, given how the landscape has changed in recent years.

“When looking at PPC over the past 10 years, the reliance on automated bidding strategies executed directly within the platform has increased alongside the rise of more ‘blackbox’ automation strategies (e.g., max performance),” she says.

“With less focus on managing CPCs and allowing platforms to algorithmically ‘choose’ them, a cynical mind might suggest this has had an impact on boosting CPCs. A recent study of GOA (the search automation tool) showed that CPCs exceeded £00 in certain verticals where CLV would not make it a viable marketing solution.”

“We’re surprised that more brands haven’t made the transition to being driven by margin and CLV when evaluating their marketing budgets,” Welland concludes.

Wesley Parker, co-founder and director of DemandMore also told Econsultancy that CPCs are increasing, but those clicks can still represent value.

“It depends on the industry, but in most cases, our ongoing campaign optimizations and data management improvements have resulted in an increase in conversion rate or customer LTV, if not both. Indeed, some of our clients’ CPCs increased on purpose because we raised the bids for clicks where the data suggests higher lead quality or AOV.

Paid Search Best Practices Guide

Advertisers can apply performance lessons to CTV

AppsFlyer’s Gal Ekstein says the biggest change in social advertising is where brands are now investing. “Facebook and Instagram have long dominated, but it will come as no surprise that TikTok, and video advertising in general, have seen significant growth and will continue to do so,” he said.

Additionally, he explains that CTV is proving increasingly valuable and, more specifically, “challenges the assumption that television advertising is nothing more than expensive branded gambling.”

explains Ekstein. “CTV also enables advertisers to create better, more contextual experiences. The combination of more specific engagement with improved ad buying systems allows advertisers to show their ads in the right place at the right time, minimizing any possibility of mishaps or irrelevant ad placements. Advertisers can also place deeplink-powered links and QR codes in ads, allowing them to run mobile app campaigns on CTV that drive users to the right content in their apps.

“Due to programmatic buying methods, CTV also has lower upfront commitments and can be added as a line item to existing mobile and desktop media investments.”

“Finally, advertisers can measure the performance of their CTV ad campaigns, understand return on ad spend, what’s working, and optimize future campaigns accordingly. As we have discussed, this information is crucial, especially during an economic downturn. »

While House of Performance’s Emma Welland agrees on the benefits of CTV, she also suggests that marketers aren’t taking full advantage of it yet, and the same goes for programmatic podcast advertising.

“There are very few clearly targeted ads with geographic or demographic personalization in these spaces, and if advertisers could apply more performance marketing lessons to target the right users with the right creative across these growing channels, they would probably benefit from it.”

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Marketers must prioritize first-party data

According to Merkle’s latest Media Performance Report, only 35% of survey respondents prioritize first-party audience and data management, despite the deprecation of third-party cookies.

Welland agrees, suggesting there’s a clear lack of attention to first-party data from brands.

“With the changes and discussions around privacy over the past few years, we expected this to be a priority. We had planned to focus on CRM strategies and audience activation strategies in all media investments, however, as a consumer and advertiser, it does not appear that the industry has prioritized this” , Welland said. “This should be something that all CMOs/CDOs etc. will prioritize over the next six months, as having a comprehensive data strategy will enable sophisticated digital enablement strategies that drive both growth and efficiency of the marketing and beyond.”

While AppsFlyer’s Ekstein agrees that “like any major change, it takes time to adapt” – he also suggested that marketers are start making this change.

“For example, brands are increasingly asking us how to diversify their channels and put more emphasis on proprietary media that doesn’t rely on third-party data. For example, if you want to drive people to your app, running an email marketing campaign is free, uses existing proprietary data that was provided through consent, and reaches an already engaged audience.

DemandMore’s Wesley Parker suggests that Google’s repeatedly delayed deadline for abandoning third-party cookies is the reason for the lack of attention to first-party data, leading many to view it as a “distant problem”. .

“Over the past two weeks, Google has pushed the deadline to 2024. I believe this transition will be accelerated by increased automation within the platforms in areas such as bidding and targeting. In the past, advertisers have seen performance gains from optimizing advertising platforms such as Google Ads, however, as this becomes more automated, the advertisers who will excel are those who get the best possible third-party data from the platform -form. Whether it’s conversion data, audience data, or creative.”

Retail media continues to grow

Sam Benkel, MD Retail Media Northern Europe at Criteo, told Econsultancy that rising costs inside walled gardens are prompting brands to explore new channels.

“According to our recent research,” he said, “senior media agency professionals in the UK reported a 27% increase in their cost per sale via walled gardens over the last year. “

One of the most common solutions to this, Benkel says, has been to increase spending in these channels by about a third. “But investing more for diminishing returns is not a long-term solution,” he said. And while Benkel cites CTV as one such solution, he also says retail media is where the real opportunity lies.

“With audience insights derived from a retailer’s first-party data, retail media can immediately scale advertising campaigns, identifying new buyers in the market. It’s also an inherently safe environment for the brand, backed by long-established, trusted retailer domains. »

Benkel cites other stats from Criteo’s own research, explaining that retail media can produce more accurate audience targeting (51%) and better sales growth (53%). “The outlook is shared by brand marketers, those investing in retail media are increasing their spend by 50% on average this year,” he said.

“The retail media wagon is accelerating and one of the key things we’ve learned is that too few retailers currently offer brands mature advertising environments, underscoring the desire to diversify spend across these partners in the immediate future. Marketers need help building, scaling, and enabling first-party data to make the most of business opportunities, and retailers are delivering to them and their agency partners exactly that. “

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