Performance marketing is dead: A bold statement by Dhan Claes
Performance marketing is dead: A bold statement by Dhan Claes
At the BAM Marketing Congress, Dhan Claes captured the attention with her statement “Performance Marketing is dead”. A bold statement, especially when it comes from an agency deeply rooted in a performance-oriented background. However, this declaration is not meant to bury the concept but to recognize the cracks in the system. Dhan Claes, from Semetis, delves into the pain points of performance marketing and the crucial need for a shift.
Performance marketing: A definition
According to Hubspot performance marketing is a digital marketing technique where marketers focus on performance and results solely. You set a performance goal and pay only when your goal is met.
Such goals are often:
- Driving conversion
- Reach a number of clicks
- Fill out a form on your landingspage
- …
Discovering the performance plateau
The agency Semetis, through observation and learning, identifies a common challenge faced by many brands: the performance plateau. This concept is well known in sports. An athlete for example is training and regardless of all the training, the athlete is not actually getting better performances. Brands, irrespective of size, industry, or business models, are grappling with this performance plateau as well. The ROAS (Return On Ad Spend) are increasing and everything that brands knew that worked well like search, social and display ads, don’t seem to work anymore. The root cause? An overreliance on performance marketing, with 80% of strategies fixated on short-term gains.
The evolution of marketing
Dhan traces the evolution of marketing over the past two decades, from the ‘attribution marketing utopia’ where we could track everything and anything, to the challenges brought by GDPR, Apple’s privacy settings, and the increasing complexity of online content distribution. So, in this new world, marketers needed to be a little bit more transparent about their data and due to new privacy settings, the traditional attribution model does not work anymore.
In addition, the attribution model made marketers feel safe. It allowed them to justify their budget distribution and helped them persuade stakeholders. But, it mainly pushed them to focus purely on short term numbers.
The attribution model and privacy restrictions are not the only reasons we’re hitting the performance plateau. Users today, also use a variety of channels and it is all about content. The truth is that companies are not really finding their way on how to advertise on certain channels, like TikTok for example.
Unveiling the 'hype cycle'
A phenomenon that Dhan recognizes with many of their clients, is the hype cycle. Just as excitement peaks about performance marketing, the efficiency or effectiveness in the middle of the hype declines. The era of solely focusing on short-term gains has led to a disconnect between advertising efforts and actual business results. To get out of this negative trend, you need to rethink your strategies.
Case: Airbnb reinvents their offering
The year of the pandemic in 2020 was also the year the travel industry collapsed. Overnight Airbnb lost 80% of their business. Why? Because pre-pandemic they were solely focused on performance marketing and word of mouth. Airbnb did not have a voice anymore and became just one of the many travel options.
How did they regain market? Through differentiation and uniqueness. Before they started a big branding campaign, they started working heavily on their performance and product experiences. They created new features in the app and added new services. When customers want to travel and spend time with friends, they should not rent separate hotel rooms when they could just rent one property together for a lower price. Airbnb put a light on performance and on product uniqueness.
I promise you there are going to be more bold statements that I will say. And the only reason I am saying those bold statements is because I truly believe we can only get better by challenging some conventions.
Breaking free from the Performance Plateau
To break free from the performance plateau, Dhan emphasizes the need for a nuanced approach that harmonizes branding and performance.
There is no magical formula to break free from the performance plateau, since it depends on many different elements. You need to think about your strategy and recognize you’re on the performance plateau if you want to make an evolution. Some pointers:
- Firstly, dare question your capabilities and those of your team. Don’t challenge yourself but dare to be critical.
- Unlearn old habits or conventional strategies.
- Thirdly, make attention a goal. Performance marketing was actually never alive, it was just on life support called ‘mental availability’. That mental availability was fed by attention.
- Attribution doesn’t work anymore. We simply cannot track everything and so you have to be careful when making conclusions from attribution models.
- Be creative if you want to effectively gain attention. Things that work well are human interaction, catchy tunes and memorable visions like advertisement with a cute dog.
- Consistency is key: work from 1 central insight and do product development on this one insight. Use it as well to feed your branding campaigns.
Conclusion
While acknowledging that marketers are still navigating the maturity levels of online advertising, Dhan concludes with a sense of reassurance. Just as marketers adapted to TV commercials over 75 years, they are still figuring out the nuances of platforms like TikTok. The key takeaway is the importance of recognizing the performance plateau, unlearning old habits, and embracing a more holistic and nuanced marketing strategy.
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