Tradedoubler believes there will be five key topics of conversation in the coming year: value chain, traffic, data, pricing models, and regulation and compliance.
Indicators show that ecommerce spend will continue to grow. The impact of the smartphone and how it is supporting the change in consumer behaviour – enabling the traditional in-store purchase journey of the persistently connected consumer to be hi-jacked at the last moment – is indicative of this growth. So the future of performance marketing is bright.
However, for the industry to reach fruition, it must move up the marketing value chain. It will be critical in 2014 that performance marketing is on the agenda of the c-suite, with a view to us advising this group of influencers on how they should invest in performance marketing to drive the most effective ROI.
Unsurprisingly, mobile traffic on the network will continue to grow. What will be an interesting trend to watch though is the growth in integrated on/offline traffic, which will become an integral part of the advertiser’s affiliate programme. Consumers will continue to embrace social, video and offline (for example, pay-per-call) and it will be more important than ever for advertisers to be able to track the diverse path that a consumer may take in making a purchase.
Add to this the growing demand for local affiliate marketing with geo-targeted vouchers and deals, and understanding the user journey and their path to conversion better is suddenly critical.
‘Data’ has been appearing in the predictions lists for a few years now, but the big change for the performance-marketing channel will be understanding the full user journey, not just what the customer did at a certain point in the purchase path. Having the data to understand how the customer first started their engagement and where they ended it will be crucial.
Advertisers will need to know what advertising medium consumers were influenced by, to what extent that medium influenced them, and at what point in the purchasing decision – was it while checking out a promotion on their smartphone, watching a video, reading a newsletter, participating in a social forum, or across all of these activities?
Likewise, advertisers will be able to use the data to analyse how to get value out of the consumer in the long term (by educating them through "long-tail" channels such as blogs and newsletters), as well as in the short term (through initiatives like voucher codes and cash-back). By having the data on the lifetime value of a consumer – across multiple channels and devices – advertisers will be able to make intelligent, insight-based decisions, so they can become more effective at new customer acquisition.
Performance marketing will continue to embrace the traditional pricing models, such as CPA and CPL. However, as advertising campaigns evolve, we will need to incorporate CPE (engagement) and CPV (view) into the pay-for-performance mix, to accommodate consumer engagement trends. Marketers are including a broader mix of marketing mediums into their digital advertising campaigns, to include video and social for example, and are also keen to optimise campaigns with re-targeting.
So, the technology needs to be in place to: track variable traffic activity, set the parameters for the "cost-per" type prior to the campaign commencing, and accurately charge for it. For the advertiser, it’s about being able to effectively manage their budget with maximum insight, have presentable metrics, and prove the return on investment through an increase in sales. It’s the responsibility of our industry to have the technology in place to accommodate the expanding and variable cost models to support this.
Regulation and Compliance
The performance-marketing industry has lacked formal regulation and this has been an issue for a while – it stops advertisers placing their trust in performance-marketing networks and publishers, but it’s also prevented the industry from gaining its rightful credibility. With a pay-for-performance payment model, performance marketing is one of the few marketing mediums where you pay based on the result, not upfront before the campaign is proven. However, it’s often seen as an afterthought in the marketing mix.
The industry must come together to create a blueprint for best practice with a formal code of conduct, and implement an accreditation programme, with a regulated audit process for guaranteed compliance. Greater regulation and compliance will assure the future of our industry.
Dan Cohen is regional director at Tradedoubler