The performance trap

"How Google Analytics ruined marketing"was the title of a recent article by Samuel Scott published in Techcrunch. His central thesis is aimed head-on at the promise of salvation of online marketing: tools such as Google Analytics, according to Scott, would lead to a purely ROI-based approach to all online marketing and thus to a narrow view.

From the opposite direction, but aiming at the same point, a thundering highly amusing polemic by Christian Meyer Theo Müller Group's media and digital manager ("Müllermilch"): Disgusted by buzz words and the digital industry's foaming at the mouth, he announces his South Sea vacation absence during dmexco, of all things, and lambasts all digital marketing promises of salvation in one big sweeping blow. In between, Meyer poses a provocative question that in many ways precisely outlines the plight:

"Ask the agency or the marketer if they want to be measured by their success. Very enlightening. Sharing the risk with the customer for services and products whose effectiveness often still has to be proven? Oh no, you don't."

Nope, you. We really don't want that. But by no means for the reasons that Meyer implies ("Belief in your own product has gone with the wind."). The answer from the agencies and marketers is less enlightening than the question itself, which points to a very specific mindset, especially among advertising clients: the narrow performance mindset, which in the most harmless case leads to nonsense such as performance-based fees, and in the worst case to bad marketing.

What does success mean?

Firstly, the effect of marketing measures is always interdependent, but the agency influence is usually only selective. Example: If our customers run TV campaigns, our AdWords figures shoot through the roof. That's nice, but I would be wary of charging a success fee for it. Conversely (speaking of Müllermilch), if a company promotes its products stupidly packaged and gets bad PR, the online agency can't be held responsible for a drop in performance. But it will still be punished.

Secondly - and this is my main objection - the fixation on measurable success is a strategic disaster in many respects: If you reduce success to directly and immediately measurable effects, online marketing degenerates into a tactic with no strategic relevance.

Pepsi: 80 million votes, 5 percent less market share

A prime example of an unfortunate focus on measurables was provided by the "Refresh Project" True to the Cluetrain Manifesto ("markets are conversations") and the realization that the world is now digital, Pepsi reallocated massive advertising budgets in 2010, forgoing Super Bowl ads, among other things, and noisily launching a platform on which grants were awarded for great ideas. The idea behind it: This creates conversations and therefore a market. Result: 80 million votes, 3.5 million likes, 60,000 Twitter followers. Engagement that was impressive, and pretty much every social media conusltant painted enthusiastically Slides.

Nevertheless, it was one of the biggest marketing debacles in recent history: Pepsi lost a whopping 5% market share in 2010 and fell behind Diet Coke to become the third most popular soft drink in the USA. The use of mass media, difficult to measure in terms of impact, was thus replaced with precisely quantifiable measures in social media. The interdependency was ignored, the echo chamber was apparently too small after all, and after just two years the project silently buried. Since then, Pepsi has been advertising at the Super Bowl again.

Performance is an exceptional case

Within the online marketing ecosystem itself, the narrowing mechanism described above often continues: good online marketing is suddenly only that to which Google Analytics assigns sales directly or via attribution. "Measurable" narrows down to "converting", "success" becomes "turnover". However, this distances marketing from its recipient: the potential customer. They do not buy all the time, but only in exceptional cases. It is precisely this exceptional case, however, that determines who is caught in the performance trap. Measurability is no longer a characteristic here, but is misunderstood as a prerequisite for success.

This lacks any logic and leads to market remoteness: Assuming a decently functioning online store generates a conversion rate of 5% on all paid advertising measures, the retrospective goal from a performance perspective would have been to have used the budget exclusively on exactly those 5 percent. Anything else is considered wastage and failure. So the scatter loss will be minimized, with the declared aim of ignoring the vast majority of your audience in future.

Marketing rarely works now

This lack of logic is also demonstrated time and again by advertising banners that suddenly tell me to "Buy now!". Recently, for example, an advertiser mysteriously thought that I should order a pair of binoculars immediately. Nothing was further from my mind at the time, and no, it was by no means a remarketing ad. That annoyed me so much (admittedly, the ad was an interstitial on my cell phone, which was the last is) that I won't be buying anything from this company for years to come.

The alternative: I could have been gently wooed; I could have been charmingly introduced to the company and later shown how beautiful the world looks thanks to these fabulous binoculars. Little by little, thanks to exciting content and methods of sequential remarketing - might be able to persuade him to buy. But no, online marketing is measurable, so the reluctant guy should buy these binoculars now, after all, ROI is needed now. If the campaign doesn't work, either banner advertising in general is crap or the agency in particular is. No wonder they refuse a success fee, QED.

Good advertising does not have to sell

Mind you, there is nothing wrong with pure performance strategies. Many companies do well with them, limiting themselves in terms of growth, but as we all know, this also has its positive aspects. It only becomes problematic when it is not a strategy, but a tactic ("buying traffic with the highest possible ROI") that is diametrically opposed to the company's strategic goals ("growth"). Unfortunately, it is easy to overlook this: as Internet audiences and activity continue to increase, performance marketing appears to generate growth. But this is a delusion: you often just move in step with growth that is happening anyway. The rude awakening only comes when saturation effects take hold and competitors who have previously made a greater effort to attract the 95% non-converters gain market share.

The user will certainly appreciate well-made advertising that does not yet want to sell him anything, and it will certainly influence his inclination to buy these binoculars one day. Contrary to the performance mindset, it makes a lot of sense to spend money on measures that do not generate any sales.

Procter & Gamble's wonderful clips "Always like a girl" for example, refrain from any commercial message and are indirectly highly successful: Google queries for "always pads", for example, have been a popular tool since the campaign by Leo Burnett shot up. "Well," Müllermilch's Christian Meyer might interject. "Success. You can measure it." Certainly. But only with the right key figures. In this case, it was about a brand lift.

Success must be defined by the consumer

The problem that arises is this: Depending on the measure, depending on the channel used, depending on the objective, success must be defined differently. Or, to put it another and revolutionary way, from the consumer's point of view: Success means something different depending on the user and their current relationship with the advertising company. (Good luck putting this into a performance model for the agency, by the way).

From this perspective, performance is just one of many characteristics, nothing more. But if you incentivize your agency on performance, you turn it into a tactical henchman instead of a strategic partner and then complain about the inadequate consulting service. Just like Christian Meyer:

"As long as we don't start to focus on the essentials again, as long as we continue to fall for the digital craze - often without reflection - and as long as agencies do less and less justice to their consulting mandate (...) nothing will change."

Certainly, agencies challenge their clients too rarely. One of the reasons for this is that companies too rarely accept this challenge. But in order to climb out of the performance trap, collaboration is needed. What Meyer overlooks or fails to mention is that this is actually an unholy alliance of wishful thinkers on both the client and agency side. Since this stuff is measurable, the client wants to buy success, which is why the market - especially in the context of a dmexco - readily promises success. However, as the concept of success is rarely clearly defined, everyone ends up disappointed and pointing at each other.

Meyer is absolutely right when he writes:

"Digital is everything? No, it's not. Good communication is everything for every thing! And it still starts with a good idea, followed by good creation and ends with a good media plan. Nothing has changed in this respect, even in the digital age."

There is nothing to add to this. Except that the statement, which is certainly correct, needs to be differentiated: a "good idea" is also needed for digital contexts, in which a "good media plan" is subsequently required in exactly the same way. After all, the aforementioned growth in Internet audiences and activities has been taking place for years. And it is a truism that marketing has to take place where people are. In this respect, a lot has changed in the digital age: Digital must always be considered. And with the right mindset.

Luke Stuber, CMO of Yourposition, 2016