| June 17, 2019
After presenting at the Effies Summit in Colombia the other week, I sat in on a presentation by Santiago Pachano, Commercial Director at Google Argentina. He laid out a compelling case for why marketers should invest more in performance marketing. In my opinion there was just one small problem with his argument: it was a recipe for killing a brand’s future revenues.
Pachano’s argument for why marketers should invest more in performance marketing was backed by three key points:
1) Marketers should not target based on demographics but purchase intention (presumably as displayed in their online behaviour).
2) Technology means that we can now automate the process of identifying high intention targets and serving them with customised ads.
3) Empowered by the previous two, marketers can now reap the rewards of spending less and getting higher returns from what they do spend.
When it comes to driving immediate marketing efficiency there is not much wrong with this argument. However, it totally ignores how brands actually grow and make more money over time. Brands do not grow by targeting high probability purchasers. They grow by turning low probability purchasers into high probability ones.
Look, I get it, this is the perfect argument to help Google drive up its own sales. It makes marketers feel a bit dumb for not using all this wonderful artificial intelligence to make their marketing budget more effective. Except, it will not last. High intention people would likely buy your brand anyway, with or without sponsored search terms or display ads. Meanwhile, the new customers that the brand needs to attract to replace those lost to competition (or that great marketplace in the sky) get ignored. Eventually, the brand ends up incentivising a smaller and smaller group of high probability buyers, and the application of all that technology is wasted.
If you want to grow your brand you have to reach out to new customers and you need to prime the performance pump by predisposing people to buy your brand. The silly thing is, you could use the same technology much more intelligently and target low probability purchasers. You could further improve performance by looking at potential buyers from many different dimensions - shopping, browsing, dining out, entertainment choices, fashion, lifestyle and their existing relationship with the brand – then identifying potential customers similar to existing customers but currently off the radar and serve them customised ads. Of course, you might have to ask them what they think, feel and do rather than infer it from past behaviour.
I totally understand that marketing is a probability game, so Pachano is right there, but the real job of marketing is to change the probability that someone will buy your brand, not accept it at face value. Is performance marketing valuable? Yes. Does technology make it more efficient? Yes. Does it make brands grow? Not on its own. So now, you tell me, why do so many people fall for the performance marketing pitch? Please share your thoughts.