Five signs your media agency is delivering fake performance
Optimise Media's Chris Barron lifts the lid on the realities of 'performance advertising', and how the phrase has been hijacked by media agencies and programmatic ad tech companies.
Performance media is a phrase that is bandied about loosely and almost indiscriminately by digital agencies and marketers, often to the detriment of the advertisers it was designed to serve.
By definition (and according to IAB Australia’s glossary) performance advertising is where advertisers pay based on a set of agreed upon performance criteria, such as a percentage of revenue driven or on the volume of sales leads delivered e.g. cost per action or cost per lead etc.
In recent years, the term “performance” has been hijacked by media agencies and programmatic ad tech companies to refer to any digital activity where performance is tracked and measured.
No guaranteed clicks, leads or sales. It does not need to meet any client performance criteria, as long as it is measurable and intended to deliver performance goals.
Cleverly, this self-serving loosening of the definition of performance allows agencies and ad techs to ensure they meet their own objectives (i.e. spending money and retaining margin), but unfortunately not those of their clients (i.e. delivering new customers cost-effectively).
Low expectations are set amongst clients without the guarantee of performance-based objectives being met, despite delivering what they refer to as “performance” activity.
The way this often plays out is that a client will identify their cost per action (CPA) or cost per lead (CPL) target cost, and the agency will undertake a “best endeavours” approach to work towards that outcome, without any guarantee of hitting it.
This might mean that a client invests significant budget into programmatic spend for up to six months and still not be anywhere near the CPA target cost. As long as the CPA outcome is reported and monitored, even if several times higher the client’s target, that is still considered by the agency to be “performance” activity, which it simply is not.
Some agencies and marketers will chalk up modest improvements on CPA over time as a victory, despite being nowhere near the client’s goal CPA. If cleverly positioned from the outset, the client may even be brainwashed into joining the celebrations.
At a time when performance-based outcomes are becoming the standard for advertisers, and rightly so, we should be demanding more transparency, more accountability and ultimately a commitment to achieving performance objectives from the “experts”, being agencies and ad techs.
So you may ask, why would an agency not offer real performance media outcomes to their clients? Well, there’s a couple of reasons…
Firstly, if an agency is locked into CPA outcomes, they must work a lot harder to spend client budget in identifying opportunities that will meet CPA targets. This is time consuming and labor-intensive, as agency personnel may need to negotiate hard with individual publishers to deliver inventory on a real performance basis. Trading desks, which have become the booking mode of choice for media agencies, do not offer inventory on this basis.
Secondly, not guaranteeing CPA outcomes allows agencies to “test and learn” for a considerable amount of time (and budget) without any undertakings on the results – so budgets can be spent freely and agency commissions and service-level agreements achieved with minimal effort and minimal risk of leaving budget unspent (i.e. agency commission not collected).
Thirdly, loose “performance” strategy allows agencies to book inventory that is easy, automated or offered through “preferred suppliers” who may or may not provide undisclosed rebates or retained margins to agencies. None of which is in the interest of delivering clients performance-based outcomes.
All of that said, there are some agencies who get performance, understand its true value and do it well for their clients. But if you’re not lucky enough to be represented by one of the good ones, here are five signs your agency is delivering fake performance:
1. Your agency talks a lot about “performance” but only ever buy for you on a CPM or CPC basis
2. When questioned about a lack of real performance-based activity on a guaranteed CPA basis, lack of “incrementality” is cited, despite no evidence of incrementality in other components of the digital plan
3. Complex attribution models which spuriously award conversion attribution to display/social/video channels, despite low demonstrable click-through/engagement, viewability or evidence of these activities driving actual sales
4. A focus in reporting on “blended CPAs” and “overall CPAs” from digital strategy rather than a granular view on CPA by specific activities. Ask your agency to report on what viewable impressions, clicks and conversions are actually being driven by each activity along with justification of weighting based on the performance of each
5. Failure to split out internal traffic CPA outcomes (i.e. retargeted/existing/branded search) from incremental sources (if they’ve already visited your website, or searched for your brand, you might well have acquired them anyway!)
Chris Barron is Optimise Media’s managing director, Australia & New Zealand.
Yes of course, fragment your KPIs and look at everything individually so you don’t get a full picture. Genius. Hey that OOH campaign has a poor ROI! Turn it off.
Scrutinise the metrics to find outliers and when you do understand their role in the grand scheme of things. Looking at each line items CPA leads you down a funnel of efficiency, not growth.
If you don’t have a macro view of your campaign, you won’t know what direction to go in matey, and if anything, it will send you backwards.
There’s a reason Omni channel is becoming more acknowledged within the industry, it’s because the synergies between channels is much more important and challenging to interpret than a simple CPA on a page.
Don’t be myopic.
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“Your agency talks a lot about “performance” but only ever buy on a CPM basis” – unless you are a programmatic unicorn, the only way to buy is on a CPM. It’s what inventory is traded and valued on across every single exchange. Suprised you aren’t aware of that.
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Now watch them all go on the attack to try to protect their dirty little game that rips of advertisers and genuine publishers.
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Simple test would be random sampling of actual customers or sales outcomes and do tracking back analysis eg. not just how or which channels they emerged from but whether the actual message matched their experience.
The results can be then used to inform not just future strategy, but to update and maintain one’s own system, so that new strategies and campaigns, requiring high investment for unclear outcomes, can be avoided.
It may seem more difficult or high workload in short term, but maybe beneficial in the medium long term as conducted in house through customer base, joining the circle.
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Actually you can buy inventory on an acquisition basis but that wouldn’t be profitable to your media agency who would rather spend through their own desk would it?
Surprised you’re not aware of that…
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Solely paying on a CPA for all your marketing is great in theory, but in practice it’s not that simple – for a few reasons.
1) There’s a limited volume of traffic available from performance channels, because most publishers in the digital market won’t work on a CPL or CPA, and the publishers that do usually have scalability issues. So once the initial pool of ‘easy’ traffic is exhausted, it’s hard to increase volumes without massively upping the CPLs or CPAs.
2) Performance channels typically perform best (i.e with the highest volumes at acceptable CPLs/CPAs) with established brands that have an omnichannel strategy. It’s a lot harder to sell via performance when the brand is unknown.
Sometimes it’s more cost effective to pay for brand and get the uplift from performance publishers than simply throwing more money at performance publishers.
3) Agreed publisher CPLs/CPAs can be higher than what a client would pay if they were paying per click or per impression. Typical examples of this are FB ads, Native, and Retargeting via display. Also, frequently occurs with PPC.
In summary, paying on a CPL or CPA is fantastic, but it’s not an entire marketing strategy, and it has it’s own challenges.
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I think what you are trying to say is that good programmatic strategies focus on solid and trusted partnerships between advertisers and programmatic buying platforms.
Trust which comes in the form of transparency from the platform in return for access to valuable data from the advertiser.
As a result, both parties can cooperate in a buying strategy that goes beyond achieving a CPA, but which focuses on acquiring customers with a Customer Lifetime Value higher than their acquisition cost
More involved but less restrictive than a CPA being fixed or the final performance metric to work towards
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