Performance Horizon Group: How to ride the groundswell of change

Before founding Performance Horizon Group (PHG), I co-founded and served as president of the buy.at affiliate network, which AOL acquired in 2008. Over the years I was able to apply insights from the first business to foresee how the industry was going to change and I have had the pleasure of being part of the evolution of performance marketing. With PHG we saw an opportunity to centralise clients’ global marketing activity as a strategic technology partner in a way that wasn’t possible as an affiliate network.

In their 2008 Business Week bestselling book, Forrester analysts Charlene Li and Josh Bernhoff describe the world’s transformation as a result of social technologies as a ‘groundswell’ – a fundamental shift in how things are done based on a collision of people, technology and economics. Social media started to really change the world around five years ago and these three factors are now driving a transformation in the performance marketing industry. At PHG, we’re seeing it unfold firsthand. There’s a fundamental shift on the brand and agency side in how they manage, understand and optimise their key marketing partners – and it’s happening at a faster pace than ever.

People

Technology enables change but it is people who require and demand it. Consumer preferences change all the time, from how people consume online content and ads to their journey from product discovery to purchase. Because online consumer behaviour produces massive amounts of data, brands are increasingly looking to manage all their channels under the larger performance umbrella (affiliate, search, display) in a single centralised place. They’re also looking at how they can get more data out of the channel and utilise the insights for both themselves and their partners
to drive incremental growth and smarter, margin-led sustainable results.

Fortune 500-level brands have proved that they can enter a new market almost anywhere in the world and still find the biggest partners directly. They are realising as globally recognised brands that partners want to work with them directly. Some brands, such as Amazon, are handling this in-house but many are also now looking to combine best in breed technology solutions that scale with strategy and account management from large digital agencies such as iProspect and Ogilvy to help manage their partners day-to-day and integrate their data at a holistic level, which allows for better attribution of their wider media spend. The opportunity to connect directly with their partners globally at scale is attractive – and of course technology is the key enabler of this shift in strategy.

Technology

New technology is helping turn brands into real-time marketers, which in turn is causing a fundamental shift in how they optimise their partner marketing channels. For the first time, brands and their partners are able to use data effectively to derive increased value in their relationship. Better relationships were always a key growth agent and that hasn’t changed – things have just matured.

Many firms are still way behind on having the capability to use their data effectively, especially in the marketing function. We see a huge opportunity as brands are leaving a lot of revenue on the table that could be delivered through improved use of their data to drive better decisions on how best to maximise their key partnerships. Brands have shifted priorities
from just looking at the volume of sales to digging deeper into their data, and this requires them to rethink their underlying platforms and toolsets.

If it can be measured then brands increasingly want to pay on the performance metric. This used to be limited to impressions, clicks, leads and sales but it now could just as easily be a tweet, ‘like’ or in-store conversion. All of these extra data points will force large brands – regardless of size – to make changes in the next three years. The smartest brands have already future-proofed themselves.

In the macro-scope of technology, mass consumer adoption of mobile devices is fuelling sales for brands globally. While being able to report data is one thing, the ability to act on that data in real time is something else completely. Brands now want to be able to view partner sales by device and even operating systems in real time and be able to turn that data into actionable insights. Brands are also now adopting and using better performance attribution models. Methods of click path analysis such as value attribution allow brands to better identify what partners are driving the most valuable customers and sales – not just the most clicks.

Economics

Performance marketing is rapidly adjusting to the realities of a global economy driven by a massive growth in ecommerce. Today brands and their base of partners are operating all over the globe and are moving outward from traditional core sectors into emerging EMEA and Asia-Pacific markets such as Malaysia, Poland and Russia. As a brand’s publisher base becomes increasingly global, so must the brand’s performance program. The scale of both ecommerce and performance partners has brands seeking efficiencies and leaning on their digital agencies to bring in talent to meet the dawning of this globalised age.

Within the performance marketing channel, the economic viability and implications for brands and partners are clear. Key findings from the IAB’s most recent report on the value of online performance marketing in the UK showed that in 2013, there were “4,000 advertisers actively engaged in online performance marketing… expected to spend £1bn across 12,000 publisher sites…driving 4 billion ‘clicks’ by consumers, which converted into 200 million transactions…to generate £14bn of sales for advertisers.” A 14-1 return is hard to beat, so it’s no wonder that the majority of brands are looking to up their spend in 2014.

Parting thoughts

I’ve been lucky enough to be involved with businesses that have helped to shape the industry so far and educate enterprises on the benefits of investing further in performance-based models. The PHG team and I are excited to be part of driving this next phase of growth, as all advertising becomes measurable in real time and paid for on a performance basis, with the smartest brands learning quickly how best to unlock the enormous power in their data.