WARC released their Guide to Performance Marketing for members in April 2024, and I wanted to share a few relevant highlights from the report on strategic considerations for the future. Have any of you noticed the same trends or struggled with measuring performance marketing effectiveness going forward?

•  Performance accounts for 51% of ad spend
  • Search is diversifying to social platforms like TikTok, which are now used as search tools.
  • Retail media is growing, and its higher ROI is driving this growth.
  • Performance marketing is moving “offline” with programmatic DOOH and Connected TV, for example.
•  Brands need to start looking beyond short term for efficiency and effectiveness:
  • Adding brand building can improve effectiveness since long-term ROI is 2.5x higher than short-term ROI.
  • For example, campaigns with both reach and performance had 18% greater incremental sales than performance alone.
  • Branding is a way to escape the performance plateau**
•  Brand’s need multiple approaches to measurement
  • MMM (marketing / media mix modeling)
  • Incrementality experiments
  • Attribution (though the challenge is that attribution can over-report performance marketing’s effect).

•  What does this mean for marketers and agencies:

  • Break down the silos between performance, brand building and retail teams to work together for better effectiveness.

*Definition of performance marketing for this study: type of online advertising where advertisers pay for specific results, such as clicks and conversions.

** Performance plateau is the theory of if you only do performance you will get quick growth but eventially you reach everyone “in the market” who easily convert and then you will plateau. So without branding bringing in new customers to the market the brand will slowly “dry up”. More often tt is the light buyers who are buying most of your product and not the heavy buyers (the banana curve).

Source (members only): https://www.warc.com/content/paywall/article/bestprac/the-warc-guide-to-performance-marketing/en-GB/155467