Navigating Attribution in Performance Marketing Strategies for Sustainable Growth
Matt: Can you share one unique insight or observation you've had recently about it?
Dian: To start, performance marketing focuses on measurable results to drive business outcomes. It could be anything like installs, purchases, or revenue. Performance marketing helps us understand how each marketing activity contributes to our business.
For example, if you do an offline event, run ads, or partner with influencers, you want to know how many bookings come from each activity. We look at how each channel performs. If you have ten bookings, you try to see which activities led to those bookings. For instance, three might come from affiliate marketing and two from search ads.
Performance marketing is mainly about attribution. The tricky part is that every platform has its own way to measure performance, and they might be different, making it hard to compare them directly. The consumer journey is getting more complex.
Performance marketing is mainly about attribution. The tricky part is that every platform has its own way to measure performance, and they might be different, making it hard to compare them directly. The consumer journey is getting more complex. People are using many types of media like social media, YouTube, and out-of-home banners.
For example, a report from We Are Social showed that in Indonesia, the unique reach across social media is very small, only about 2 to 3%. So, whether you use TikTok or Instagram, you're mostly reaching the same audience but on different platforms.
This makes attribution more complex because customers see many types of media, and not all can be tracked. For example, if they see a flyer or an out-of-home banner, you don't know if they will search online, visit a website, or install an app. There are limits to online tracking.
Over the years, attribution has become more complex and less productive to focus on. Now, it might be better not to focus too much on how each channel performs since everything overlaps and platforms change how they measure results. So, marketing should not focus too much on attribution.
They can choose a specific measurement and check if the results improve as they invest according to that measurement. If the trend is positive and the numbers grow, that's a good sign. Many companies are now investing more in performance marketing.
Eventually, they might hit a performance plateau because they target audiences who are likely to convert, like signing up for newsletters or buying products. Once this audience is exhausted, additional investment won't yield more results.
When this happens, businesses need to invest more in brand marketing, which is harder to measure and less focused on immediate performance. This requires a shift from performance marketing to an incremental approach.
Businesses need to test and learn to find patterns in how marketing investments affect performance. There's no one-size-fits-all solution, but this is a general insight.
Matt: You talked about the brand and the performance marketing side, or what I call the demand side. What advice do you have on how to split the budget between brand and performance marketing?
Dian: This is a tricky and interesting part. About three years ago, I talked with a leader from a big media agency. We discussed how different companies at different growth stages have different marketing strategies.
For example, smaller companies invest more in performance marketing to drive conversions and business performance. Bigger, established companies like FMCG banks focus more on brand awareness, trying to reach more people so they remember the brand and make purchases.
Smaller businesses need to survive and make things work with fewer resources, so they focus on performance marketing. Big brands, on the other hand, are already known and need to strengthen their brand, so they focus more on awareness.
For bigger brands, the marketing mix could be 80% on awareness and 20% on performance marketing. For smaller brands, it might be 60% on performance marketing and 40% on brand building and long-term investment.
Beyond the Plateau: Integrating Performance Marketing with Brand Building
Matt: Do you think businesses will agree with this idea? If you've already convinced your current business, how did you do it? How did you get them to care less about these metrics and more about business results?
Dian: When we start, we usually focus on measurable results. But over time, I noticed some patterns when things don't add up. For example, I'm currently helping a big telco company. They used to invest a lot in performance marketing, but now about 40% of their budget goes to awareness.
After they shifted to awareness, their overall marketing costs went down. This is because we need to look at the whole investment, not just parts of it. Brands usually separate budgets for brand awareness and performance marketing.
But when things get tough, you need to see the big picture. Treat brand awareness and performance marketing as parts of overall marketing. Combine them and see if increasing brand awareness affects the total result.
But when things get tough, you need to see the big picture. Treat brand awareness and performance marketing as parts of overall marketing. Combine them and see if increasing brand awareness affects the total result.
And that's one of the interesting patterns I found for that telco brand. When they increased their brand presence in the past three months, their overall business improved even more. This is likely because they reached more customers. In performance marketing, you usually target the easiest customers first.
Now, they are trying to reach a larger audience, so they invest in a wider reach. You start with measurable results. When that stops working, you need more conversions. So, you invest in reaching more people. The tricky part is measuring this.
Not every business has the right analytics in place. You need to test, learn, and see the patterns. Typically, a brand will need four to six months to find the right balance.
Matt: You mentioned Airbnb, a well-known brand, and their example of brand versus performance marketing. They stopped all performance marketing for six months or a year.
Airbnb is a famous example of performance versus brand marketing. They stopped all paid performance media for twelve months, focused on brand, and saw a huge increase in sales and business.
Do you worry about the future of performance marketing when you see big examples like that? What changes do you see coming in performance marketing? Or do you think it will always be around, but maybe with more budget going to brand?
Dian: There is a big and interesting case here. We shouldn't see performance marketing as a separate thing. It's part of online marketing. Performance marketing helps us target customers who are ready to buy, sign up, or register. It's a way to find these customers quickly and easily.
The key is to find and reach these customers. For a big brand like Airbnb, performance marketing might not matter much because the brand already has a wide reach. You'll reach the same customers with or without it. What matters is offering products or promotions to get the business. Performance marketing helps the business grow faster.
But as I mentioned, when your business gets big and your brand is well-known, you can switch to general brand-building activities. People already know you, and performance marketing is just about reaching those likely to buy your product.
You can achieve the same results with brand-building activities. For example, when launching a new product or entering a new market, you need to reach those who will adopt your product quickly. That's where performance marketing comes in. It won't disappear but will remain part of your strategy, just used differently.
Constructing an Effective Performance Marketing Team
Matt: What makes a great performance marketer and what traits make someone effective?
Dian: The main thing I look for in a performance marketing team is a growth mindset. I've worked with many performance marketing teams, from big agencies to small startups.
The key trait is a growth mindset, where they want to explore, tinker, and dive deep into the technical aspects of their work. Performance marketing is about tailoring our media investment to be productive.
The key trait is a growth mindset, where they want to explore, tinker, and dive deep into the technical aspects of their work. Performance marketing is about tailoring our media investment to be productive.
We might need to look closely at details, like changing settings, bids, or doing A/B testing on creatives. To do that, the team needs to take the initiative and not be satisfied with the current status. They need to challenge it. So, one important trait is a growth mindset. The second is the ability to work well technically.
Some people are generalists who like planning but may not be interested in details. However, the best performance marketing team is willing to dive deep into technical aspects and be specialists on the platform.
For example, if you're working with Facebook, you should know how it works. If you're working with TikTok, you should know how it works. You should also understand how machine learning works on Google, like how increasing the budget will affect the machine's behaviour.
If you increase the bid or change the creative, how will it work? And when you increase it, how long will it take effect? If you change certain criteria, what will change and how soon?
The second point is to have people who are technical and know the platform well. This is really important because things change a lot. Sometimes the platform acts strangely. For example, while working with Facebook, a campaign went bad for no clear reason. We tried changing everything, but nothing worked. We ended up shutting it off and creating a new campaign, which worked better. We didn't know what happened; the platform just changed.
We need a proactive team with a growth mindset and an understanding of the campaign or platform's capability. They should know what needs to be done. With technology changing, this person needs to work fast and understand the changing landscape and how media will affect our results.
Matt: Having a growth mindset is very important because, as you mentioned, online marketing changes quickly. It's as important as having deep expertise in one technology because that technology could change or be replaced in a few years.
Have you seen the skillset for performance marketing change over the last five years? Have there been any major changes that make you think the new breed of performance marketers has a specific trait?
Dian: This is interesting because the change is driven by the platform, not the business. Big companies like Google, Meta, and Amazon are adding more automation to their platforms, making it less important to tweak details. However, understanding how the platform works and what can be changed is still crucial.
In the future, machine learning will handle most changes, with humans guiding the process and integrating the platform into marketing strategies. Performance marketers now need to be both technically and business proficient. They must communicate technical advertising terms like CPM, CPC, and click-through rate in ways business people understand, focusing on revenue.
As automation increases, more people can enter online advertising, lowering the entry barrier. Marketers need to bridge the gap between technical and business aspects to stay competitive.
Matt: If someone is starting out in performance marketing, it's important to be curious and have a growth mindset. Play with the tools and show curiosity. This is really important for new online marketers.
Dian: Performance marketing is not just for immediate business needs like driving leads or sales. It's a way to target customers more effectively. One interesting use is testing creative ideas with performance marketing.
For example, if you have a product and you're unsure if it will work, you can use performance marketing. Create a simple landing page and promote it to get sign-ups. If people sign up, it shows that the business or product might work. It's part of the growth mindset the team needs.
Knowing how it works lets you experiment and drive more results for the business, not just conversions but also creative tests new products. So, being creative with performance marketing is really important.
