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Performance Marketing Comes of Age

By Jake Sorofman | August 21, 2014 | 3 Comments

I’ve been thinking about the idea of performance marketing, which—to most ways of thinking, at least—is seen as a relatively narrow discipline reserved for clicks-driven and digital commerce companies with the luxury of close proximity to the transactions that drive their business.

But I think it’s a discipline that should inform modern marketing in a much, much broader sense. I think every digital marketer should aspire to become a performance marketer.

What exactly is performance marketing? Two things set it apart from other marketing disciplines: (1) a pay-per-click orientation that offsets the front-end risk associated with traditional marketing investments; and (2), a closed-loop system that enables continuous measurement and optimization of these investments over time.

While I recognize that this traditional definition isn’t perfectly parallel to all manner of marketing and media, performance marketing is really about removing risk from marketing by shining light in the dark corners and turning marketing into a performance-driven science, rather than an intuition-driven art. Performance marketing allows us to double down where the hands are hot.

In fact, this is a key driver for the digital marketing hub, which is really about bringing the advantages of performance marketing to “broken-loop” marketing models, where decision journeys are anything but direct and revenue attribution is complex. Recall the characteristics of the digital marketing hub:

  1. A unified customer profile that combines first and third party data and the necessary instrumentation to achieve known and anonymous audience resolution.
  2. A content supply chain that “feeds the beast” with relevant offers, stories and experiences.
  3. Intelligent orchestration to sequence and coordinate this content to the moments that count on the decision journey, in near real time.
  4. Unified analytics that allow marketers to trace the thread from investments to outcomes so they can optimize investments to highest yield.

This last part certainly calls to mind performance marketing. The challenge, of course, is broadening these principles to apply to a more experience-centric way of thinking. Here, the goal is to engage audiences with content appropriate to the moment, often holding fire on the offer itself. The goal is to use data to drive dialogues to create loyalty and advocacy over time.

That’s not to say that the goal here isn’t also to sell stuff. The difference is developing a more sophisticated view of behavior, preference, motivation and intent to appeal to audiences in more relevant and memorable ways. This is very different from pumping what you have on the truck.

Performance marketing is, indeed, coming of age. Closed-loop marketing is a page directly from the performance marketer’s playbook and a key design center of the digital marketing hub. The difference here is one of orientation, where the audience—not the offer—is the center of gravity.

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3 Comments

  • Toby Murdock says:

    I really like this vision Jake. Devil is in the details, however, in making all of the pieces work together.

    When you and your colleagues think of this hub, do you think of it as one system that covers all of the needs? Or a more loosely coupled set of systems?

    The former is more straight-forward, but I think is ultimately unrealistic given the proliferation of marketing technology and tools. I think the key to the realization of your vision are systems that are able to effectively stitch together all of the touch points and metrics to provide marketers the comprehensive control and analytics that they need.

  • Thanks for the comments, Toby. While there’s clear consolidation in the market that will eventually simplify what it takes to create a digital marketing hub, it will probably always be a loose assemblage of commercial components. Thus, integration and extensibility are absolutely essential ingredients for achieving this vision.

  • Aaron Goldmn says:

    Great post, Jake. We’re definitely seeing this trend you’ve identified of all digital marketers becoming performance marketers. Even the most traditional brand marketers are now using proxy metrics that can be gathered and analyzed in real-time to inform automated campaign optimization. This used to be exclusively the domain of direct response marketers but the rise of advanced marketing technology solutions have made it possible for all organizations to measure and optimize performance. Now we just need to shift the orientation, as you pointed out, with audiences being the focal point of optimization as opposed to myriad other campaign variables.