Performance Marketing and Paid Media in Challenging Economic Times
Hi, everyone. Alex from OpenMoves here, and in this video we’re going to discuss performance marketing and paid media during challenging economic times…
Most people would definitely agree we are in challenging economic times, and we’re really not sure what is going to happen at a macro level over the next few months or even a few quarters. Stock market is down, hiring is frozen across a lot of companies, definitely lots of choppy waters out there, macroeconomically. And many marketers, media buyers, CMOS, are wondering what to do with paid media during this type of environment. So here are five tips or five tactics, strategies, talking points, whatever, that you can use to improve or at least skillfully navigate and guide your performance marketing through a downward trend at the macro level.
So, paid media performance marketing concept one would be focusing on the middle funnel.
So what does that mean? Obviously, most marketers are aware of a marketing funnel. You have the very low funnel efforts, like maybe branded remarketing, you have your middle funnel efforts sort of like Facebook prospecting or non brand search. And then maybe you have your very top funnel efforts like display ads or connected TV or things of that nature.
So in challenging times when marketing budgets are getting squeezed, our focus, my advice is to continue to double down on your mid funnel, those campaigns that are core drivers of new user acquisition for the business. And the reason for that is, if you think about both the low funnel and the top funnel, those are places where during tough times, when maybe your budget is lower, you’re getting squeezed on performance.
You can reallocate into the middle funnel and make sure the core engine of acquisition keeps running. So what I mean by that, to add a little more detail, is if you look at the loaf funnel of a business. I know it may seem counterintuitive to say, well, why should I reduce spending on/low funnel during tough times? Well, the reason is that although a lot of the low funnel/advertising certainly looks great in reporting, especially if it’s last click/reporting, many of this reporting or a lot of this spend may actually be non-incremental to the business growth, right? So it may be the case that 50+ percent of your brand and your marketing spend actually is not incremental. You would have made those sales anyway.
So during good times when budgets are growing and it’s sort of like spend, spend, spend, that obviously is an easy thing to do, is say, yeah, let’s maximize our brand impression share, let’s slam our marketing pool with a high frequency. We might as well. The roast is great, the CPL is great, whatever. In harder times, though, when budgets are tight, when budgets are getting cut, and if you think about not just the performance of like last click/reporting, like what it looks like in a dashboard, but what is the gross performance of the business? If you can free up 10% or 15% of the budget from a low-funnel that isn’t incremental and move it to the middle funnel. The core engines of acquisition like/non brand search that almost definitely is incremental. That’s the real driver of growth for the business that actually can unlock efficiency when the budget is limited.
More or less the same concept here applies on the top bundle. I think that’s more intuitive. Clearly it’s the case that if you have unproven or speculative or very kind of awareness or brand level media going out the door, you can look at potentially reallocating that into again these core mid-funnel engines that you know are driving growth and you may find that that’s a more efficient way to use the budget.
And I’m not saying don’t do brand, I’m not saying don’t do remarketing. What I’m saying is that if you have a limited budget to allocate and you are able to focus on the total performance of the business. Not a vanity metric like just Last like Google Ads. Role Ads. But the gross performance of your business. What really is going to move that needle or at least keep it from falling during tough times is those campaigns that reliably produce new customers. New users in a profitable way.
Concept number two here is going to be looking at unit economics in performance marketing.
So I’m going to think about and talk about both customer lifetime value as well as sort of upsells cross sells and margin. So on the LTV side, when times are tough, this is a great opportunity to review the lifetime value of your customers and what you and your marketing efforts can be doing to grow that LTV. Because if you have the opportunity to reach harder into your existing customers who know you already. Who are already satisfied and you can sell them something else. Whether that be on the ecommerce side. More products. Whether it be on the B to B side. On the enterprise side. Just calling into your accounts and seeing which of the accounts have some opportunity to buy more or a larger service from the firm. Growing the LTV unlocks media efficiency for obvious reasons. If you can get 10% or 20% more lifetime customer value on average, that means you can afford to have a slightly higher CPA or a slightly worse roast because in the end the customers are worth more after the sale. So clearly this is a great thing to pursue.
Almost All businesses have some ability, some kind of untapped LTV they can look to expand on. And then the related point here on the topic of unity economics is upsells, cross sells and margin. So this mainly applies to e-commerce. Maybe there’s some application here for Legion and B to B, but primarily for ecommerce/advertisers.
This is really the time to look to see if you can lift your average order value via a cross sell or upsell try to get the user to buy a bundle try to get them to buy a longer term subscription, whatever is relevant for the business. This is really the time to explore seeing if you can do an upsell, cross sell or bundle. It’s also a good time to/explore if you can upsell, cross sell and bundle into higher margin. Meaning if you can do something like upsell your user into buying gift wrapping or a gift card or something to that effect where the margin on a gift card is 90% when your gross margin on the rest of your products is 50%.
Those couple extra bucks of pure margin can really fuel the ability to keep performance marketing online and even scale up performance marketing when/otherwise you might be getting downward pressure economically to scale down.
So look at your economics, see how you can improve your LTV, your AOV and your margin to enable better media performance.
All right, point number three here would be slowing down some of your costly testing.
I’m not saying stopping testing, obviously we all know in performance media testing is key to just continuing to have the campaigns succeed in operating, get better. But we shouldn’t underestimate the actual cost of testing. And that doesn’t just mean the dollars would go out the door on pure tests, but it also means how much efficiency you concede and give up by running a test that otherwise kind of disrupts machine learning or breaks data integrity or whatever it may be. Not to mention the cost of just executing the test in terms of labor, creative, etc, all the actual work that needs to go into these tests.
So by way of example, if you’re running a cadence today or an account structure today where it’s like, let’s say on Meta ads, you have 20% of your spend going to basically a testing campaign. Or even if it’s not a testing campaign, if it’s all running through one campaign, but you have a practice of like on a weekly basis iterating ads either in new ad sets or an existing ad sets. Even though that’s fueling future profitability and future success of the campaigns, it’s also costing you a lot of money today.
So if there are tests that you can slow down, not stop, but just slow down that cadence in particular, if you can slow it down in a way that stops breaking machine learning, that allows more machine learning to approve more quickly, this can be I mean, first of all, you might want to be doing that anyway. That’s a separate topic of discussion. But some people are over testing in a way that’s breaking up their data. But especially in a slowdown when you might have a tighter budget and you’re trying to do more with less, it’s not a good time to over test and to commit a huge portion of budget into testing. Now is the time to figure out a way to test in a lean way that isn’t too disruptive or too costly.
Okay, concept four look harder at waste.
Okay, so it’s a bit of a trivial point.
Obviously everyone wants to say, well, I want to cut down waste, but it still applies and it is definitely worth reviewing here. Almost all media accounts, media, platforms, campaigns have some ability to waste your money. And again, when budgets are flowing and growing and results are good, people tend to look less hard at the waste and are more interested in scaling. But when times are tough, now is really the time to double check how you can reduce waste.
So, ideas for reducing waste, spend more time on your search query reports in Google Ads, just more time reviewing if there are bad/queries and what you can do to negative those out. Same thing. Look at your display ads and your display placements. Look really hard at mobile app placements, low/quality YouTube placement, YouTube kids, things of that nature. Almost no matter what, if you’re doing on display, you’ve got some bad placements running and you can improve the performance by negative those out. Again, both those two things you probably are doing anyway, or at least you should be doing them. But when budgets are shrinking and we’re trying to do more with less, definitely a little bit of efficiency on concepts like placement and query exclusions can really go a long way. Also on the Pay social networks, now is a good time to double check. Are there opportunities to reduce spend on things like the LinkedIn audience networks or other things like that, where maybe there’s just a media channel or a place where the ads are running that is just probably not as efficient, probably lower quality media.
Look to see if there are clearly losing audiences and campaigns, clearly loser ads that are still sucking some budget up. Almost every account has some ability to cut out the bottom 10% of just waste and losing tests and so on. So in tough times when budgets are tight, now’s the time to figure out like, hey, where’s the bottom three, four, five, 10 percent of my account and just cut that out.
All right, and point number five here, the last tip for today is look to exclude people who cannot possibly be your customers from your media campaigns.
So there are a couple of ways to do this and a couple of ways that it can happen that your ads are showing to people who could never be your customers. One very common way, which is on lots of media buyers best practices, checklists and so on, is make sure that you’re not remarketing to your own employees or to other people who might have visited your website but are not your customers, like your partners, your vendors, your investors, etc. So by default, if you’re doing sort of pixel driven remarketing, the way that’s working is you’re going to have it set up.
So it’s like everyone who’s been to my website in the last 30 days is going to see XYZ product ads, for example. But a lot of people who visit your website are not your customers. They’re people who work with you or for you or whatever, and you don’t want to spend your money advertising to them. So good effort, a good idea to exclude them. You should be doing that anyway. It’s not only for a recession, but especially when budgets are tight. This is a good way to just make sure you’re not wasting money. A similar point is on the Google side, on the brand search side, whatever you decide to do with brand search and however incremental you decide your brand search is or isn’t, in many cases you’ll find brand searches that are associated with terms that obviously imply the searcher is your customer.
For example, company name login or company name support or whatever it may be, you probably do not want to spend money advertising to those users. Those are your existing customers. Again, unless you have a very sophisticated LTV strategy around that, or the brand is very competitive, there are potential use cases, but by and large you can look for opportunities to exclude based on query and language as well people who are not likely to become your customers because they’ve bought from you already. And those are just two examples. There are lots of other ways to look to exclude non-buyers on various platforms.
If there’s a specific group of users of a specific sort of customer avatar that is close to your buyer but you know will never buy, that’s very business specific. But many businesses have that case. Like if you’re selling to, say, teachers but not professors or something like that, you can also look to model and exclude those definite non-buyers from your audiences. Anything you can do to reduce even a small amount of wasted spend, even a small percentage of wasted impressions obviously is going to increase the efficiency of your media, allowing you to potentially keep campaigns online to spend more into campaigns. So, that’s the fifth tip.
Hope you found these five media buying and performance marketing tips during an economic slowdown helpful if you are a media buyer, if you’re a brand, if you’re a CMO director performance, but maybe if you’re interested in talking about performance media, SEO, email marketing, creative CRO, the whole universe of performance marketing, please visit openmoves.com or Google search OpenMoves. We would love to chat.