Performance Advertising And The 'R Word'

by Gary Kreissman, Dec 20, 2007, 10:15 AM

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The subprime crisis, the dollar crisis, the credit crisis, the energy crisis -- and a few crises to be named later -- may all add up to an economic growth crisis, aka A RECESSION. Since many of the buyers and sellers in today's advertising market have never endured such times, a few thoughts from this wizened sage may be in order.

In a recession, spending certainly declines -- colleagues lose jobs. The world looks bleak. The media claims America's golden age is over. Again.

And for marketers, it's a time of accountability -- stretching the budget and demanding greater returns. In today's online advertising environment, that means performance advertising.

Here are several thoughts to help you survive and perhaps thrive while the bear growls:

• Demand more from your media. Focusing your ad budget on branding is a good long-term strategy but can be very inefficient in the short run. In this tight economy, every marketing dollar should produce a tangible and measurable return.

Performance advertising promises accountability, but don't view it as clicks alone. When there are fewer buyers and more competition to reach and sell them, marketers should weigh cost-per-lead and cost-per-action programs against cost per click. Learn which will yield the lowest acquisition cost for new customers. Experiment with how to find and convert the specific type of customers you want, such as heavy users or deep-pocketed investors.

• Creative should address the new reality. When economic times change, consumers generally accept what's happening better than marketers do - and definitely sooner. If your prospects are increasingly looking for value, luxury and image can become irrelevant. They want to know how much you value their business. This doesn't necessarily mean price promotion; copy that empathizes or offers a break from real economic conditions goes a long way. And providing solutions is better still.

• Test offers that fit emerging attitudes. Classic direct marketing has always been about testing, but during a downturn, you should consider whether the old controls are still valid. In financial services, for example, response and conversion norms that reflect an era of greed often don't apply in an era of fear. Performance advertising gives you the chance to test a much broader matrix of offers much faster, and apply the results to all media.

• Find niches. Everything doesn't move in the same direction at the same time. Even in down markets, some segments are doing well. Cost-per-lead programs can capture information on factors that can define these niches. They could be demographic, industry-based, or even attitudinal. Ask good questions, analyze results and you'll often find small combinations of attributes that define lucrative niches that reduce acquisition cost.

• Build long-term relationships. Another effect of recessionary times is that buying behavior may change from immediate gratification ("I want that now") to considered purchase ("Let me think about which one I want"). Effective cost-per-lead programs can establish the relationships that lead to eventual purchase. You can position your company as knowledgeable on relevant topics through offers providing consumer education. That elevates your company or product to favorite status when it comes time to actually purchase. It also builds market share over time in a way that simple branding does not.

Finally, remember that while recessions don't last forever, companies that act quickly to recognize what's going on -- and companies that take the appropriate accountable actions -- stand to come out way ahead when the good times start again.

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