Performance Marketing No Longer Drives Value – Here’s What Does.

An ad is only as good as the experience that follows it. How does ours rate?

For many brands, 2023 is not shaping up as expected. Despite big investments in paid advertising, sales are flatlining as demand in many sectors continues to decline. The answer from the ad platforms is to go wider or deeper on keywords or audience segments and basically spend more. 

With an uncertain economic outlook, budget extensions are unlikely and the pressure is on for marketers to prove a return on existing investments. This is becoming harder as consumers are being cautious in their spending and thinking twice about how and where they spend. They are also fatigued by the constant bombardment of ads on every channel. Cutting through all that noise is not easy. Many brands are considering cutting back on ad spend and rethinking performance marketing strategies in favor of improving customer experience (CX) and the merits of this are becoming more apparent.

3 reasons why performance marketing doesn’t always add up

The premise of paid advertising is that you only pay for clicks or impressions, but the reality is that clicks and impressions on their own rarely translate into loyal customers. Yes the numbers  matter and generating awareness online may require them, but it takes much more to get customers to buy. That “more” is positively affecting customer experience. 

Everything in today’s marketplace is about experience whether it’s eating at a favorite takeout or buying a pair of second hand jeans online. At the core of this is that consumers want to feel valued and understood and they feel that brands have enough information on them to make this happen. This also explains why there continues to be an increasing demand for greater  personalization. Performance marketing tools are limited in their ability to deliver on this for these three reasons:

1. An ad is only as good as the experience that follows it    

A good ad concept compels potential customers to take a desired action. But hooking them also creates an expectation, and a brand has only a small window of opportunity to make good on their ad promise. Once a potential customer clicks on an ad, if they aren’t immediately presented with relevant information or the journey appears too complex, it’s all too easy for them to drop off, go back to the myriad of other ads and possibly find a better experience. This illustrates that it’s not just the click that generates valuable customer data, but rather how they’re browsing post-click. Landing page optimization has the potential to greatly improve the  performance of ads, especially when it’s rooted in CX.

2. Return On Ad Spend goes beyond optimizing keywords

Keywords are important for when potential customers are searching online. The challenge is bridging the gap that often exists between brands and customers. The way that a brand describes a product or service may be entirely different to how a customer thinks about it. If return on ad spend (ROAS) only focuses on optimizing keywords it’s missing out on a real opportunity to connect with customers through better experiences—that’s where the more valuable customer data can be found. The ability to identify points of friction and respond quickly through website optimization helps create a consistent brand experience throughout the whole customer journey. This has a far greater impact on conversions and ROAS. 

3. Quality matters more than quantity

The  default in paid advertising is the mindset that to generate more leads a brand needs to continually increase their spend. The rhetoric is that cutting back on spend has the potential to dry up the lead funnel and negatively impact a brand’s reputation. But there’s an interesting example that occurred at the start of the pandemic that proved the opposite to be true. Several major brands cut back their digital ad spend completely and it had zero impact on their business. This brings the promises of performance marketing into question.

Customer acquisition vs customer retention

There’s a reason that ads and marketing messages have lost some of their punch. Consumers are tired of being told what they want, what they need, why they need it and what they should be buying, when. 

Today’s consumers are far more likely to buy based on a recommendation of a friend or social networks and many of those recommendations are derived from positive customer experiences rather than digital ad engagement.   

What matters is connection, authenticity, shared values and the experience of the whole customer journey. Brands focusing on customer retention usually end up acquiring more new customers in the process because of consumer advocacy. Generating leads may be the end  goal, but in today’s marketplace, it’s community that matters. It’s the reason that business and networking is shifting to social media because that’s where community happens. Paid advertising may get eyeballs on a page but the engagement quickly fades. It’s an optimized experience that’ll keep them on a website and move them further along the customer journey. 

Is performance marketing killing customer experience?  Some may argue it’s rather the other way around. Customer experience is consistently recognized as one of the most critical elements of marketing-based business success. Brands may be able to cut back on ad spend with negligible impact, but ignoring customer experiences will place them at a distinct disadvantage. In fact 83% of business executives feel that failing to improve CX poses a serious risk.

Takeaway: what’s better than paid ads?

Optimizing CX at every touchpoint in the customer journey, as it will generate more meaningful connections with customers, and deliver more valuable insights that brands can use to personalize experiences. An added benefit is that  by optimizing post-click experiences there’s potential to improve ad performance. Anyone entering an optimized customer journey will enjoy a better experience which improves the potential of conversion. 

It’s certainly a complex task, but that’s where technology offers an advantage. AI-driven experience optimization learns from how visitors browse a website in real-time and uses this to serve more relevant experiences. This optimization can start from the minute a customer clicks on an ad or search result that takes them to a landing page. The learning continues throughout the customer journey, always optimizing towards top performing experiences to generate desired outcomes. 

Are these outcomes defined by gaining more customers or more conversions? Present the right customer experience and a brand will likely gain both. A strategic focus and investment in optimizing CX is more likely to deliver clear and measurable results than paid ads ever will.

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