Performance Advertising: what to do when sales slow down and you have to increase your expenses to compensate for it
By Enrico GiubertoniUpdated 4 minutes to read
When you measure your performance digitally, you often notice – when you compare it with previous years, turnover drops for the same amount of money.
And consequently the advertising expenditure (budget) to keep turnover stable.
This article is the result of years of experience in consulting cosmetic companies and is therefore the result of the results obtained in terms of optimization of Performance.
The first three questions a cosmetic manager usually asks himself are:
Is it an isolated case (and therefore depends on my management) or is it a general phenomenon?
How much does my digital agency adopt an appropriate media planning strategy?
What can I do to optimize my Advertising expenses?
I will answer the first question with an answer from IAB Forum 2020:
In the decade 2020 there is an increase in ADV expenses (in performance marketing) to compensate for turnover.
In practice pay more in advertising to keep the same turnover.
Why is this happening in Performance Marketing?
Mostly for three conspiracies:
Crowding: Why is there a growing crowd of competitors operating in the digital world?
Reception Station:Because digital is no longer a novelty and therefore less surprising
Channel Overload: Because the places to do Adv are always the same GAFA channels (GAFA = Google Apple Facebook Amazon)
Therefore, our consumers perceive a drop in Receptivity due to a repetitive routine that:
Decreases the effect of novelty and amazement (WOW effect) in finding your brand in the digital world
Increasingly frequent channel crowding by competitors
The meeting with the brands always in the same spaces
All this results in a Déja-Vu effect that diminishes the persuasive force of sales performance.
What to do? Branding to increase the receptivity of your sales messages
To make our advertising activity more effective, two mistakes in the approach must be avoided:
Download it to the media agency
Continue with the same scheme
Let’s analyse the first case: finding in the media agency the scapegoat for all evils. When we change agency we will find ourselves in the short term a slight benefit, which will be frustrated in the medium and long term. And why are we getting this benefit? Because – and here we come to the second case – the new media agency will use a different approach, stopping to continue with the same (previous) scheme.
Fuel your Media Agency: your media agency needs marketing guidance
Your media agency needs the marketing input.
We must support BRAND, the intangible asset of our company.
And that’s why we need your support and brand guidance.
In order to combat this phenomenon, it is necessary:
Why do advertising costs rise while sales stay flat?
According to IAB Forum 2020, in the 2020s advertising spend in performance marketing increases just to compensate for turnover. It is a general phenomenon, not an isolated case caused by your management: in practice you pay more in advertising to keep the same turnover.
What causes the drop in receptivity to digital advertising?
Three factors: crowding, with a growing number of competitors in digital; the loss of novelty, since digital no longer surprises; and channel overload, because ads always run on the same GAFA channels (Google, Apple, Facebook, Amazon). The result is a deja vu effect that weakens the persuasive force of sales messages.
Is changing media agency the solution when performance drops?
No. Blaming the agency brings a slight short-term benefit that fades in the medium and long term, and that benefit only comes because the new agency stops repeating the previous scheme. The two mistakes to avoid are offloading the problem onto the agency and continuing with the same scheme.
How can brand strategy improve performance advertising?
By giving your media agency the marketing input and brand guidance it needs, and by balancing brand equity when allocating the budget. The stronger the brand, the more return it generates in the channels, because it generates receptivity.
