There are no free moves in performance marketing, only tradeoffs.
As a marketer, you’re under constant pressure to push the envelope in terms of growth and ROI, with the added squeeze to deliver immediate results. You’re spending hours carefully electing which channel and strategy to test—a significant challenge when you have hundreds of both to choose from.
Enter the performance marketer’s dilemma. To find the perfect balance of short-term growth and long-term plays, you must test. Frequent and broad testing (whether that be channels, offers, creatives, lists or price points) will increase your odds of securing higher sales rates, lower CPAs, increased lifetime value and more. The tradeoff: Increased testing means higher costs, greater risks, longer turn times, and sometimes, failure. This gets especially tricky in times of uncertainty.
Swing for the fences
Recent industry research found implementing a sustainable testing strategy was the most challenging aspect of managing performance marketing campaigns in-house. It’s no surprise. Testing is hard. In fact, that’s why many marketers look to agency partners to manage their testing programs.
The first battle is determining what to test. It’s a good idea to test for elements that will create the most impact (swing for the fences). Why? Because incremental tests (swing for the bases) are low risk, low reward. They’re difficult to measure and ultimately delay your search for your next control.
There is surely a time and place for incremental testing, but it’s traditionally beneficial in mature campaigns looking to optimize an existing channel (or during gap campaigns as you read test results).
The end goal of a test is knowledge, not profit. That’s why it’s critical to test as broadly as possible. An example of swinging for the fences is to test a new channel, offer, creative format or audience list. This helps to determine which factors will move the needle to the greatest degree. It will also help you quickly identify what is not working.
Then you can develop your testing roadmap to narrow your focus on incremental testing opportunities (best offer presentation, creative copy, etc). Even if you strike out a few times, one big score is still a win.
Test for growth
Next, how to test. While A/B testing is straightforward and inexpensive, the extended timeline offers delayed and often minor improvements. Multivariate testing is an accepted alternative, but it comes with a premium price tag. A common practice to offset multivariate costs is to test in small sets, making it difficult to accurately identify the winners.
There is a third option that gives you the success rates of a multivariate test at the investment level similar to an A/B strategy. Based on fractional factorial design, your test matrix is structured to later predict (or index) the performance of the combinations you didn’t actually test. By indexing, you’re trusting the data-driven performance projections to minimize risk while still learning as much as you can. Then when you do swing for the fences, it’s a home run.
When marketing through an economic downturn, you must shift your testing strategy. Your gut may be telling you to tighten the purse strings, but instead, keep them relaxed. It’s no time to be reckless, but experts suggest those who stay the course during a recession and continue marketing spend experience favorable results on the other side. This is a time when incremental audience testing for acquisition, win-back, or cross-sell/up-sell can deliver significant results.
Find the greatest scale in diversification
As data privacy restrictions continue to mount, 78% of marketers are concerned about their ability to effectively reach their desired audiences. It’s a reasonable concern. Using multiple data sources for targeted audience building will provide you with the greatest opportunity for scale and overall growth.
In addition to leveraging first-party data, modern marketers are integrating offline and online audiences to diversify data sources, maximize reach and lift overall performance.
With limited access to popular online user data serving up a blow to prospecting and retargeting efforts, one strategy to bridge the digital marketing targeting gap is to leverage direct mail lookalike audiences online.
By activating these rich consumer data sets in digital environments, you can reach audiences across display, native, web video, connected radio and CTV/OTT formats. As your campaign continues to grow and new data sources are tested, you modify the channel mix to target deeper, find scale and optimize performance.
As a performance marketer there are no free moves. Navigate the tradeoffs by prioritizing the variables that will make the biggest impact, trust the data to limit risk, and integrate your strategy for maximum reach. Most importantly, stay in the game.
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Erik Koenig is the president and chief strategist at SeQuel Response, an award-winning direct response marketing agency based out of Minneapolis. With over 15 years of direct marketing experience, Koenig has a passion for helping brands optimize their channel performance with a data-driven strategy and an integrated approach to online and offline campaigns.
