Decoding the Performance Marketing Puzzle: Navigating Brand and Agency Dynamics

What is Performance Marketing?

To dive into the depths of the brand and agency’s perspective on choosing the right performance marketing agency, it is crucial to first understand performance marketing comprehensively, and how it can be a game-changer for both fledgling and established brands. At its core, it is a data-driven approach that focuses on generating quantifiable results. It’s all about measuring what works and only paying for the outcomes you want. This can be through clicks, engagement, sales or simply awareness. 

The next question becomes how exactly does performance marketing benefit brands ?

For budding brands, establishing a solid customer base is paramount, and performance marketing offers a tailored solution - it allows precise targeting and segmentation, thus enabling immediate actions and conversions. Picture this: instead of casting a wide net and hoping for the best, brands can zoom in on their target audience with laser precision. Likewise, for established brands, maintaining market presence and achieving their short-term goals is something performance marketing can come in handy for. 

Having a fair idea of the impact, it is now feasible to gauge the complexity of performance marketing. Success in this realm hinges on expertise, highlighting the importance of skilled execution. This is where performance marketing agencies shine. They help develop and execute effective campaigns, leveraging their expertise, cutting-edge tools, and resources to deliver results.

Nikkitha Shanker, the founder of Shoppre shared with us the perspective of a brand when it comes to selecting the right performance marketing agency for their business. Alongside her is the view of Talia Praveen, Lead Creative Strategist at Adbuffs, a Kolkata-based performance marketing agency, where they highlight the significance of aligning goals and metrics, reporting strategies, and fair compensation to effectively navigate all the parameters to consider before zeroing down on an agency. 

To start off, it is extremely crucial to align clear goals and KPIs for running sponsored ads. However, these goals and KPIs should remain static in the medium term at least, to achieve success through these ads. A singular overarching goal that serves as the  North Star should align with the overall business objective. It could either be growth at all costs with no constraints, or it could be fixing the profitability metrics and growing within those constraints. While no strategy is wrong, modifying the objective mid-way definitely is, given it is bound to disrupt team alignment and hinder the success of the partnership. In certain scenarios, the brand may require a comprehensive plan that covers multiple stages of the customer journey - from awareness to decision making - Top of the Funnel/ Middle of the Funnel/ Bottom of the funnel (TOFU/MOFU/BOFU). Establishing such a plan from the outset ensures a cohesive strategy geared towards long-term success.

Having aligned these goals, to measure them, focusing solely on Returns on Ad Spends (ROAS) might not go as far as inquiring about how the agency evaluates said ROAS and ROI and whether their metrics reflect the brand’s goals and priorities. 

Oftentimes during initial discussions with potential agencies, the brand team inquires about metrics and strategies that may not provide the insights needed to make an informed decision. Questions like "What ROAS can you get me?" or "Can you boost my current 5x ROAS to 7x?" tend to take the centre stage. While these metrics are essential, it's equally crucial to delve into other key indicators and their interrelation— like Customer Acquisition Cost (CAC) versus new Customer Acquisition Cost (nCAC)—to gauge the brand's growth trajectory. Effective reporting goes beyond flashy presentations; it's about extracting meaningful insights from the data and deriving actionable strategies to drive success.

For a holistic approach, the subsequent phase should involve setting realistic expectations for ROAS. Running some preliminary ads across multiple channels - search, paid social, display - can serve a dual purpose. It will not only help provide a tangible gauge for aligning expectations, but will also facilitate the Product Acquisition Channel Fit evaluation and analysis of unit economics. 

In essence, in today’s competitive D2C landscape where digital marketing plays a significant role in brand growth, even a basic understanding of these concepts can empower brand teams to make well-informed decisions, paving the way for mutually beneficial partnerships.

For unified strategy, it is also mandatory to integrate the tonality of these ads with the rest of your marketing efforts and communication is a must, such that in the larger picture, it all fits well like a jigsaw. 

Another extremely important aspect of this collaboration is the compensation. Looking at it from the agency point of view, relevant experience implying a decent track record of success and an in-depth understanding of the brand and its industry can affirm that the agency brings ample value to the table, and will not be worth skipping simply for a cheaper option. On the other hand, some additional requirements from the brand’s perspective could be on the lines of having a well knit network at Meta and Google Ads, which can come in handy when you need a quick fix or any technical support on the backend of your Meta platforms. 

Finally, the key contacts from both teams must synchronise creative approaches, technical competencies, thought processes, and understand their problem-solving prowess to weather the storm smoothly, if need be. Without a doubt, choosing a performance marketing agency is like building a winning team. Make a wise choice!