3 Ways to Battle Efficiency Headwinds in 2024
You don’t have to look too deep for significance there: measurement is tough right now (even for measurement companies), and fraud is rampant and stands to get worse as AI governance lags behind AI adoption. No matter how big your brand or what industry you’re in, efficiency is going to be a challenge in 2024.
Naturally, where challenges arise, tech solutions will follow. But you don’t have to wait for another surge of options on the impossibly crowded Martech scene to start making serious inroads into more efficient campaigns.
Test for incrementality
It’s not enough these days to understand how much revenue a channel is driving; you have to understand the incrementality of the effort – that is, the actual value it’s adding to your marketing campaigns overall. Expressed another way, it’s what you would lose if you paused the active campaigns on that channel.
Understanding the incrementality of your marketing, which you can achieve using tools like matched market tests, holdout tests, and native platform lift tests, is the difference between over-spending on retargeting campaigns to engage users who would have converted anyway and re-investing that money in awareness or affinity campaigns to find new users. One great springboard to better incrementality is Media Mix Modeling (MMM), which you can use to shift budgets from lower-incrementality channels to higher-incrementality channels. We’ve seen this open up budget for CTV and other channels with extensive reach but (on the surface) low conversion intent.
The irony here is that, while moving to high-incrementality channels is far more valuable in the long term, less-incremental channels often have shiny low acquisition costs that look efficient on the surface. A focus on incrementality will require a ton of communication and a bit of a culture shift in departments that have grown used to bottom-of-funnel, direct-response dependence, but it’s where efficiency is headed for smart marketers.
Segment your audiences by CLTV
Do you know who your highest-value audiences are? Do you know the approximate average value (expressed in CLTV, or Customer Lifetime Value) of those audience members? Do you know the common characteristics of people in those audiences? Are you building marketing campaigns specifically oriented toward finding and engaging more of those audience members?
If you answered “no” to any of those questions, you’ve just identified a high-priority initiative for your marketing team. Understanding who your best users are, where they interact, what needs, challenges, or desires they share, and how much you can spend to find more of them – those almost guarantee you’ll be spending your advertising budget more efficiently going forward. And on the flip side, knowing the segment of your customer base with the lowest CLTV, and understanding how little you want to pay to acquire more of them, will help you focus your spend where it has a bigger impact.
Use first-party data to beef up Google and Meta campaigns
Google and Meta have both leaned heavily into AI-powered campaign structures in the last 18 or so months, with PerformanceMax and Advantage+ leading the charge.
In essence, both Google and Meta are encouraging marketers to set some basic targets (e.g. CPA) and let the algorithms take it from there to find and convert users. As you can imagine, this means advertisers who just check the most basic boxes may be paying to convert easy, low-value users – and plenty of spam.
Smart advertisers are taking steps to integrate their CRM data into the back end of the advertising platforms to train the algorithms more effectively to find the right users, not just the easy ones. Whether it’s a B2B company loading select batches of sales-qualified leads or an eCommerce company uploading the information of its highest-CLTV customers, marketers must give the ad platforms information that teaches their algorithms to be more selective. You’ll pay the same (or maybe a little more) per conversion, but the efficiency gains and conversions themselves will be far more valuable.
Doing any of the above has proven to make immediate efficiency gains for our clients, who span a range of industries. Doing all three does more than put you ahead of the curve; it positions you and your organization to succeed for the long term in a new world of measurement and AI domination.
