Build it or Buy it: The Future of Performance Marketing Technology

by Malcolm Cowley
August 13, 2012

Ever since humans learned to use simple tools some 2.6 million years ago, technology has unrolled in cycles. The ongoing drive to make life easier or more productive continuously sparks new lines of innovative products, which in turn creates more wants and needs. The speed and scope of these progressions depend on the item and industry. For example, on one end of the consumer electronics spectrum, the KitchenAid® mixer has remained virtually unchanged in both appearance and mechanics since its invention nearly a century ago. Conversely, the iPhone, which would have boggled Alexander Graham Bell’s mind, rolls out a new version every year.

Technology cycles are of course important for consumers that are always looking for the next great thing, but they’re also important to big brand merchants that regularly invent, produce and consistently market these goods and services. Today, brand marketers place major emphasis on digital campaigns that allow them to track and measure performance per new product initiative. However, a major transitional period faces marketers who oversee these performance-based campaigns. On one hand, marketing channels such as social, mobile, apps, geo location and paid search made it ‘easier’ for marketers to identify, reach and engage directly with customers. On the other hand, these channels create more and more ‘big data’ that many companies simply aren’t prepared to handle and/or leverage to make smarter campaign decisions.

The Old Way
Over the past decade or so, price and reach have been the dominant driving factors that brands considered when they invested in performance marketing technology. While several large tech companies who offer services opted to build their own internal performance marketing platforms, brands (who don’t specialize in tech) decided to buy new platforms and either turned to third-party affiliate networks or adopted best in class platforms across different categories e.g., search, affiliate, lead generation, finance, etc. However, in many cases, this approach resulted in a ‘patchwork quilt’ of multiple disparate technologies, each with its own different function that doesn’t sync or provide centralized reporting.


Marketing Industry in Transition
The new realities are clear. Forrester Research estimates that digital ads will comprise 35 percent of total ad spend and reach $77 billion by 2016. During the same period, Forrester forecasts that affiliate marketing spend will grow annually by 17 percent and reach $4.5 billion. Interestingly, Avanade, a business technology solutions provider in Seattle, recently conducted a survey of 500 business executives in 18 countries and found that most aren’t prepared to deal with the ‘big data’ all of these digital marketing channels create. However, the survey did reveal good news for business IT providers, in that 75 percent of the respondents said they planned to make new investments in technology over the next 12 months

The question for companies whose investments will include performance marketing management technology is simple: ‘build it or buy it?’ Whatever a company chooses, there’s an even bigger question today, which revolves around the technology itself. How is it built? Is it flexible, scalable, and can it be customized? Does it allow for real-time centralized reporting and analysis? These, among others,are the important issues CMO’s and digital marketers must think about as they move to invest in new performance-based technology.

Performance Marketing Landscape Today
Today, brands are scrambling to adopt new ways to track and manage performance- marketing campaigns, especially with the rise of social and mobile channels. The prevalence of mobile is reflected in recent projections that mobile devices will deliver 88 percent of online advertising by 2016, with revenues approaching $24 billion. Social campaigns on Twitter and Facebook are creating massive amounts of traffic, but also leave marketers wondering exactly how to track and measure the ROI of a ‘like’ or @follow. As the initial novelty of social media marketing wears off, social campaigns leave company executives wanting to know exactly how the sum of all these campaigns drive business value and affect the bottom line.

The architectures that companies built or bought over a decade ago can’t help answer the questions these new channels have created – and more importantly, they can’t scale to manage new data tsunamis looming on the horizon. In many cases, these old technologies still produce and present reports in static spreadsheet form, which doesn’t allow information to flow seamlessly within a business. This old way of reporting also doesn’t provide an easy way for marketing analysts to access raw data, move it around where they want and present it in a way that CEOs and other top brand executives can use to make real-time decisions from both a macro industry and campaign level.

Preparing For the Future
Moving forward, performance marketing technology cycles will get shorter as new online channels are created. This means, in theory, companies will need to replace technology more often – UNLESS they have a scalable enterprise-level solution. Additionally, online marketing will become increasingly performance based. According to recent data from the Interactive Advertising Bureau and PricewaterhouseCoopers, in 2011 performance-based advertising accounted for nearly 65 percent of total online ad dollars, up from 62 percent in 2010. To adapt to this industry shift, CMOs at major global brands are rethinking their current models and making important decisions about adopting enterprise-level technologies. Whether a company decides to build or buy, key decision makers must make choices based on how the technology platform is built from the ground up.

The key to not getting locked into another cycle and spending valuable time and resources replacing technology again in five years, is to choose a platform that’s built with a flexible architecture and can grow along side the brand as the company brings new products to market and leverages the latest technologies used for marketing. These advanced platforms are being built with open technologies at the API level and designed to sync with all areas of a campaign while providing a centralized view of data coming from all channels. Today it’s Facebook, Twitter and Pinterest, but new channels will certainly face marketers tomorrow. The new breed of performance marketing technology for the ‘big data’ era will scale quickly and accommodate information from the digital channels that haven’t even been thought of yet.

Final Thoughts
There’s no doubt that performance marketing will continue to grow and remain a cost-effective method for major global brands to reach millions of customers through multiple channels on all types of devices. As the industry continues to mature and technology moves forward at breakneck speed, top brands need enterprise-level SaaS platforms to track and manage their campaigns. These new platforms not only provide digital marketers, analysts and C-level executives better ideas on how to execute successful performance marketing campaigns, but also better overall business insights, which leads to greater ROI.

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About Malcolm Cowley

Malcolm is CEO and co-founder of Performance Horizon Group (PHG), a leading provider of real-time performance marketing technology to some of the world’s biggest brands. Prior to PHG, Malcolm co-founded the highly successful buy.at affiliate marketing network, which AOL acquired in 2008. As CEO of PHG, Malcolm oversees all aspects of the company’s global growth. For more information, visit www.performancehorizon.com or follow at @tweetphg

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