Winning with Incremental Performance
Ask any Olympic athlete, it’s incremental performance that delivers the win.
With the 2024 Summer Olympics upon us, I’m reminded that for competitors at the top of their game, a winning performance is often measured in millimeters, hundredths of a second or fractions of a point. In 2008 Michael Phelps beat Milorad Cavic in the men’s 100-meter butterfly by only one-hundredth of a second – Cavic’s fingertips reportedly trailing Phelps’ by fewer than 5 millimeters. This is merely one story in dozens of close finishes across more than 100 years of the modern Olympic Games. With the difference between podium places or even reaching the podium often measured in tiny increments, it’s no wonder why gaining incremental improvements in performance is an obsession among the world’s elite athletes.
Incrementality is also an obsession for retail marketers. We’ve previously addressed how a focus on incremental opportunity can help retailers grow sales by reaching more untapped shoppers. In our view on incrementality, the companion to incremental opportunity is incremental performance, a constant obsession over optimization to squeeze a little more efficiency from your budget, making a big difference as your campaign scales.
Each of us likely has his or her own thoughts on what incremental performance in marketing means to them. For many, incremental performance might be thought of simply as a measured improvement to cost-of-sales (COS) or return on ad spend (ROAS). Others might consider an increase in the rate of sales growth or new customer acquisition as incremental performance. Still further, some will want to measure incremental performance in a comparative context by measuring results against average benchmarks or against performance achieved in previous campaigns – like long-standing or personal records in sports.
As a firm partnering with many top retailers across a number of different categories, Connexity works to grow new sales while being held to a wide variety of performance requirements. That puts Connexity in a unique position to offer marketers experience-driven recommendations for what they can do to achieve incremental performance.
Find Blue Waters
Marketers all know where most retail advertising budget decisions begin, with an allocation to Meta, Google, Amazon and the like. But, advertising on the largest of Internet platforms is a challenge. Not only are these walled-gardens increasingly more competitive, advertising costs on platforms like Google Search have increased 13% YoY all while click volume has decreased. With economics like this, the competitive battle to reach and convert shoppers on these platforms is more costly than ever.
For some time Connexity has been advocating for merchants to allocate additional energy and budget to the open-web, a diverse array of editorial sites, commerce content sites, shopping marketplaces and more. The open-web is where consumers reportedly spend roughly 70% of their time online. It’s also where advertisers need to recognize that people often discover brands and where they are influenced to buy.
The social creator space is one area to explore in the open web. While individual social influencers might leverage walled garden platforms, they are independent content creators capable of promotion that drives ROI for retailers. In fact, Connexity’s own ShopYourLikes social influence platform, with growing creators focused on driving very high performance in niche categories, has delivered incremental performance for retailers with performance results that often 2x the rate of new customer acquisition vs other channels.
Allocating budget across many open web sources (commerce content, shopping sites, social creators, etc.), where price of access is lower than the best walled-garden content but shopping intent is just as high, can drive better economies of scale and deliver new customers unreached in the standard platform choices. But for most individual merchants it’s impossible to establish effective relationships with hundreds (not to mention thousands) of traffic sources across the open web. The best approach is to work with a partner with expertise and direct integrations that enable incremental, exclusive opportunities.
Use Active Budgets
Smart retailers scale growth and performance by accessing more competitive and in-demand traffic using a budget that blends the use of both traditional CPA rates together with dynamic CPC rates. While CPA budgets are helpful to gain evergreen exposure in affiliate content, high-intent traffic placements that enable faster growth demand active CPC bidding. With CPC, merchants enable their budget to prioritize targeting the highest converting traffic in product display ads on premium content, shopping ads in active marketplaces and performance focused social content.
CPC budgets can also earn you incremental promotion in content. As commerce content strategies mature, publishers often diversify monetization to take advantage of both CPA and CPC – demanding premium rates to promote merchants in their best performing content. This is an opportunity for the retailer. By working with a performance marketing partner that has direct relationships with these publishers, your CPC budget can incentivize the publisher to create new content exclusively promoting your offers, where traffic intent and volumes will perform to your KPIs.
Connexity uses this incentivized content approach in our network, where custom integrations with publishers enable us to track the performance of every piece of content and promotional link. In one case where a popular multi-category retailer needed to scale growth, we recognized the opportunity for a premium content publisher to deliver this scale. By offering a negotiated CPC rate on behalf of the retailer, the publisher generated several new promotional pieces. The exclusive content promotion earned the publisher a higher commission rate and delivered for the retailer a 145% (2.4x) increase in YoY sales coming from that publisher – and all while maintaining performance to the retailer’s COS goal.
Train Your Own Optimization
You’ve put effort into understanding how customers buy and what influences them to convert. This means you likely have a preferred attribution model for how to value the advertising that drove a sale. Your attribution truth should be accounted for when directing marketing strategy and budget. On many performance platforms and affiliate networks, performance is reported based on the network’s model for attribution. While this leads to mismatched expectations in performance reporting, it also importantly means that on-going traffic selections and budget optimizations are being done based on the network’s view of performance, not yours.
Insist on performance and optimization to your own attribution model. Find a partner who prioritizes your version of attribution and uses that as a “source-of-truth” in both optimization and reporting. In this relationship, traffic selections, pricing and competitive bidding are all driven by how you attribute the partner’s contribution to your final sales results.
Merchant source-of-truth as primary is Connexity’s default mode of operation. By using the merchant’s own daily sales attribution results as the primary input to drive optimization algorithms we’re able to achieve more efficient results for the retailer. All placement opportunities are valued based on their contribution to the final sales results and bidding to win placements is set (with high and low values) by that reality and not by conversion at the network’s view of how those placements may contribute to sales. Because optimization is based on individual placement level performance, we’re always aiming to win new opportunities at the merchant’s preferred price, not just any price. In one case, getting our merchant partner to provide their attribution input ultimately resulted in a greater than 20% increase in daily average sales while maintaining their 10% average COS target.
Partner With a Competent Coach
Olympic coaches aren’t running races for their athletes. Instead, coaches are creating the conditions for the athlete to achieve their best performance. The coach’s job is to optimize the athlete’s abilities, to understand the competitive field and to prepare the athlete as best as possible to compete under the right conditions.
Ecommerce retailers need to partner with a performance marketing coach the way Olympic athletes select a coach for their performance in sports. Your job as an ecommerce retailer is to come to the table with the raw skills and the goal to win. You create great products, develop a strategy, enable a budget and set goals. Then, you partner with a coach who can use what you bring together with their knowledge and expertise to enable you to compete in the best conditions possible for success.
The market for retail advertising opportunities in the open web is diverse. There is a huge learning curve and development effort necessary to effectively promote product offers in commerce content, in shopping experiences on mobile apps, in targeted editorial content, in product comparison sites, in performance oriented social content and in search auctions. The average merchant doesn’t have the time nor the expertise to learn how to adapt their product feed to integrate with each traffic opportunity. Look for a partner that has experience integrating with traffic sources across the open web. Connexity has spent more than 20 years building relationships with thousands of content sources. Our customer integrations result in incremental opportunities for our merchant partners. In fact, we estimate nearly 50% of the annual sales we generate for retailers comes from promotion only available because of our traffic partnerships.
Getting access to promotional opportunities is just the first step. Your performance marketing partner should also be able to optimize to the goals and KPIs you set. This requires intimate knowledge of how the market performs under different conditions – and expertise in your particular category. With years of refinement to optimization algorithms and experience delivering growth for thousands of retailer campaigns, Connexity is able to deliver outsized performance results in key categories. For example, at a over $400 AOV for home & garden, our results are nearly 2X higher than average industry benchmarks.
In Conclusion
Like the challenge an athlete faces in the Olympic Games, success among a cadre of top competitors in your field requires a plan to find the incremental performance that can help you achieve your goals and deliver a win. An athlete will do it through intense focus, years of repeated training and expert coaching to refine their performance.
In retail marketing you too can achieve incremental performance. Your path is to focus on setting yourself up to take advantage of the performance opportunities that exist – be open to the open-web, prioritize CPC budget to compete for the best exposure and insist on performance measured and optimized to your source of truth. Finally, bring all of that preparation into a partnership with a competent coach who can maximize your efforts to generate a return that meets or beats your goals.
To achieve your ecommerce growth goals we invite you to reach out to Connexity, where medal worthy incremental performance is delivered every day.
