Performance Marketing Reboot - 11.13.24

A Marketing Newsletter for Performance Marketers Converting to Marketers™

Hi folks,

As much as I try to get these newsletters out a bit more frequently, the laws of the universe seem to mandate a once-every-6ish-weeks-cadence. It’s definitely not me, it’s the the laws of nature. Lots of stuff in this newsletter that I am currently fascinated by - I hope I’ve been able to convey some of the insights and takeaways in a clear manner because I often feel like this:

If you ever have questions, don’t hesitate to reach out. Happy reading!

Highlights:

• Why REACH may be the key KPI to start tracking in your social accounts

• Is podcast the media growth opportunity of 2025/2026 or just a shiny object

• Hot take: Your customers are not loyal, they are just habitual

Test I’m Excited About:

We’ve been very focused on incremental reach lately, as we talk with more and more brands who are staring at the Performance Plateau. Brands in this position are often having to significantly increase spend YoY just to maintain scale. Or their CAC has gone haywire and they are pulling back to preserve profitability. These situations are caused by saturation of in-market/lower funnel audiences. That explanation intuitively makes sense, but how can you prove it? And more importantly, how can you detect it early?

The answer, I believe, is in your reach data. Two scenarios to look out for:

1. HIGH cost of marginal reach - how expensive is it to reach the next 1000 new people? Not impressions, unique reach.

2. Negative marginal reach (YoY) - spending more YoY to reach fewer people (rare, but possible).

Here is a real example from a brand who saw each ad dollar on meta reach 40% fewer people YoY. Oversimplifying a bit and holding all else constant (conversion rate, aov, etc), this means they would need to spend at least 40% MORE YoY just to maintain revenue.

How can you increase reach? How do you reverse this high marginal cost?

There are a number of ways to increase reach, the “easiest” being investing dollars into reach based (awareness) media. However, most brands initially resist this path as they cannot easily attach an ROI value to these efforts.

The other, and arguably more enticing way (especially for “performance” minded brands) is creative - specifically video. “Creative is the new targeting” means creative is a vehicle to reach new audiences, but doing this requires diversity of format, style etc. Video is the most potent dimension to diversify around, especially when it comes to reach.

I’ve long preached video (read: ugc/short-form video) as this “conversion driving, mid/upper-funnel acting” unicorn, but have not had the data to back it up. Now we do - thanks to this brand that made an aggressive push into video this year.

• With 0-5% of meta investment in video, this brand saw a negative or highly expensive cost of marginal reach (a 4% increase in spend required to acheive a 1% increase in reach - not sustainable)

• With 25-30% of meta investment in video, this brand saw the cost of marginal reach plummet (a 1.5% increase in spend required to acheive a 1% increase in reach)

New, video creative immediately helped this brand access new audiences and will eventually help them break through the performance plateau.

Actions you can take today:

1. Analyze your YoY Marginal Reach Costs - are your costs increasing or decreasing YoY? Are the increases manageable (i.e. 0-10%) or crippling (i.e. 20%+)?

2. Build reach (cost, marginal cost etc) into your monthly reports - it’s important to monitor as a leading indicator for the performance plateau.

3. Diversify your creative (and run video) - a sea of sameness is the fastest way to rapidly diminishing returns and slowing growth.

Post I Like:

This from Nico Neumann. Two elements to highlight:

1. This fantastic radar/spider chart comparing measurement solutions, and wher they excel or fall short. This is a great view for educating folks new to measurement.

2. The POV that costs in this space may in general be misunderstood, starting with how opportunity cost is weighted. I would also add the “risk” cost of poor execution, especially for something like attribution (i.e. last click). The true cost to your business of bad attribution is massive.

Macro Observations:

I recently sought to validate a prediction from Scott Galloway (“Prof G”) that podcast will be the marketing growth story of 2025.

If we just look at time spent vs. ad spend, the case is quite strong. Podcast consumes 3-4% of our time every day, but sees less than 1% of ad spend. Social, on the other hand, consumes 6% of our time but 29% of ad spend. CTV is very balanced.¹

We of course can’t just look at this time:spend ratio to say “podcast is undervalued”:

• Ad “load” matters - a user sees an ad every ~3 swipes/scrolls on social (lets call this ~33% ad load) where as a 60-90 minute podcast may contain 10-12 minutes of ads (12-15% ad load.

• Ad tech matters - this is hyperbole, but a brand could setup a meta or tiktok acccount and be live with ads in <30 minutes. Podcast requires more work.

• Targeting matters - unless you are buying programmatically, you can’t geo-target, demo target, etc on podcast. It’s all “contextual”.

There are other potential elements holding podcast back:

• Scalability - high impact podcast ads are host-read, and require much more manual work (see ad tech note above).

• Concentrated mass reach/Fragmented reach - the idea that MOST people are only consuming a handful of podcasts (Rogan, the Daily, Huberman etc), making costs astronomically high, and good inventory impossible to get. This becomes more about the ROI on level of effort (i.e. you could combat by buying a bunch of niche podcast inventory, but at what labor cost? and for miniscule reach?)

• Attention - the many naysayers of LinkedIn claimed people don’t pay attention to/skip podcast ads. I beg to differ (for many, many reasons) and Karen Nelson of Amplified Intelligence shares her POV.

  

Here’s what is true: Podcast is trading at a discount to the attention it commands. Some of this is justified, but I surmise this discount leaves room for savvy brands to exploit the cost advantages and outmaneuver their competitors. At a minimum, you should kick the tires on podcast in 2025.

Huge breakthroughs in growth are often about finding and mastering the “soon to be mainstream” ad product before everyone else does. Meta in the 2010s and TikTok in the early 2020’s are great examples of this - but competitors and costs have caught up and its no longer “easy”. While podcast may NOT be that channel, we as marketers should always be on the lookout for these dynamics of mismatched supply & demand.

Reading:

• Are your customers loyal, or just habitual? Research suggests many “loyal” customers are really just in the habit of buying. If that is true, it only further highlights the importance of mental and physical availability. If you’ve read Atomic Habits, hopefully you can see the personal parallels to habit formation - i.e. if your gym clothes are stuffed in the back of your upstairs closet, will you go to the gym?

• Is Byron Sharp’s book title “How Brands Grow” a misnomer? This is a LinkedIn post that links to a brief article and an interview (previewing an upcoming book). How Brands Grow is highly relevant for large brands, but may provide limited value for smaller brands. The author argues smaller brands must take a more nuanced approach to reach, attention and more niche audiences where they can win outsized SOV. This article and the supporting research received plenty of backlash from Sharp and his aligned peers, but I tend to believe there is a sliver of truth here.

• “‘Core-ification’ killed the subculture” - fascinating consumer insights around the death of true subcultures and the rapid rise of “cores”. For brands, this shift highlights the power of the “remix” (i.e. making old ideas new). Simultaneously, these surface level identities mean fleeting trends and aesthetics. As a brand, how can you possibly tow this line? My forward looking POV here: as the pendulum ever swings, will we slowly shift back to a world of deeply rooted subcultures?

• Reddit Is On Fire - speaking of early mover opportunities (see podcast breakdown), Reddit is the place to be. Daily active users are up FOURTY SEVEN PERCENT in the third quarter. Reddit offers highly differentiated value to users, as the internet grows noisier and ever more “influenced”. Oh, and they have unique reach. If you are an advertiser, it’s time to pay more attention to Reddit

Thanks for reading & supporting,

Kevin

1. source(s): emarketer, statista