Performance Marketing Reboot - 3.28.25
A Marketing Newsletter for Performance Marketers Converting to Marketers™
Hi folks,
Whether it’s writer’s block, laziness, a busy full time job or something astrological, we are bit late with this newsletter. My apologies!
In a case against writer’s block, I’ve been a bit more active on LinkedIn the last 2 months. If you don’t follow me there, I have a few pieces of content I’d recommend checking out:
My team has also been very busy rolling out a number of new service offerings. We’re most excited about the launch of our strategic consulting practice.
Enough excuses and self promotion. Onto the content.
Highlights:
Where is the alpha in media buying?
E-commerce has an Amazon problem & TikTok CPM Discounts
A first-of-its-kind study on YouTube that every marketer should read
Where is the Alpha in Media Buying?
I’ve seen a lot of opinion pieces lately about how all the alpha in “growth marketing” is gone. The writers argue that Google & Meta have automated so much of the buying process, you can no longer find an edge. I must respectfully disagree with this point of view. In fact, I think there is potentially even more alpha than when I was actively slinging meta ads in 2016. It’s simply harder to find and exploit.
I’m naturally biased - I work for an agency who gets paid to find (or claim to be able to find) said alpha. You might say, “Of course the agency guy is going to say that, it’s his job to manufacture added value.” To which I might say, “I’m not just an agency guy, I’m so much more.” More on topic, the alpha is out there and I’m going to show you where to look.
But let’s start by assessing where these claims are correct:
Increased Cost & Competition - the early winners of “Growth marketing” were propped up by incredibly low ad costs & competition. Back in 2016/2017, we would frequently talk to large brands (Walmart, Urban Outfitters, Instacart, eBay) who had nascent Meta strategies, and annual budgets of $0-10M. Compare that to the last month, where Pathmatics estimates those brands spent the following on Meta: Walmart $20m, Urban $2M, Instacart $7m, eBay $4M. As such, the cost to reach 1000 people with lower funnel ads on Meta has doubled or tripled in the last 6-8 years). Cost arbitrage, at least on Meta and Google, is no more.
Automation - automation (smart bidding, ASC, PMAX, etc) has leveled the playing field to a degree, and removed certain levers to optimize performance. Take PMAX for example, where query level insight and optimization are highly limited.
No More Free Money - When cash is abundant, experimentation and growth are much lower risk, and therefore much more “accessible”. With the fed’s tightening, and a economy-wide focus on profitability, we see lower risk tolerance and a steeper climb to finding alpha.
But a lot of other macro dynamics have shifted in the growth marketer’s favor the last ~10 years. We’ve gained massive new channels (TikTok, CTV), Measurement tech (Measured, Haus, etc), workflow tools (AI, motion) in addition to a plethora of new ad tools (ASC, PMAX, value rules, CAPI etc). More tools & channels does not directly translate to more alpha. However, I have found this proliferation and increasing complexity to create constant, new opportunities for alpha - you just need to know where to look.
So where do you look for this alpha and how can you exploit it. Here are my top three areas to focus:
Cross-Channel Alpha: a good rule of thumb here is that the alpha resides in harder to measure channels. Why? Because harder to measure channels require more effort, and receive more scrutiny. In most cases, these channels are highly effective marketing channels. The hurdle here is you need proper measurement, but there are lightweight solutions like HDYHAU & platform lift studies that can get you most of the way there. This is the hardest alpha to wrangle, but the most rewarding.
What’s at the top of my list right now?
TikTok - CPM’s down 30% YoY after the ban, high effectiveness.
YouTube - High effectiveness, mass reach, generally low cost.
Signal Manipulation: The machines (ASC, PMAX) are taking over. But what do the machines feed on? Data. The data we feed these machines (conversion signal) and the constraints we set (campaign structure) give you so much more control than you think. Every signal test our team runs has a massive impact on performance. You are leaving money on the table if you are not actively testing your conversion signal and campaign structure.
Here is a very simple framework to think about conversion signal specifically. You have two key inputs - the source and the event/value. From there, you have dozens of permutations to test for alpha. Hint: “Advanced” does not always mean “Better”.
Performance Management: I have the privilege of auditing dozens of ad accounts ever year. Automated solutions have given marketers an excuse to be lazy. The fundamentals are still misunderstood and mismanaged, and 10-20% of budget is consistently wasted through tactical mishaps. There are WAY more levers available to the modern marketer than the headlines would make you think. There is always alpha in the fundamentals, including but not limited to:
Audience exclusions, CAPI integrations/EMQ, negative keywords, keyword segmentation, poor product match rates, product disapprovals, dated bidding strategies, lack of active management (budgets, targets), age targeting etc.
A very common area of opportunity is in age targeting management. In the case below, you’ll see how 20% of budget is going to a segment driving ROAS 30-40% below target. Those are real dollars and huge gains just waiting to be claimed.
I didn’t mention creative above. It does not mean there is not alpha in creative - in fact, that is likely where the MOST alpha is. However, that could be an entire newsletter series on its own, AND there are creative strategists much more skilled than I who can provide better guidance :).
Looking forward…
So if the alpha isn’t gone yet, it will surely disappear soon right? Maybe. I think we all envision a day where you simply give your URL and budget to Meta and they do the rest.
But I’m skeptical. As humans, we want control, influence and understanding. Further, as media shifts and new channels emerge, advertisers & brands are regaining negotiating power with the biggest platforms. This is leading to more balanced conversations, and once-removed controls being added back. This will ebb and flow, as will our opinions on and trust in AI. Eventually, our deep-rooted need for control could and likely will change. But that will take time, and I will hopefully be retired 😉.
For now, there’s still plenty of alpha to go around.
Three Charts:
1. Ecommerce Has an Amazon Problem
I recently wrote about how most ecomm growth is being sucked up by a small group of players led by Amazon & Walmart. From a consumer POV, about 56% of shoppers in the US start their search on Amazon when looking for a product (emarketer, 2024). Winning on your own, in the online space, is growing increasingly challenging. Developing and evolving an online (amazon, walmart.com etc) and offline retail strategy need to be a c-suite priority for all brands this year.
2. TikTok Blowout Sale (Limited time!)
Since the original ban date, TikTok CPM's have sold at a 30% discount to last year. This number has barely changed over the last two months despite general reassurance from the Trump admin that a ban will not happen. Plus, platform usage has largely returned to normal after dipping around the ban. I’ve heard of some brands that paused ads and “just haven’t reactivated yet”. Well…here is the reason you have been looking for.
3. The Bull Case for Google Search
I am guilty of being quick to highlight the threat that chat GPT and other AI platforms pose to Google. While long term threats still loom (including chrome anti-trust), Google maintains their current, dominant position. This is the best data I have seen on the topic - Google searches were still up >20% in 2024….on a base 300-400 times the size of chatGPT. I’m still keeping a very close eye on what is a rapidly evolving space, but for now, some perspective.
source: SparkToro via Datos/SEMRush
Reading:
Re: The Growth Marketing Alpha disappearance: as I noted above, I both agree and disagree with the underlying thesis here. However, the author conveys an interesting insight around where marketing (and the CMO role specifically) might be headed. Our research on CMO tenure, remit, and c-suite construction support the broader argument that a shift is coming. This is a provocative point of view, but one anyone in marketing should be weighing.
AI Will Soon Dominate Ad Buying (WSJ, pay-walled): in continuation with the theme of this month’s newsletter. I still believe we are not far from the day where google/meta offer a product where you input your web domain & budget and everything else happens behind the scene. However, we are still a ways away from this state. In the meantime, take advantage of the dozens of levers still at your disposal.
Haus on “Do YouTube Ads Perform” (hint: yes, but with lots of data): This has appropriately received a TON of attention. I consider it a must-read for anyone in digital marketing. YouTube is shockingly underbought, relative to its scale and prevalance in our lives/discourse. This is because its hard to measure. Enter Haus, who has both measured and synthesized YouTube’s impact.
Thanks for reading,
Kevin