Revisiting these 5 truths today doesn’t feel as blasphemous. On the contrary, it feels like everything has been said repeatedly - to the point where citing my own post makes me feel like Captain Obvious.

Let’s review them one by one:

Truth 1 – Slashing CAC isn’t everything

We are growth marketers - we are given a set budget, and we want to maximise the customers we can acquire with said budget. Of course we want low CAC.

The graphs shared back in the day were all about CAC and CPA. My first major case studies were all about decreasing CAC.

The truth is: it’s a KPI of paramount importance, but it can’t be the north star.

Quoting the original article:

Focusing only on CAC can present you with pitfalls in the areas of LTV and volume of growth. For example:

- You might find that not all customer types have good retention. Optimising for the right customer rather than any customer may increase your CAC, but your LTV will be higher. It’s likely that this will result in a shorter payback period.

- Increasing your media spend is likely to increase your CAC and decrease your ROAS. But it will also unlock more revenue growth. It’s up to you and your business goals to decide what you want to maximise (most often revenue or net profit after factoring in COGS) – and therefore to find the optimal levels of CAC and ROAS.

What I’d add today:

• The name of the game isn’t reducing CAC, it’s having the unit economics that allow you to operate with a high CAC so that you can scale. The higher your breakeven CAC is, the more budget you can allocate, the greater the reach and you can maximise your contribution margin in absolute dollars.

  
  A lot of my consulting these days is getting founders or heads of growth to adopt contribution margin over CAC as their north star. Maximising that number doesn’t mean minimising CAC; it usually means unlocking higher scale as long as contribution margin increases - even if CAC rises up to a point.

I’ve seen a lot of posts along those lines in my Twitter and Linkedin feeds the past year. It’s not a new idea, but I reckon it’s marketers being more finance-led and CFO-friendly than they were 4 years ago. After all, performance marketing is a finance-led exercise.

Truth 2 – The least important factor in your performance channels is the channel’s account and campaign structure

“Well, duh. Everybody knows this, Michael.”

I can see you rolling eyes. Well, welcome to the performance marketing community, a place where debates like CBO vs ABO and Target CPA vs Target ROAS can command 80% of the attention at any given moment. To top that off, imagine you are in 2021.

Yes, today everyone knows that it’s the offer and the creative that can make or break an ad account, not the structure. But this wasn’t the case at the time of the post.

Nowadays creative dominates the discussion when it comes to Meta Ads. Rewind 4-5 years ago, and the discussion was mostly about account structure.

Quoting the original post:

If I were to rank the factors that affect the performance of an ad campaign, I’d go with the following:

1) Strength of the Offer

2) Compelling Creative / Ad Copy

3) Effectiveness of the Landing Page / Conversion Funnel

4) Ad Account Setup / Bidding Strategy

It wasn’t that offer and creative weren’t important back then - they’ve been the backbone of advertising since the beginning. But relegating the Ad Account Setup below everything else? Sounded blasphemous, especially pre-iOS14. It felt like us performance marketers were diminishing our own role.

Technical media buying with endless clicking in-platform and sophisticated audience testing is now a thing of the past, and the role of Creative Strategist has exploded. And trust me, if you hired for a Creative Strategist in 2021, no one would think you are hiring for performance marketing.

The biggest spenders on Meta today build in-house production teams and large-scale creator programs to support paid activity. Creative Volume and Diversity are dominating the conversation, and rightfully so.

Truth 3 - Looking at your source/medium report in GA won’t give you accurate channel performance

Google did the heavy lifting for me here, killing Google Analytics in favour of GA4 and inciting a massive drop in GA usage.

If you were around the last decade, you’d have experienced the industry referring to GA source/medium rows as “channels”. Such was the dominance of this report in assessing performance, that we were confusing the last touchpoint with a channel. You’d have heavyweight Heads of Growth talk about the “direct channel”.

iOS14 shone a light on what was always the case: last-click can’t account for the full buyer’s journey, and that there are channels that are more easily tracked towards the end of the journey vs others. The fact that a channel is more easily found on last click doesn’t mean that it’s the channel you need to scale.

Sophisticated Multi-Touch Attribution models were already trying to solve that problem, but their solution had the limitation it said on the tin. It was click-only attribution. And these models ended up overvaluing the same click-happy channels, namely search and… direct (unattributed).

Thankfully no one does that anymore, but it wasn’t the case. I remember getting laughed at on Linkedin when I suggested that self-reported attribution should complement multi-touch attribution from an analytics guru.

Fast-forward to 2025, this report is no longer the holy grail, and it’s becoming an accepted reality that there’s no single source of truth for attribution. And yes, you can and should survey your users.

Truth 4 – But neither will relying on channel-level data

For marketers understanding the limitations of last-click, in-platform numbers looked like the best alternative.

And in most cases, it was indeed a better alternative to last-click numbers. That’s why in-platform numbers are still around and still impacting massive performance marketing decisions like budget allocation, creative testing next steps, etc.

But they never were, and still aren’t, a source of truth, and treating the in-platform numbers as a true reflection of performance is quite problematic:

• For brands with organic demand, paid social can easily claim conversions that would have happened anyway as their own (especially when view-through is included)

• For brands starting out / on a growth stage, I usually see the opposite problem. Platforms not being able to capture the full effect of the ads, due to tracking limitations, cross-device, latent effect of increased awareness, referring a friend, etc.

• Google Ads campaigns that include Branded Search (Brand Search, PMax without brand exclusions, etc) obfuscate the results. Google does that on purpose and in some cases it might even be beneficial for the optimisation (another data point to train the algorithm) - but it’s not to be treated as truth.

The industry has recognised this problem. The fact that incrementality is now a buzzword is itself the evidence - I love that it is, because I remember when it wasn’t.

There’s a whole marketing incrementality industry that has emerged, with providers like Paramark, Haus, Recast, etc. putting out amazing content and providing real value to brands needing to diversify their channel mix.

You have Meta and Google putting out Robyn and Meridian open source for Marketing Mix Modelling. In-platform numbers are now recognised for what they are, proxy metrics, not actual ones. One of the most important heuristics for a performance marketer today is understanding the relationship between in-platform numbers and real numbers - and no, that’s not just a static multiplier.

A couple quotes on incrementality that have stuck with me:

Gaurav Agarwal, COO at ClickUp: ​​”The biggest counterintuitive tactic I’ve used at ClickUp to drive rapid revenue growth while keeping CAC tight: Stop overthinking attribution and start focusing on incrementality. Netflix did this years ago.”

Olivia Kory, Chief Strategy Officer at Haus: “Every time you shift marketing budget from a less incremental channel to a more incremental one, you are growing the business. You might not be hitting your ideal in-platform CPA when you do that. But the fact that spend has moved from a less incremental investment to a better one, that’s growth. It will show in your blended metrics.”

Truth 5 – You need to lean on blended numbers to evaluate performance instead of trying to measure everything

And Olivia’s quote is the best segue for this Truth. Incrementality over granular attribution means that the focus naturally has come back to the relationship between marketing investment and cold, hard revenue / blended acquisition numbers.

Obviously that was always the case for CFOs and board-level executives. The fact that it’s becoming baseline for hands-on performance marketers too is a great evolution for the industry.

When I first wrote Truth 5, it felt like the most controversial one of all. Like I was turning my back on “digital” marketing and all the ways the digital world enables us to do marketing better than our predecessors. Today I feel the opposite, uneasy that I’m stating the obvious:

The only source of truth for your marketing investment is the movement of the blended numbers. Your CFO agrees. And I think that nowadays the CMO agrees too 😉

I didn’t intend to identify as a DTC Marketer nor a B2B marketer forever, and the offer from Silverbird ticked all the boxes. Heck, the way we get to operate in Growth feels a lot like B2C.

On the above point, I want to devote this post to describe a striking difference between DTC marketers and B2B/Demand Gen marketers. It’s effectively a lesson I managed to teach myself (now in B2B) after 3 years of working on DTC Growth.

Signal Optimisation for Performance Marketing

DTC marketers know they need to be optimising their paid media for Purchases, so they have that part figured out. Every junior marketer in the Ecommerce space knows that for their campaigns to drive sales, they have to be optimised for the Purchase event. 

Even though they don’t need to contemplate which event to optimise for, DTC marketers know how much the conversion event you choose to optimise your campaigns against matters – and wouldn’t dream about running paid ads differently. 

Furthermore, they obsess about signal optimisation. They want to ensure they send as many events as possible back to their channels, (and are angry at Apple for making it harder).

In contrast, B2B (and non-Ecommerce B2C) has all sorts of funnels – and the decision on which event to optimise for can make or break a B2B Growth Engine. 

You can have a sales funnel where it all starts from a form fill, a Product-Led / Freemium funnel where users get to trial your product, variations and/or combinations of the two, etc. Just like 2 Ecommerce orders can vary greatly in value, 2 signups or form fills can have vastly different business value. The difference here is that you don’t have the $ denominator to distinguish the two, so you have to do the work in identifying the correlation between certain parameters of the conversion and the actual business value. 

To explain this in plain terms, let’s say you are a SaaS software in the HR-tech space: The value of a form fill coming from a 500+ employee company (your Ideal Customer Profile) is very high, while a form fill from a solopreneur can almost be disregarded. This is a relatively straightforward example, but it can get a lot more complex than that when you layer multiple factors (e.g. Company Country, Nature of Business, Product Usage characteristics, etc.) on top of each other.

The above complexity is why I am a big proponent of starting from Tracking first and making sure you are collecting the right events and distributing them to your performance marketing channels.

You might be reading those lines and thinking: “come on Michael, I’ll just find whatever event is relevant and optimise for it”. 

2 things here: 

a)  you’d be surprised how many Paid Social campaigns are optimised for clicks or traffic - with marketers relying on Interest/Lookalike Audiences to drive relevant traffic to their funnel.

Why is this problematic? Essentially it’s like instructing your paid channels to get you the cheapest clicks for your budget and stripping away their Machine Learning prowess. You want to instruct the machine to maximise the intended conversions for your budget, not maximise traffic for your budget.

b) Choosing the event that’s relevant to your end goal and is also suitable for Performance Marketing is quite tricky. In most cases, you can’t optimise for actual Customers - as this is a conversion that tends to happen offline and the volume is quite low anyway. Your performance channels need signal volume.

Choosing the right event is a balancing act, here’s why:

When choosing your optimisation event, there are two factors that compete against each other. Correlation with business value, and volume. The two factors are almost always in negative linear correlation, meaning that the higher the business value, the lower the event volume.

Sometimes the only available events you’ll have will fall too much in either way of the spectrum - either high volume / low value or low volume / high value. Before you shrug and choose one of the available events anyway, zoom out of your performance marketing dashboards and think about your customer: what’s a common pattern between your high value customers? Is there a way to modify your funnel to better scout for this pattern? The event you want to optimise against might not even exist yet.

Let’s say that you are getting a lot of unqualified leads, because you are optimising for a Form Fill or a plain signup event. What can you do in that case?

Here are four approaches:

1. Your volume is low so you can’t afford to optimise for anything other than this event. In this case, you want your Ad Creative and LP Elements to do a better job in qualifying the prospect and possibly deter unqualified ones to reduce operational load. At the same time, you need to develop your internal processes in order to not waste any time with obvious unqualified prospects.

2. You identify certain parameters within the signup/form fill that result into a higher quality lead, typically from user input (e.g. Job Department = Engineering or Business Size > 50 Employees) and fire a custom event for the leads that meet them / fire the Lead event only for them.

3. You keep your conversion event the same, but introduce pre-qualification steps that prevent the event from being executed under certain conditions. Essentially you only “allow” the event to be submitted if the pre-qualification deems the prospect relevant. Added bonus of this approach? Reducing the operational load on your Sales/CX team - they will love you for it.

4. (Only applicable in Product-Led/Freemium funnels) You optimise for an event further down the acquisition funnel - e.g. a user performing X actions during their free trial. Product Qualified Leads, essentially.

With all of those approaches, you’ll end up receiving less optimisation events. This way you’ll reduce your signal volume, but you’ll then KNOW that the event you are sending back to the performance marketing channels is one of high business value, and one you want to be optimising for. Essentially you are telling Facebook and Google: “this conversion event is a strong signal for you to optimise your bidding against”.

Conclusion

The acquisition funnel is at the heart of your growth engine. It’s no longer a case of setting up the funnel first, and then simply driving traffic to that funnel. Your acquisition results can inform the funnel. If there is no optimisation event that can combine good enough volume with high correlation to business value, it’s a sign that you’ll either need to set up a new event in your existing funnel, or create a funnel step that will fix one of the 2 factors: a conversion higher in the funnel that will get you higher signal volume, or one that’s lower in the funnel that will increase the signal strength, without sacrificing too much volume.

Choosing the right conversion event for your paid media campaigns can be the difference between success and failure - don’t take it lightly.

Hope this got you thinking! Would love to hear back from anyone rethinking their funnel / optimisation event after reading this.

My new boss, Max, likes to treat me really well - partly because he's a very nice guy and partly because he probably believes that investing in me will result in more Marketing Qualified Leads for Silverbird.

One of the early treats I received was a trip to Warsaw for a workshop led by Harvard Professor Frank Cespedes. As you can expect with a professor from Harvard, the delivery of the workshop was captivating (very hands-on and practical, too).

At some point in the workshop, he suggested that we read "Confessions of an Advertising Man" by David Ogilvy, saying that the Don Draper character was influenced by him. I love me a Mad Men reference so I instantly tapped away at my phone and ordered it before he even finished his sentence.

Later on, we were discussing Customer Acquisition for one of the startups featured in the case studies, when he said that "the tech community likes to take longstanding concepts, slap a new title on them and treat them like brand new. We always talked about how much we spend to acquire a customer, but now we say CAC (customer acquisition cost) to try and sound cool".

I've found the above concept to be true on numerous occasions, but I did not expect it to be validated from an advertising book written in 1962. “Confessions of An Advertising Man” is surprisingly relevant to today's client-agency relationships and attitudes inside advertising as a whole.

The thing that really surprised me though, was Ogilvy's performance marketing mindset. Sounds crazy? Read on.

13 Quotes that prove that David Ogilvy was, in fact, a performance marketer

Ogilvy was heavily influenced by Direct Response Copywriting - and criticised the lack of performance accountability in the advertising industry. While he was in the business of building great brands, he was firm in his belief that advertisements should drive action. In other words, he was observing a false dichotomy between great advertising and advertising that sells:

"The curious thing is that the techniques which work best in "direct" advertisements are seldom used in ordinary advertising - like giving factual information about the product. If all advertisers were to follow the example of their direct response brethren, they would sell more. Every copywriter should start his or her career by spending two years in direct response."

"The problem is that advertising agencies, notably in Britain, France, and the United States, are now infested with people who regard advertising as an avant-garde art form. They have never sold anything in their lives. Their ambition is to win awards at the Cannes Festival. At best they are mere entertainers, and rather feeble ones at that."

"I have produced my share of advertisements which have been remembered by the advertising world as "admirable pieces of work" but I belong to the third school, which holds that a good advertisement is one which sells the product without drawing attention to itself. It should rivet the reader's attention on the product. Instead of saying, "What a clever advertisement," the reader says, "I never knew that before. I must try this product".

He deeply understood acquisition mechanics. He knew discounts work for the short-term and recognised the danger of brands getting addicted to them.

"Andrew Ehrenberg of London Business School reports that a cut-price offer can induce people to try a brand, but they return to their habitual brands as if nothing had happened."

"Why are so many brand managers addicted to price-cutting deals? Because the people who employ them are only interested in next quarter's profit."

"Price-off deals are a drug. Ask a drug-addicted brand manager what happened to his share of the market after the delirium of the deal subsided. He will change the subject. Ask them if the deal increased his profit. Again, he will change the subject."

Even though Ogilvy created great ads, he would state that the core conversion pillar was the product's promise, and that creative followed suit, not the opposite. That’s the same concept as us considering the offer as the cornerstone of performance, ranking it as the most important factor above the creative and landing page:

"What really decides consumers to buy or not to buy is the content of your advertising, not its form. Your most important job is to decide what you are going to say about your product, what benefit you are going to promise. The selection of the right promise is so vitally important that you should never rely on guesswork to decide it. At Ogilvy, Benson & Mather, we use five research techniques to find out which is the most powerful.”

He was actually advocating for and practicing testing! Actually scratch that - he even said TEST EVERYTHING. Given the constraints and the sophistication needed to set them up, it's fair to say he'd put his contemporary counterparts to shame with his testing prowess.

"The most important word in the vocabulary of advertising is TEST. If you pretest your product with consumers, and pretest your advertising, you will do well in the marketplace. Twenty-four out of twenty-five new products never get out of test markets. Manufacturers who don't test-market their products incur the colossal cost (and disgrace) of having their products fail on national scale, instead of dying inconspicuously and economically in test markets.”

(The case of Tropicana losing $30M in sales on a packaging redesign back in 2009 failing to test is enlightening)

“Test your promise. Test your media. Test your headlines and your illustrations. Test the size of your advertisements. Test your frequency. Test your level of expenditure. Test your commercials. Never stop testing, and your advertising will never stop improving."

He’s even going exactly into the “how” he conducted those tests:

“Another technique is to prepare a series of advertisements, each built around a different promise. We then mail the advertisements to matched samples and count the number of orders procured by each promise.”

“Another technique is to run pairs of advertisements in the same position in the same issue of a newspaper, with an offer or a sample buried in the copy. We used this artful dodge to select the strongest promise for Dove toilet bar. "Creams Your Skin While You Wash? pulled 63 per cent more orders than the next best promise.”

Just like your typical performance marketer, he would never pause a winning ad before it stopped performing. 

"If you are lucky enough to write a good advertisement, repeat it until it stops pulling. You aren't advertising to a standing army; you are advertising to a moving parade. Three million consumers get married every year. The advertisement which sold a refrigerator to those who got married last year will probably be just as successful with those who get married next year."

He’d allocate budgets based on performance - and keep the efficiency of the spend top of mind:

“If your brand generates less than $2,000,000 a year for advertising, do not attempt continuous national advertising. Pull in your horns. Concentrate what money you have in your most lucrative markets, or confine your advertising to one income group. Or give up advertising completely. I hate to admit it, but there are other roads to fortune.”

Why does this matter to us?

Obviously, the marvel of David Ogilvy’s work far exceeds the term “performance marketing”. The fascinating thing, and the true learning here is that Ogilvy’s clients benefitted from an approach that was results-oriented, with terms like efficiency of the spend being central to the client-agency relationship. That’s how he helped build the amazing brands he did - he didn’t achieve it despite that focus.

Indeed, he was in the business of playing long-term games for his clients’ brands. He built commercial outcomes that were reflected on their earnings and market share:

“Every advertisement should be thought of as a contribution to the complex symbol that is the brand image.”

(Cody Plofker, CMO of Jones Road Beauty calls that brand-first performance marketing).

So why is this all relevant to us today?

1) It’s an important refresher of the fact that while our habits have changed, the way we consume media has changed, the human brain and therefore the marketing fundamentals haven’t. Next time you hear about the next “revolution” in marketing or the “new approach that changes marketing forever”, take a step back and question what you’ are hearing.

We’ve seen this play out a few times the past decade. My favourite one is arguably the “Marketing is over, it’s now all about Growth”. As if marketing historically was about… stagnation.

2) It’s a nice wake-up call about branding vs performance advertising being, indeed, a false dichotomy. There are brand marketers who are resistant to any hint of sales copy - thinking that it’s a compromise they make for the short term and that it’s actually harmful to the brand. Knowing that David Ogilvy, out of all people, said that most advertisers should start their career in Direct Response to understand how to sell in order to apply the learnings in their campaigns, should be enough to dispel that myth. Imagine shifting your thinking towards ensuring your performance advertising is effective so that it powers your brand building.

We, as an industry, need to stay away from Shiny Object Syndrome, and focus our efforts on building value that has long-term potential. It was always true, but the overreliance on tracking had masked this. The iOS14 developments and the future of the industry in that regard are making it obvious again.

As for me, I’ll be following up my reading with “How Brands Grow” by Byron Sharp and “The Long and The Short of it” by Binet & Field to further improve my understanding around this topic. Oh, and catch up on the Vexpower.com courses to better understand Marketing Mix Modelling. Thank you, Professor Cespedes, for the inspiration.

Recently, the prevailing sentiment has been anti-performance. Especially after iOS14, the Facebook outage, and reports that behemoths like Uber and Airbnb switched off a big chunk of performance spend with zero to little impact, performance marketing’s impact is being questioned. The great Rand Fishkin went as far as to wonder whether it’s an “analytics scam”.

It wasn’t always like this. Performance used to be the darling of marketers, especially during the golden era of lower CPMs and less competition in Paid Search. Marketers would flood Linkedin with posts mocking the “old way” of doing marketing without measurement and make lists of why performance/growth marketing is superior.

This post isn’t about finding a middle ground between the two approaches. It’s making a case that the dichotomy shouldn’t even exist in the first place.

Why the dichotomy exists and the view from the 2 marketer perspectives

Ultimately, the dichotomy between brand and performance exists because the day-to-day work and the mindset of a marketer that’s focused on each practice differs:

• The Brand Marketer will see performance activity as “cheap”, short-term, and compromising to the brand.They’ll be annoyed by the performance marketer’s testing mindset, and will look to impose constraints on what can be tested. They will care more about delivering a consistent message and developing the brand for the long-term than meeting short-term targets.

• The Performance Marketer will see brand marketing as fluff and not impactful enough. They’ll struggle with the priorities being set by them, and will also be annoyed by the fact that brand marketers impose constraints on what they can or cannot test.

Why it’s a false dichotomy

At its core, it’s a false dichotomy because it’s not supported by your audience. People buy from brands, and performance advertising is one of the marketing activities that enable a brand to reach and engage with their audience.

The truth is, a brand drives performance and performance marketing informs brand perception. Let’s dive deeper into this statement:

How does performance marketing inform brand perception?

First of all, a performance ad is often the first touchpoint between your brand and a potential customer. People discover new brands daily through Google searches and Paid Social advertising aimed at prospecting audiences. Moreover, performance advertising serves as a continuous touchpoint with your audience, in the form of retargeting.

Ultimately, the prospect experiences any activity as a representation of the brand. Both a promoted post and an organic social post will be received as communication from the same source. The human brain won’t “discount” a performance post when forming its perception about the brand.

That leads us to the conclusion that performance marketing is another way of delivering the brand. But it’s actually more than that. For most digitally-native businesses, Performance Marketing is actually PIVOTAL in building the brand – a  performance ad will typically have at least 100x the impressions of an organic social post or a PR placement (and that figure goes up for successful ads as they tend to run for prolonged periods of time).

Does Brand Marketing really drive sales?

Absolutely! It does - the baseline. What are the “baseline sales”? Well, what happens to your conversions when you turn off all performance marketing? In this hypothetical scenario, all the conversions that will still come through will be because of the brand you’ve built. These are the non-incremental conversions (not all conversions attributed to performance are incremental).

It's a question that became a lot more relevant for me when I joined Bleach London last year. It’s an exciting brand that has been active for 10 years and has its own hair salons, very distinct product line on both Retail and Ecommerce, and a very strong organic social presence. They had never done performance marketing before I joined.

Organic Social was the backbone of our day-to-day marketing activities and we had 345k followers on Instagram on the day I joined (Rihanna being one of them!).

The organic social campaigns visibly impact the sales - if not in volume, certain activations result in certain SKUs sales increasing. This was a lot more evident in periods when we had low performance spend. A series of instagram posts about e.g. violet hair would result in an obvious uptick of sales for our Violet SKUs.

The strong organic channels also have a direct impact on the performance advertising we do, as we leverage the social engagement audience for Retargeting. Even if we didn’t directly do that, though, the effect would still be there as there are undoubtedly people discovering us from organic social that end up converting through our performance campaigns.

This can be expanded to a 360 view of what influences buying behaviour. Whatever you can’t directly attribute to a performance channel, email or other trackable activity, is likely due to brand.

(Context: Moiz means that a great brand will achieve lower CPAs, not that a great brand needs to reduce its marketing spend)

A theoretical exercise to prove brand ROI

Okay, Michael – I understand that investing in your brand is important, but how do you go about turning this broad statement into actual business decisions? How would you fight for a brand budget and link it to the business’ bottom line?

One way I’ve found useful is utilising the “% attributed to Paid” metric (sales attributed to paid divided by total sales) when forecasting. 

Since this is a theoretical exercise, we ignore the impact brand has on paid conversions and conveniently just split conversions into organic and paid – even though this is never a clear split.

1. With scenario based thinking, you can compare your current % with the (lower) % you believe you can achieve by investing in Brand.

2. Utilise identical Paid CPAs for the two scenarios, and show the difference a higher mix of non-paid conversions makes in Blended CPA and Blended ROAS.

For example: If the Paid CPA you can achieve is £30, the blended CPA if Paid accounts for 100% of your conversions will also be £30. If, on the other hand, Paid accounts for 50% of your conversions, the blended CPA will be £15

3. Measure the brand ROI by dividing the uptick in Revenue numbers in Scenario #2 by the proposed brand marketing budget

Example of a forecasting model I built together with Ines Ures, ex-CMO of Deliveroo and Treatwell:

Get the Model in Google Sheets

(Using Performance Marketing Spend, Paid CAC, AOV, % attributed to Paid and a breakdown between New & Returning Customers are enough inputs to forecast)

My advice to the Brand Marketer and the Performance Marketer

Even though I come from a performance marketing background, my academic background is in marketing too - I first learned about marketing the “classic” way. For that reason, I’ve always seen performance marketing as part of the promotion mix for a marketing plan, and not a transformation to marketing itself. This notion has been supported by my experience so far. 

My advice to both parties starts from the same principle for both parties: understand that what you are doing is a means to an end, not an end itself. Your jobs are part of the same assembly line and ultimately deliver against the same target.

To the Brand Marketer:

1) Your role is also a commercial role and must be tied to the business’ bottom line 

The fact that you’re not measured by immediate impact shouldn’t divert your focus from your end goal. You are not building a brand for the sake of building a brand, you are building a value-generating asset.

Building a brand is a commercial outcome. There’s a reason why Brand Equity exists and is measured in dollars: a brand is a moat, an asset and it means that people are willing to pay a premium for your product or that they are likely to pick it among alternatives precisely because of the brand. While it’s not a short-term endeavour, the nature of branding is commercial.

2) When it comes to your relationship with performance advertising, shifting your mindset from an abstract “what’s good for the brand” to “how can I build a brand while enabling performance marketing to do their best work in a brand enhancing way” will only make you a stronger brand marketer.

For example, when the performance marketer asks for more freedom to test things, place your constraints in a way that does allow for significant tests to take place.

Especially with paid social, you want to avoid being “too polished” and rigid and understand that certain paid social formats work because they actually look native to the platform. You should 100% adjust those formats to how you think your brand should be communicated, but bear in mind that you are advertising fleeting content that’s going to be consumed on a mobile screen, and can be skipped with the flick of a finger. Not everything your brand puts out needs to be polished as if it’s a billboard in Times Square!

Furthermore, what you have on your mind as “best for the brand” isn’t necessarily true – performance advertising can help uncover that.  Also, looking at short-term effects of your activity, albeit not your guiding light, can provide solid indication on whether you delivered a message that connects with your target audience. 

If you are running a bigger above the line campaign, you should be using learnings from your performance marketing campaigns to fail-proof your investment.

If your budgets are smaller and don’t run any long-term Branding/Above The Line campaigns, that means that your branding is mostly going to be consumed through the performance channels. Adapt your tone of voice to the medium you serve while staying true to your tone of voice.

To conclude: don’t delve into short-termism, but don’t discount short-term either.

3) And nope, Performance Marketing isn’t a scam (sorry, Rand).

To the Performance Marketer:

1) Nope, Brand Marketing is not fluff nor ineffectual just because you don’t see a large uptick in purchases after a brand activation. Keep in mind that the characteristics of the brand (or lack thereof) are impacting your performance metrics, whether you realise it by looking at your daily dashboards or not.

2) Let go of your ego! You are not more valuable than a brand marketer because you can report on sales after a successful performance marketing campaign. Your campaign is successful only because the brand enables it to be!

3) Nope, brand constraints on your performance advertising are not nonsensical – your performance marketing activity is a core component in brand building and you’ll have to connect the dots to the end goal. The end goal isn’t seeing beautiful numbers in Facebook Ads, it’s contributing to the company’s revenue. Yes, a creative test that goes off-brand might drive sales up for a period of time, but this will come at a cost to the long-term goal of building a successful brand. 

Heck, it will even make your performance marketing less effective over time! Like Babak Azad has said in his Ecommerce Playbook (a must read!), all marketing activity must be done in a brand-enhancing way, exactly to avoid this risk.

To the CMO:

1) If you can only focus on one thing, focus on the alignment of incentives. It’s more frequent than I thought possible that the two teams sit in their own little silos, without communicating enough with each other or working towards the same overall goal. It’s even more frequent that the way the two teams are measured makes them compete with each other! Audit your team’s incentives and understand whether there are any conflicts of interest with the current setup.

2) Put your marketing plan on a single page and define priorities for every quarter to increase visibility across everyone’s activity.

3) Encourage synergies between the brand marketers and performance marketers and reward them for actually delivering on those synergies.

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Hope you enjoyed this one.

Remember the dichotomy between “traditional” and “digital” marketing? It’s fading away, and rightfully so. I’m suggesting that this should also happen with the Brand vs Performance dichotomy.

But, Michael, isn’t slashing the Customer Acquisition Cost our life’s purpose? You even post that on your IG stories!

(Don’t hate me for the filter, thanks. Shoutout to the guys at myscreenbreak.com that enable reading blog posts on paper)

This is a classic trap for performance marketers. For most of us, reducing CAC is often the KPI we are measured by, or it’s our quarterly OKR. It might even be the reason we got hired in the first place.

Then why is this a trap?

Focusing only on CAC can present you with pitfalls in the areas of LTV and volume of growth. For example:

-   You might find that not all customer types have good retention. Optimising for the right customer rather than any customer may increase your CAC, but your LTV will be higher. It’s likely that this will result in a shorter payback period.

-   Increasing your media spend is likely to increase your CAC and decrease your ROAS. But it will also unlock more revenue growth. It’s up to you and your business goals to decide what you want to maximise (most often revenue or net profit after factoring in COGS) – and therefore to find the optimal levels of CAC and ROAS.

Then why the obsession with CAC?

The answer is that between CAC and LTV, the former is the metric that you can have more influence on as a performance marketer. Big shifts in LTV represent big shifts in customer behaviour, and that’s not something you can normally dictate. 

On the other hand, big shifts in CAC are more possible (via optimisations on your existing channels, opening up new efficient ones, increasing virality, etc.). That means that shortening your payback period or increasing your LTV:CAC ratio is often synonymous to lowering your CAC.

Truth 2 – The least important factor in your performance channels is the channel’s account and campaign structure

Wait, are you saying that in order to succeed in, let’s say, Facebook Ads, you don’t have to completely nail all settings inside Facebook Ads Manager?

Precisely. Media buying is important, but if the campaign fails to deliver on its marketing fundamentals, even the most advanced setup won’t do.

I remember a chat I had with a friend and fellow performance marketer recently. He was telling me a story about a poorly-structured Google Ads account in a business he was working with. “Even though it was a mess and there was tons of wastage in the search term report,” he said, “the performance was amazing.”

“Let me guess. The offer was great?” was my response. “Exactly,” he said. “The price was 50% lower back then than it is now”.

What’s the explanation?

With such a compelling offer, the clickthrough and conversion rates were high enough that the ad wastage was a minor factor for the overall performance.

If I were to rank the factors that affect the performance of an ad campaign, I’d go with the following:

1) Strength of the Offer

2) Compelling Creative / Ad Copy

3) Effectiveness of the Landing Page / Conversion Funnel

4) Ad Account Setup / Bidding Strategy

(The 2nd and 3rd factor could be ranked interchangeably depending on the case. I don’t have a strong opinion there.)

The offer is the cornerstone of performance, since it’s what ultimately decides how desirable your value proposition is.

In an extreme example, a job finder website can get away with terrible UX and UI. This is because the job seeker’s motivation to complete the conversion path is going to overcome any obstacles that arise from poorly-optimised website elements.

It’s the reason why you’ll see paid ad accounts with millions in spend being structured around a single offer. For example, subscription businesses will discount their first month, to enable cheaper acquisition and then look to increase their LTV and shorten their payback period.

With creative and landing pages being the factors that will lure prospects into your website and increase their chances of converting, it’s evident that the way you structure your ad account is important. But it still ranks behind the 3 factors above. 

Furthermore, the more sophisticated the ad platforms become, the less granularity they require in their setup. This means that two identical ad accounts in terms of setup, where the only difference is the creative and landing page experience, will get radically different results.

Truth 3 - Looking at your source/medium report in GA won’t give you accurate channel performance

The discrepancies between Facebook Pixel Conversions and the conversions attributed to Facebook from Google Analytics is a classic debate between performance marketers. There are tons of questions about this in performance marketing discussion groups asked from junior PPCers as well as seasoned pros.

Simply put, you can’t get an accurate measure of channel performance by looking at your Source/Medium report.

This report is last click (or, to be fair, last non-direct click) and does not take into account cross-browser, cross-device or view-through conversion paths.

Let’s think of a typical scenario:

You scroll through Instagram and find an ad showcasing a skincare routine. You are impressed by the creative, click through it and browse the website.

You are then hit by retargeting ads over the next 3-4 days, and you decide you really want to start taking better care of your skin. You now remember the name of the brand so you google them on your laptop, click on the first result (the brand’s paid ad), and complete the purchase there.

On Source/Medium, you’ll see this transaction attributed to google/cpc, and specifically the brand campaign –  Paid Social would show a visit with no conversion.

Think about it the opposite way. If Source/Medium was a report you could count on to evaluate channel performance, the marketing channel you’d attribute your conversion above would be… branded search, and you’d be looking to increase your budget and efforts in branded search. Sounds illogical, right?

With that being said, I’ve seen brands make huge (in terms of both size and impact) budget decisions based on this report. More often than not, this means cutting paid social spend thinking that the organic, brand ppc and direct traffic will stay unaffected. What typically happens is that they see drops as high as 50% in their total traffic, then hurriedly get back to spending!

To summarise, since we all know that the buyer’s journey is far from linear, it makes no sense to try to evaluate marketing channels based solely on their impact on the very last touchpoint.

Truth 4 – But neither will relying on channel-level data

Since we just established that Google Analytics data won’t accurately reflect Facebook’s performance, surely Facebook Pixel data will, right? 

(Using Facebook for simplicity, but the same can be said for all Paid Social)

Well… no.

While the Facebook Pixel will give a much better representation of Facebook Ads’ performance than Google Analytics (let’s ignore the latest iOS 14.5 drama for a bit), there’s still a pitfall you should avoid when evaluating performance from the channel’s ad manager.

The pitfall’s name is… Incrementality.

Facebook Ads and Google Ads attribute conversions to their campaigns based on last interaction within their ecosystem. What the platforms won’t do, though, is split the conversion value between them if they’ve both played a part in it. They’ll both add 1 conversion to their campaigns based on their respective attribution settings.

That means that when budgets increase, especially with Retargeting Audiences and Branded Search campaigns, you’ll find that a lot of times different channels will claim the very same purchases as their own. 

The easiest way you can be fooled by Facebook’s stats is by assigning higher value and bigger budgets to your Retargeting and Retention (post-purchase) campaigns. These campaigns will naturally have higher conversion rates and higher efficiencies, but they are reaching people that have already interacted with your business in some shape or form. 

The incrementality of these conversions isn’t 100%, as these audiences are already aware of your business and some of them could reach the purchase step even without seeing another retargeting ad. 

Side note: Incrementality Testing inside Facebook is a particularly useful tool once you’ve scaled your Retargeting spend.

With that said, it’s important to structure your Paid Social in a way that the majority of the spend (often over 80%) is going to your Prospecting campaigns. There are exceptions to this rule (e.g. you’ll want to heavily lean on Retargeting/Retention during BFCM) but doing so ensures you are putting your budget to maximum use by reaching and converting completely new customers, as well as adding more people to your retargeting audiences to convert them later.

Truth 5 – You need to lean on blended numbers to evaluate performance instead of trying to measure everything

The controversial one. I can already sense the skepticism from my performance marketing peers.

The thing is, as already established from Truths 3 and 4 above, we can’t always attribute conversions to a single channel.

Apart from the difficulties in attribution though, it’s also true that activity in one marketing channel influences activity and results in another channel and that in the end they all work together towards a blended result.

We definitely don’t live in the era of “half my advertising spend is wasted, I just don’t know which half” (quote by John Wanamaker).

At the same time, we are still far from measuring everything. What’s more, it looks like we are taking steps backwards in terms of tracking nowadays with the gradual loss of cookies. This can be mitigated by sophisticated 3rd party attribution tools, but the principle still holds true.

There are also still highly-impactful activities in marketing that you can’t measure accurately - and a grave mistake a lot of marketers make is not focusing on certain activities just because they won’t be able to measure them.

At the end of the day, your marketing is an engine with many moving parts that work together - and the result is greater than the sum of its parts. 

Therefore, leaning on your blended numbers to measure performance is a better guide to making budget decisions, as you’ll also avoid the pitfalls described in Truths 3 and 4.