What C-Levels Must Know About Performance Marketing

Part 1: The Ecosystem

Introduction:

Your contribution as a C-Level has a negative impact when it comes to performance marketing.

• You are trying to add value, yet your business is losing market share year over year.

• You wanted to improve the bottom line, so you cut the marketing budget; however, you lost your top line.

• You seek growth, so you acquire new brands and open new markets, yet all fail as you need to hire the required team or have high expectations without accounting for many factors that can change everything you planned.

• You want to secure the next round of funds, so you are trying to do whatever it takes to show the VC the LTV and CAC they need, destroying your brand and business model in the process.

• You are trying to calculate and maintain a positive ROI from every investment in technology, yet you need help deciding which technology is better for you now. As a result, you lost decisive opportunities.

You don't have to go through all of this; there is another option, you need to spend time learning about performance marketing fundamentals.

After you learn about performance marketing fundamentals, you will:

•  Be able to have a positive impact on your business

• Decide how much you need to invest in technology and performance marketing to preserve a competitive advantage

• You will be able to find sustainable growth for your business

Let me share a story with you…

One of my friends, a senior CFO in a major organization, once told me that the modern CFO is the chief strategy officer and is responsible for value creation and digital transformation. 

I was confused as I thought what he mentioned fit the position of the chief digital officer. Then I reflected on my experience, and most of the CFOs I have come across had inputs regarding performance marketing.

Not only that, but I did my research, and I've found a lot of research supporting the new responsibility of a CFO, such as "The modern CFO is a business strategist rather than a digits champion" by Deloitte.

Recently I have conducted a series of sessions with the CFO of Alfuttaim Group as part of the reverse mentoring program. I was fascinated with the quality of the questions asked and how different the perspective is from a C-level executive to other levels of employees.

This makes it more evident that educating C-level executives about performance marketing can't be done traditionally. It needs to be customized to fit their busy schedule needs and depth regarding aspects that can impact the overall strategy while summarizing the day-to-day related activities.

I'll be sharing a series of articles about what C-Level executives need to know about performance marketing through the coming few weeks with the intent of guiding c-level executives on adding more value when it comes to performance marketing.

I'll rely on my ten years of experience in performance marketing, my recent experience as a mentor in the reverse mentoring program at Alfuttaim retail, and my research and discussions with industry experts.

Today I'll talk to you about the ecosystem because understanding the ecosystem will act as a foundation for all the topics we will discuss in the future.

A brief history of the web:

Web 1.0:

Let's go back to 1995 with the rise of the Internet browser. Soon after, "the browser war" was declared, a massive competition among the initial internet browser company over the dominance of the usage share.

The browser was mainly about two companies, Microsoft (internet explorer) and Netscape (Navigator). 

Microsoft came out victorious in the war because Microsoft leveraged its deep pockets and the access it had to consumers back then (Microsoft Operating System - Windows).

In 1998 Google entered the internet browser market with Chrome. 

At the start of 2022, Google had a 91.9% share of the worldwide search engine market, while Microsoft's browser, now called Bing, had a share of 2.88%, followed by Yahoo! with a 1.51%. Yandex, Baidu, and DuckDuckGo hold the remainder.

Now the question is how Google was able to achieve this. Which is the main reason I am telling you this story. 

Google has introduced a new way for the search engine to work. 

Traditional Internet browsers such as Microsoft Internet Explorer relied on responding to search queries with a list of web pages in which the keyword in the query appeared.

Let's have an example: now we are in 1995, and we have opened internet explorer, and I am looking for bookstores, now the results I am going to see on internet explorer only depend on how many times a web page has the keyword bookstore mentioned in it. 

What Google did differently was prioritize the results (Web Pages) that had frequently been linked from other web pages. Simply put, Google ranked the web pages according to how relevant the results were to the search queries.

Also, from 1990 to early 2000, all web pages were static, and internet usage was limited to checking emails and reading the news.

Web 2.0:

In 2004 few incidents happened that changed the internet from being static web pages to become interactive, socially connected, and for users to be able to generate content (User-generated-content); 

• First: the acceleration of mobile internet access. 

• Second: Google's Initial public offering (IPO). 

• Third: Facebook was created as the spark that ignited the social media phenomenon.

Web 3.0:

is where we are heading, I am not going to mention a lot of details here because it is not helping the goal of this article, but the two main characteristics of web 3.0 are:

• Decentralized: relying on blockchain technology, no organization or even a country can influence or switch it off; this, of course, from a technical, theoretical perspective

• Bottom-up Design: where everyone can partake in writing and improving the code

The Web ecosystem:

If your business relies on a website, let's say, an e-commerce website, we often hear the team the web ecosystem, which refers to all the different cogs that can make your website machine work both technically and to generate sales. So the web ecosystem is a body of corresponding and communicating parts working together to achieve your business objectives.

First, the website:

 is the heart of the web ecosystem, and beneath it, all the activities can give the users a seamless experience. A lot of effort can be made to improve the website conversion rate, such as website merchandising and landing page optimization.

Allow me to cover a few definitions in a simple manner:

The website conversion rate: is a metric measuring the relationship between the conversion events that happened and the total number of sessions.

Conversion event: a meaningful action that happened to your website; for an e-commerce website, it is a purchase; And for a real estate website, it is a lead.

A session: is the period a user spends actively browsing your website.

Second, Paid Channels: 

 are all the channels that use advertising and require a budget to be spent on the advertising activity itself, such as google ads, Meta ads, Tiktok ads, affiliates, and influencers.

Third, Unpaid Channels: 

all the channels which are not paid, such as SEO, Email, and CRM.

The Differences between paid and unpaid channels:

1. Speed: paid channels are much faster than unpaid channels when it comes to the speed of the results. Unpaid channels require time (months) to be developed to produce results.

2. Budget: This is straightforward; unpaid channels don't require a budget to run, while paid does.

3. Customers Nature: Paid channels focus mainly on new customers, while unpaid channels focus primarily on returning customers.

Let's put all this in perspective; for example, if you have an e-commerce website, a user sees your ad for the first time, clicks on it, lands on the website, and starts browsing, generating a session. 

After a few sessions, he made a purchase; the number of purchases divided by the number of sessions is your conversion rate.

The web ecosystem always starts with a session. 

If your business has an app or it is an app-only few things will change:

• The ecosystem will start with the installs, not a session

• The app will be added to the ecosystem as it needs to be maintained.

• The app adds a new channel: push notification for the unpaid channels.

Conclusion:

Great job reading to this point; I really appreciate your time, so allow me to recap what we have discussed so far:

1. Why C-Level needs to understand the fundamentals of performance marketing. 

2. A brief history of the internet

3. The web & app ecosystem

In my next article, I will discuss tracking and attribution for both the web and the app ecosystem. Make sure to subscribe so that you can take advantage of it.

Regards,

Gamal