Brands are reinventing performance marketing for a flattened funnel

Date:

Sponsored by PubMatic  •  November 20, 2024  •

A dollar sign in a circle rollercoaster. representing reinventing the wheel with performance marketing and driving ROI.

Susan Wu, Senior Director, Marketing Research, PubMatic

Amid the growing complexity of the digital advertising ecosystem, today’s leading brands are leaning into programmatic’s ability to power a more holistic customer-centric model — one in which brand and performance budgets and strategies are converging. But what does that mean regarding media budgets, partner selections and technology investments?

A new State of the Industry report, sponsored by PubMatic, took a deep dive into how marketers are refining their performance marketing strategies in the face of unprecedented addressability challenges and shifts in consumer behavior. Impressively, 82% of brands surveyed are no longer thinking about the marketing funnel as the traditional linear model that has long been espoused within the industry — and that has big implications for the future of media.

Marketers are expanding performance campaigns across the open web

As performance marketers expand their campaigns across the open web, they are finding greater flexibility, control and quality in their media opportunities, leading to improved ROI compared to walled gardens. Overall, performance budgets are spent on the open web over walled gardens — 37% versus 31%, respectively. At the same time, the research also found that the lines between performance and branding budgets are blurring, suggesting performance efforts — particularly on the open web — might be even more well-funded than these figures indicate. 

As brands build their performance marketing mix on the open web specifically, they are prioritizing connected TV and OTT as their leading channels, along with contextual targeting as their primary strategy. This finding again emphasizes the continued shift of what have traditionally been thought of as branding channels into the realm of performance marketing. 

The reasons for the expansion of performance marketing on the open web are many: In addition to the rich creative opportunities available, the open web is also a source of significant innovation right now as it relates to privacy-first, ID-agnostic targeting. At the same time, the open web enables brands to lessen their dependence on walled-garden platforms and their associated risks. On the open web, brands can stand out with high-quality, relevant content, while simultaneously supporting premium publishers and outlets.

Brands are deepening investments in tech and platforms

As brands pivot to the open web, they’re simultaneously deepening their investments in technology and platforms to enable greater success in performance marketing. PubMatic’s research found that brands are planning a slight reduction in team labor allocation for performance marketing, freeing up budgets that will ultimately be funneled toward increased investment in technology, a top-five priority for 2024 and 2025. 

About half (49%) of brand respondents said spending on tech and platforms accounted for 41% or more of 2024’s performance marketing budget. Next year, these investments will grow, as 55% said technology investment would account for 41% or more of their performance budget, a 6-point upward shift.

SSPs play a larger role in performance marketing

As brands deepen investments in performance tech and platforms, the growth isn’t uniform across all areas of advertising technology. 

As Kyle Dozeman, Chief Revenue Officer, Americas at PubMatic, notes in the research report, SSPs, in particular, are playing a larger role in the performance marketing shift toward the open web due to their enhanced inventory access, improved data utilization, advanced targeting and optimization, transparency and control. 

Given that investment in new and emerging platforms (e.g., commerce media) is the top goal for brands in 2025, marketers will be looking for experienced ad tech partners to help guide these transitions. Integrated, omnichannel partners with strong track records for innovation on the open web will fill a crucial need in this regard. 

Overall, PubMatic’s research underscored this truth: today’s leading brands are focused on ROI, efficiency and sales — not just clicks and arbitrary conversions. This fact is highlighted in their merging of brand and performance budgets to mirror consumer behaviors, as well as their deepening emphasis on the flexibility and power of open web strategies. For brands that continue to embrace these shifts, an exciting future lies ahead: one where a flattened funnel and smarter investments in tech and the open web lead to not just performance gains, but true market leadership.

Sponsored by PubMatic

https://digiday.com/?p=561145

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