Budget Cuts: Should You Be Repositioning Your Marketing Budgets Elsewhere? – PerformanceIN

Over the past 4-5 months, retailers at nearly every corner of the globe have been feeling impacts and reverberations brought on by the pandemic. Looking back, it all seemed to happen at once. Unlike many other market disruptors (e.g. US recessions), there weren’t many tangible predictors, indicators or economists waving flags and blowing whistles to warn of the impending danger a pandemic would bring to world markets. In many ways, the average person had just days to make sense of what was happening. For retail marketers, this transition period was very short, if not non-existent. Virtually overnight, people around the globe were told to hunker down and stay at home for what was first a two-week hiatus—that eventually became an indefinite hiatus. 

For some retailers, the need to conserve cash became the go-to plan to wait out the current climate. So, what was the first task on many marketers’ conservation agenda? Cutting ad spend. But 2020 wasn’t quite finished yet and Covid wasn’t the only catalyst for marketers pulling ad spend as a political and cultural upheaval was also taking hold prompting a bevy of marketers to pull ad spend from Facebook. We would soon come to know this spend pause Blackout Day or Blackout July, a virtual way to protest unrest with your wallet.

So, between both these catalysts for fear and uncertainty, what really happened with marketers’ ad spend over these past months? And perhaps more importantly, when the dust settles and the smoke clears, what does this signal for the future of ad spend? 

Keep eyes trained on the long view

For the affiliate solution partners’ part, the best guidance comes by way of educating marketers on the impacts of cutting ad spend now—particularly within affiliate—where trusting and mutually beneficial partnerships are the channel’s backbone. Keep eyes on mid and long-term opportunities rather than making knee-jerk decisions as we sit in the thick of uncertainty. Like all economic setbacks, the current crisis will surely pass, and marketers would be wise to secure relationships now for the better times to come—even if that means operating inside a new, albeit different, normal.   

When it comes to the matter of whether marketers should reposition budget, a recent Pepperjam survey across a diverse segment of clients conducted in April of this year, indicated that more than 40% of respondents cited their affiliate spend would increase greater than 5% as a percentage of their overall marketing budgets during Q2. It’s very likely that this increased spend can be attributed in large part to the channel’s pay-for-performance model which offers greater return on ad spend (ROAS) and risk insulation versus their pay-for-access channel counterparts. 

To further illustrate the mid and long-term reliability of the affiliate channel not only through the proverbial times of feast but perhaps more importantly, through times of famine, data from Pepperjam’s Affiliate Marketing Sales Index indicates that spend has been consistently strong in the channel dating back to March 25, when stay-at-home orders really took hold through July.

Performance as a beacon of reliability amid uncertainty 

Facebook ad boycotts, Amazon slashing commissions and the current climate, all have marketers scrambling for insulation against revenue loss. Performance channels like affiliate not only offer this insulation by way of their inherent pay-for-outcome model, but they are also highly prized for their ability to maintain brand exposure and increase awareness—all without the high price tag of audience access fees that accompany other paid channels. Savvy marketers are keen to this concept and understand more than they have ever before the need for risk insulation coupled with performance. Many marketers look at this period of uncertainty and unease as a window of opportunity to diversify their marketing even further through the affiliate channel. 

Ultimately, for marketers, the question of repositioning ad budget during times of uncertainty may boil down to two key factors: Payment models and results. On the other side of the equation, the pandemic and the political unrest also has a direct impact on the channels publishers are turning to. Take for example, Amazon’s commission cuts. It makes perfect sense that as a result, publisher partners would be looking for additional ways to supplement or subsidize their loss of revenue or maintain their monetisation streams. And they are doing just that as we’ve seen a greater number of publisher partners — content partners included—applying to the Ascend™ Affiliate Cloud platform — a pattern that shows promise that they too will continue to utilise affiliate links in their long-term strategic planning. 

At the end of the day, it’s all about the consumer

But where do consumers’ wants and needs fit into this equation? Marketers need to factor in the importance of providing consumers with a seamless experience when determining where to shift their ad budgets while still being certain they remain omnipresent throughout the buyer journey. The current climate will certainly have long-term effects when it comes to strategic ad budget and planning. Marketers will continue to search out low-risk, high return channels as they will still be cautious of their go-forward spend measures and performance channels—namely affiliate—satisfy this need. 

While long-term spend outlooks favor a bullish approach, this time of uncertainty has taught marketers valuable lessons when it comes to cash conservation, and they will still be cautious about spend even as we inevitably come out on the other side. Pay-for-performance models are resilient. They are adaptable and agile. They offer marketers a greater sense of stability and safety: they offer guarantees in outcomes—something that other primary sales and marketing channels can’t claim with any degree of certainty.

Is there any sound advice for marketers right now? Do your homework. Look for channels that afford you control over your ad spend and above all, let the data drive your spend decisions. 

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