Performance-Based Advertising

Three principles that will change the way you think about advertising

The premise behind Performance-Based Advertising is simple—there are
ways to advertise that are prudent and efficient, and ways that are wasteful
and inefficient.

PBA is a series of principles, not rules. It is about probabilities, not absolutes. There are plenty of examples of ad campaigns that do not follow these
principles but have been successful. There are also situations in which PBA principles will not be relevant. However, if you follow them, we believe the probability of success is far higher.

Performance-Based Advertising has three principles:

Advertising is most productive when it is focused on changing behavior, not attitudes.
Advertising messages should be created for, and directed at, the heavy-using, high-yield customers in your category.
We don’t get them to try our product by convincing them to love our brand; we get them to love our brand by convincing them to try our product.

Let’s look at these principles one at a time, and explore their rationales and implications.

PRINCIPLE #1

Advertising is most productive when it is focused on changing behavior,
not attitudes.

The common wisdom is that first you change a consumer’s attitude and
this will lead to a change in her behavior. In graphic form, it looks like this:

The only problem with this model is that attitudes are extremely hard to change. Once someone’s a Dodgers fan, he’s probably going to stay a
Dodgers fan. Once he’s a Coke versus a Pepsi, Democrat vs. Republican, United vs. American, Mac vs. PC, paper vs. plastic, his mind is not likely
to be easily changed.

As author and neuroscientist Sam Harris puts it:

“It does not require any special knowledge of psychology or neuroscience
to observe that human beings are generally reluctant to change their minds.”

Economist John Kenneth Galbraith said:

“Faced with the choice between changing one’s mind and proving that there
is no need to do so, almost everyone gets busy on the proof.”

And perhaps marketing guru Jack Trout says it best:

“If your assignment is to change people’s minds, don’t accept the assignment.”

In fact, it is usually a lot easier to change behaviors than attitudes.

It’s easier to convince you to eat a Big Mac® than to convince you that eating a Big Mac is a good thing to do.
It’s easier to convince you to go to Las Vegas than to convince you that going to Las Vegas is a wise thing to do.
It’s easier to convince you to fly Southwest than to convince you that flying Southwest is going to be a pleasant experience.

PRINCIPLE #2

Advertising messages should be created for, and directed at, the heavy-using, high-yield customers in your category.

It is a good thing to love all your customers and treat them with respect
and gratitude. But it is not productive to fashion your advertising message to appeal to all of them.

Some customers are extraordinarily valuable. Some are hardly valuable at all. One of the keys to making your advertising more productive and efficient is to be certain it is talking the language of the high-value customer.

Most marketers define their target customer in either demographic (e.g., women 18–34) or psychographic (e.g., millennials) terms. We think this is wrong.

The target customer should be defined in terms of category usage, that is, behavior. This is just a fancy way of saying that you should define your target
as the high-value customer in the category — regardless of demographics
or pyschographics—and create your message to appeal to these people.

The following chart is not meant to be scientific, but to illustrate the wisdom of focusing your message on heavy-using, high-yield customers:

Even though some customers are much less profitable than others, the cost
of marketing to them is not less. While people in your top quintile may be hugely valuable, people in your lowest quintiles may actually cost you money. Even if you market to them successfully, it may cost you more than you can ever hope to recover.

Most advertisers mitigate against this by developing media strategies that target the heavy user. This is not good enough. When you buy a spot on Monday Night Football, it costs just as much to talk to the guy who buys a hamburger once a month as the guy who buys every day.

Creative strategy is the key to cost mitigation. Make sure your ads are written for the right people. Be sure your advertising has been developed with the point of view and needs of the high-value customer in mind.

The reason it is critical to fashion your message for the heavy-using, high-yield customer is that they will often have a different point of view and a different set of needs from the average or light user.

PRINCIPLE #3

We don’t get them to try our product by convincing them to love our brand. We get them to love our brand by convincing them to try our product.

Principle #3 is the heart and soul of PBA. It is a different view of advertising and branding. It is different because it takes contemporary advertising thought and flips cause and effect.

What this principle is saying is that the best way to build a brand is through product advertising, not brand advertising.

Let’s define our terms.

In general, what people mean when they differentiate between “product”
and “brand” advertising is that product ads are about features and benefits, and brand ads are about imagery and lifestyle. (This, by the way, is nonsense. All advertising is brand advertising.

All advertising either enhances or diminishes a person’s net impression of your brand, whether you intend it to be brand advertising or not. Nonetheless, the idea that brand advertising is something different is so ingrained in the system that we have to deal with the idea whether we like it or not.)

We believe that “brand” advertising—advertising focused on imagery or lifestyle—is least effective against your most desirable customers. It may be effective against light users or nonusers in your category, but it tends to be ineffective against heavy users.

For better or worse, the heavy-using customer in your category is probably already an expert on your brand. By definition, she participates in the category frequently. She is more likely to be interested in the category and knowledgeable about it. When you want to learn about your standing vis-à-vis your competitors, what do you do? You ask her. You conduct research and invite her in to tell you how you’re doing. It would not be hyperbolic to say that in some ways she knows your brand as well as you do.

Her knowledge and experience in the category have far greater influence
on her opinion of your brand than advertising does. Please reread that last sentence.

Because she knows her stuff, her attitudes are hard to change. That’s why Principle #3 stresses the importance of product advertising. Give her a solid reason to give you a try. She will quickly recognize meaningful product
differentiation, innovations, new product benefits, a good deal, a compelling offer, a service enhancement, or evidence of emotional enrichment.

She is far more likely to recalibrate her opinion of your brand by experiencing your product than by experiencing your advertising. Getting the customer to experience your product doesn’t just create sales—it’s what builds brands.

You want to build a strong brand? Forget all the ethnography, sociology, sidewalk psychology, and brand babble. Make sure your advertising gives people a damn good, convincing reason to try your product.

You think that’s simplistic? It’s the hardest thing an advertiser has to do.

This is an abbreviated version of Performance-Based Advertising
principles. To download the complete version, please click here.