Is It Time For A New Compensation Model For Search And Digital Marketers? ( baby steps, how about fee based compensation first?)
Pay for performance is certainly not a new concept. But a number of digital marketing industry pundits have publically suggested that attribution measurement should drive a new compensation model for publishers and search engines that’s based on the actual contribution they make to each conversion and dollar of revenue, rather than for the credit that would be given using the “last click” method of measurement.
A lot can be said for the wisdom and fairness of such a compensation model given the ability of some attribution platforms to accurately and fairly calculate this credit. But gaining buy-in from all the disparate and competing constituencies affected by it would pose a significant challenge. Perhaps a topic for a future (much longer) column…
External imageHowever, one area where this same idea makes an awful lot of sense, and is more easily implemented, is in how brands or agencies compensate their own staffs for the success of their efforts.
Attribution done correctly uncovers the true monetary contribution of each channel, campaign and tactic in your organization’s overall marketing success.
As a result, you may be forced to reassess how you compensate the people within your organization or risk failing to capitalize on the efficiency and effectiveness you could be extracting from your marketing spend and from the efforts of your marketing teams.
Option #1 – Give Compensation Where It Is Due
As a simplistic example, let’s say your digital marketing organization is made up of three separate teams responsible for managing search marketing, display and email.
The performance of each team is measured by the conversions, revenue or ROAS their respective efforts produce – based on the traditional method of attributing 100% of credit for each conversion to the “last act” (often a click) that occurred prior to the conversion. And the compensation and incentives of each team are tied to certain standards that are calculated by this same method.
But once attribution management is performed, and monetary credit for the conversion is spread across multiple touchpoints and channels, there will be certain channels/teams whose efforts have been undervalued by the traditional way of measuring their performance (such as display) and those whose efforts have been over-valued (such as search). At that point, your organization will have a decision to make.
Do you simply maintain the same standards for compensation, with one or more teams taking a hit in their compensation, and one or more teams getting an unexpected boost or use the output of attribution to create an environment that is more transparent and synergistic based?
As you can imagine, not only may the aforementioned employee revolt occur, but your teams will have no motivation or desire to work together towards the organization’s overall marketing success.
Option #2 – Create Shared Success Goals
In the example above, perhaps a less disruptive and more constructive plan might be to establish a shared set of performance metrics and compensation incentives that all three teams can work towards.
Establishing combined revenue, overall CPA, or total ROAS across all three channels – using your attribution metrics as the basis for this measurement – will motivate all three teams to pull from the same end of the rope. Channel-specific success will cease to be important or rewarded – only overall organizational success.
So when inter-channel affinities are identified by the attribution process – such as online display creative that drives searches on certain high-converting keywords, or the sequencing of certain creatives or channels that produces the highest return, or the maximum frequency of certain tactics before they cease to be effective, or the channels and creatives that serve as the most effective introducers/influencers/closers are discovered – everyone in your marketing organization has incentive to take advantage of those findings.
Optimization of the overall marketing performance will be the one and only objective and channel turf-wars will be a thing of the past. Mind you, in organizations that have multiple product lines and/or Business Units it could be extremely important for the CMO to understand how this complex engine is actually working. For example, is Business Unit 2 actually driving conversions for Business Unit 1?
Search marketing and search marketers have long served as change agents within larger marketing discipline.
Here’s an opportunity for them to lead the way in establishing a truly fair, truly team-oriented approach to organizational success, using attribution management as their enabler and their authoritative scorecard.