As we transition into the era of AI, traditional marketing approaches are being challenged, paving the way for a more outcome-centric methodology. Even though outcome-based marketing has been around as a concept for quite some time, only recently has it gained substantial traction.
In the not-so-distant past, marketing strategies were predominantly rooted in an input-based model. Let’s be honest, the majority of marketing campaigns still start with inputs. Marketers would meticulously plan campaigns, focusing on controlling various inputs of campaign planning. What we often see is marketers say: “We have x number of customers, let’s segment them and send these segments a unique email”, hoping to achieve the desired outcomes. However, these legacy approaches were crafted in an era vastly different from today's technologically advanced landscape.
The tools available then were tailored towards descriptive and diagnostic analytics, offering insights into customer behavior but lacking the sophistication required for outcome-based decision-making. Computational capabilities, processing speeds, and data accessibility were mere shadows of what they are today.
- Processing speeds jump 10X every decade
- Storage costs drop 90% every decade
- Machines get smarter and smarter with GPT-4 more than 2x smarter than GPT-3.5
The Evolution of Marketing Metrics
Traditional marketing metrics such as impressions, click-through rates (CTR), and website traffic have long been the primary indicators of campaign success. While these metrics provide valuable insights into the reach and engagement of marketing efforts, they often fall short of demonstrating their impact on the actual business objectives such as sales, revenue, and customer retention.
Marketers are under increasing pressure to prove the ROI of their campaigns and justify their budgets. This has led to a growing demand for a more outcome-driven approach that directly ties marketing efforts to measurable business outcomes. The crux of this shift lies in the adoption of an AI-native approach to marketing planning and execution. Read more about what AI-native technology is and how it’s helping marketers improve their results.
Enter Outcome-Based Marketing
Outcome-based marketing flips the script by prioritizing desired business outcomes as the primary objective of marketing campaigns. Instead of focusing solely on generating engagement or increasing website traffic, marketers aim to deliver specific results that contribute to the bottom line, such as increased volume, higher margins, revenue growth, or enhanced conversion rates.
By aligning marketing goals with broader business objectives, outcome-based marketing provides a clear framework for measuring success and optimizing campaigns for maximum impact.
Outcome-based marketing in real life
Let’s take, for instance, an end-of-season campaign for a line of T-shirts. In a traditional campaign setup, marketers will start by selecting a series of customer attributes, such as location, age, and previous purchases, to segment their audience. They will build creatives and copy and set the campaign deployment schedule in their deployment platform based on what they believe will help them sell more T-shirts. With an outcome-based approach, marketers start by defining their business goals, such as maximizing sales of a specific line of T-shirts, and then setting their budget and timeline. Once the overarching objective, timeline, and budget constraints are defined, AI takes the reins, orchestrating the entire campaign lifecycle. From identifying the most relevant audience to choosing personalized messaging, content, and offers and deciding on the best channels, AI algorithms work tirelessly behind the scenes, ensuring maximum impact and efficiency. Read more about the challenges of the traditional marketing campaigning process and how outcome-based marketing can help.
AI is enabling outcome-based marketing
AI has emerged as a game-changer for outcome-based marketing, offering marketers powerful tools and capabilities to drive results-driven campaigns.
Here's how AI is making outcome-based marketing a reality:
- Data Insights: AI can analyze vast amounts of data to uncover valuable insights about customer behavior, preferences, and purchase patterns. By leveraging these insights, marketers can identify high-value audiences, personalize messaging, and optimize campaign parameters for better outcomes.
- Predictive Modeling: AI algorithms can forecast future trends and behaviors based on historical data, enabling marketers to anticipate customer needs and tailor their marketing efforts accordingly. Predictive modeling allows marketers to allocate resources more effectively and focus on activities that are most likely to drive desired outcomes.
- Dynamic Optimization: AI can continuously monitor campaign performance in real time and automatically adjust targeting, messaging, and budget allocations to maximize results. This dynamic approach ensures that marketing efforts remain agile and responsive to changing market conditions and consumer preferences.
- Attribution Modeling: AI-powered attribution models provide insights into the customer journey across various touchpoints, allowing marketers to accurately attribute conversions to specific marketing channels and tactics. This helps optimize budget allocation and identify the most effective channels for driving desired outcomes. Read more about why a data-driven attribution model is not just essential but a must for brands to enable personalized customer engagement.
This shift towards outcome-based marketing not only enhances the effectiveness of marketing initiatives but also fosters agility and adaptability in an ever-evolving landscape. By leveraging AI to shift to outcome-based campaigns, marketers can optimize resource allocation, respond swiftly to changing market dynamics, and ensure they’re driving their business goals.
Brands that switch to AI-native outcome-based marketing technology are experiencing a 5x campaign ROI and an 8x boost in redemption rates. Do you want to achieve exponential growth in your results? Let’s chat!
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