What is Performance Marketing?

Performance Marketing; the key to ROI-focused campaigns

In the past, traditional marketing was very one-sided. Most marketing tools used included tv, radio, and print media. There were plenty of limitations in effectiveness and application. Say a brand decided to air a commercial or give out pamphlets. They could only monitor results, hoping that the tools they used worked, that the audience was pleased, and that sales numbers would positively reflect during or after the campaign. Attribution in marketing campaigns was nearly impossible. There was almost no direct feedback from customers and audiences about the brand, its marketing efforts, or the customer’s behavior and experience with the brand.

Thanks to the internet and massive amounts of data collection on digital platforms and machine learning , it is possible to track and monitor almost every action a consumer takes when interacting with your brand. Access to such data allows marketers to map out customer behavior through every point of interaction with the brand. This kind of data transparency enables media buyers to optimize their campaigns to perform better. Hence why we have performance marketing.

Defining Performance Marketing Today

Performance marketing is an online marketing approach that focuses on driving measurable results.

Performance marketing is an online marketing approach that focuses on driving measurable results. Performance marketing is used to track and optimize campaigns so that they are effective. Brands pay a third party to achieve their marketing campaign’s desired, predefined result, including sales, leads, or clicks. The third party could be a platform, company, or individual who can drive traffic to the brand and influence action from the audience.

Benefits of performance marketing

There are several benefits of performance marketing. First, it can help you to track your progress and see how effective your campaigns are. You can use this data to optimize your campaigns and refine your strategies. Whereas in the past, brands paid for advertising space regardless of the outcome, performance marketing allows them to pay for realized results. It helps you focus your budget on the most effective channels. In the long run, you will save money and get better results from your marketing efforts.

Difference: Performance marketing vs. brand marketing

Most companies face a dilemma when deciding how to split the available marketing budget between conversion-focused (performance marketing) campaigns and brand-building (brand marketing) ones. Brand marketing focuses on building long-term awareness and loyalty, whereas performance marketing focuses on achieving specific goals, such as increasing sales or generating leads. Running both campaigns in parallel is key to overall success; deciding the expenditure ratio should depend on factors like audience needs, societal affairs, and the brand’s priorities and budget.

To make an insightful decision, you need to know a few attributes of each approach. Performance marketing is typically more measurable than brand marketing. This is because performance marketing campaigns often use specific metrics such as clicks, conversions, or sales. On the other hand, brand marketing campaigns can be more challenging to measure because they focus on building long-term awareness, creating an emotional connection with customers, and gaining loyalty. Performance marketing can be a great way to generate quick results. However, it is crucial to remember that performance marketing campaigns can be more expensive than brand marketing campaigns. This is because they are highly targeted, requiring more detailed planning and execution.

Channels used in performance marketing

Here are the different channels that marketing managers may use in performance marketing:

OWNED CHANNELS

Native advertising – refers to advertising while following the native structure and function of the platform, e.g., social or news sites. For instance, if your ad campaign will use both Twitter, Google ads, and YouTube, native advertising means you will have different content for each platform for the same ad. In this case, you will need to create a video ad for YouTube, a text and graphic ad for Twitter, and an ad banner for Google Ads.

Social media marketing uses social media platforms to gain awareness and traffic while achieving your campaign goals. Engagement, CTR, CCP, and ROI are the most common performance metrics used for compensation.

Paid search marketing is when retailers pay for clicks on sponsored ads that they place on search engines like Google, Yahoo, or Bing.

Search Engine Optimisation – this is the opposite of paid search marketing. Instead of paying for your ads to be boosted on a search engine’s results page, SEO experts use other methods to gain and increase your organic results. They achieve this by mastering and leveraging the search engine’s algorithm.

Programmatic/Display marketing is the use of algorithms and software to buy and sell advertisements. It entails detailed programming for extreme optimization. The mediums used here are Video ads and HTML5 Banners. Check out our blog on the Best Performing HTML5 Banner Sizes to use.

Interstitials – these are interactive full-screen ads that overlay a web page and appear in between content; for instance, in the dead time as a new web page is loading. They surface in response to a user-triggered action on the host page and have an inbuilt frequency capping per user per hour.

Pop Ads – (include both pop-up and pop-under ads); these are seamless graphic ads that suddenly appear in the foreground of a webpage. They are more invasive and less interactive than interstitials.

PARTNERED CHANNELS

Affiliate marketing – refers to any digital marketing activity that involves partnering with an affiliate application, platform, or person. It is the most popular type of performance marketing known in 2022. When a sale is made after a customer clicks an affiliate link, the affiliate will earn a commission.

Sponsored content – refers to a paid form of native advertising and content marketing in one. The ads blend into the user experience, but they include a tag that shows it as sponsored content. Because of the nature of sponsored content, most metrics used for compensation are CPM, CPC, or sometimes products/experiences. For example, hosting an article on Forbees.com, etc.

Performance marketing can be an effective way to reach new customers and boost sales. However, choosing the proper channels for your business is essential to get the best results.

Metrics to look out for

Cost per acquisition (CPA) – This is the amount you spend on marketing for each new customer you acquire. It would be best to keep this cost as low as possible to be profitable.

Cost per click (CPC) – this is the cost incurred for every click made on an advertisement placed on platforms like Google Ads.

Cost per lead (CPL) – the price which the advertiser pays for each lead generated. A lead is any registration of some sort that includes customer information.

Cost per mille (CPM) – this is the price for every thousand impressions. An impression is the measure of every time someone views your advertisement. One viewer can return several impressions if they see your advertisement multiple times.

Lifetime value transaction (LVT) is the metric that measures the predicted lifetime value of a customer throughout their relationship with the retailer. That means the customer’s overall value is based on how much they will spend on the brand against the cost of acquiring them (their CPA).

Pay per “X” (PPX) – a payment model where the retailer defines the desired outcome/consumer action, apart from sales, leads, or clicks. E.g., downloads, signups of rewards programs, et cetera.

The Process: Steps to take towards better Performance

Are you a marketer who wants to get started with performance marketing? Here are a few steps to take:

Goal setting: The first step is to set clear goals for what you want to achieve with your marketing campaign. This will help you to measure your success. Your campaign goals determine where your ads are shown, whom they’re shown to, and other factors vital to success.
Channel selection: The next step is identifying the most effective channels for your campaign. It is best to diversify your channels to maximize your potential reach.
Ad creation: The third step is to create your ads. Here, you creatively and intentionally create the ad with the target audience in perspective. This step will involve creating both the content and the design of your ads to fit the channels you decide to use for the campaign.
Tracking and measurement: The next step is to track and measure your results. This will help you to see how your campaign is performing and make necessary changes if needed. Remember, it is not enough to monitor the performance of your campaign regularly – we advise you to evaluate and optimize your campaign as often as is needed to ensure you gain the most out of the analytics data you collect for monitoring. Read our article on the 5 Data Senses to help you start generating meaningful insights.
Prepare against potential hazards: Ensure your brand and advertising partners are compliant to avoid issues like brand safety and the ever-evolving data laws and policies. For this reason, it is recommended that you work with a credible Performance Marketing Consultancy, like VANE IVY, that will handle all the aspects of your campaign, including affiliate management.

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