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The advancement of technology has changed the modes of browsing and buying. And this has necessitated new ways to advertise and sell. Some business owners spent much part of their capital on marketing their products. But often a portion of this capital is unproductive. The problem here is that there is no way in measuring the success of marketing tricks when it comes to traditional marketing. Performance marketing is important because it helps an entrepreneur to focus on the parts of marketing whose performance is measurable. Let’s learn more about performance marketing, a much-overlooked digital marketing strategy.
What is Performance Marketing in Digital Marketing?
Performance marketing comes under digital marketing. In this type of marketing, the advertiser has to pay only when a particular action is achieved. Briefly, we could describe it as a result-driven approach in digital marketing. Businesses will pay depending on the way in which the target audience interacts with the content the marketing team or marketing service provider has put forward. In other words, we can say that the payment made by the entrepreneurs is based on how well the particular advertisement performs. This could be determined by measuring the following things.
- ad clicks
- sales
- leads
- app installs
- completed surveys
- ad views
- page clicks
- Social media engagement (shares, comments etc.)
- demo downloads
We could say Return on Investment (ROI) is a very important factor when it comes to performance marketing. We have to notice the fact that brand marketing and affiliate marketing do not come under Performance marketing even though they appear to be similar.
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How is Performance Marketing Different from Other Marketing Tactics?
1: What is the primary goal of SEO (Search Engine Optimization)?
As discussed in the introduction the fee paid by the form is independent of the performance or output given by the advertisement. And the firm has to pay the money upfront. This means that much of the money spent brings no return i.e. there is no conversion. In performance marketing the payment is in accordance with conversion and hence is more economically efficient for firms.
Types of performance marketing
Top performance marketing channels are listed below.
Search Engine Marketing
In Search Engine Marketing (SEM), we run marketing campaigns to drive traffic from search engines such as Google, Bing etc. This strategy targets the types of searches most relevant to the product. SEM should not be confused with SEO.
Content Marketing
This type of marketing focuses on educating your audience. In this, the advertiser provides useful information first. Then they bring their product into context. This can be done in the form of blog posts, case studies and even e-books.
Social Media Advertising
In this type of performance marketing, the ads are run on social media platforms such as Facebook, Instagram etc. This is set up in a funnel structure. The term prospecting means the part of the advertising campaign that is targeting new people while retargeting is the part which focuses on the people who visited the site but haven’t converted yet. But we have to understand that all social media advertising is not performance marketing.
Influencer Marketing
Traditionally, influencer marketing is not considered to be Performance marketing. But in the present, influencers are more business minded. The introduction of influencer management tools and influencer partnership platforms also played a huge part in bringing influencer marketing under this category. These tools help to properly go over and track the partnership and hence make this marketing performance-driven.
Native Advertising
Native advertising (or sponsored content) is very similar to influencer marketing. In influencer marketing, we pay an influencer to talk about the product. But in the case of Native Advertising, we pay a publication to write about it. In most countries, it is obligatory for the publication to disclose that the content is sponsored. Native advertising takes advantage of the natural appearance of a web page to promote their product. Sponsored content appearing in the midst of other organic content is what gives it an appearance of being natural. Consumers mostly are unable to differentiate them and hence promotion feels natural. These ads are also very popular in e-commerce websites like Facebook marketplace.
Banner Ads
This kind of ad appears in your social media newsfeed or at the top or bottom of the web page you visit. But they are losing popularity due to the widespread introduction of ad blockers (banner blindness). Yet we can find many firms using them successfully using interactive content, videos and graphic design.
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How to measure performance marketing?
It is important to understand how Performance Marketing works before getting into this. Below given are a few ways in which we can measure performance marketing.
Cost per Thousand Impressions (CPM)
Cost per thousand impressions (or cost per mille) is the cost for an advertiser to generate a thousand views of the particular ad. Thousand is used as a marker because the cost of a single impression can undergo wild fluctuations but the cost per thousand is more stable. This measurement is particularly useful as it helps a merchant to understand how expensive it is to advertise on a specific platform and the level of competition they have to face to reach the people who might become their customers.
Cost per Click (CPC)
Cost per click (CPC) is the cost to get target customers from the ad to your website. But this may vary in different platforms. On Google, a click happens when a person clicks the ad link and then reaches your site. But on social media apps like FB, LinkedIn etc. even a like on the ad post can be counted as a click. CPC is related inversely to the click-through rate (CTR).
Cost per Conversion
In Cost per Conversion, the strategy is specific to a business. For some firms such as e-commerce sites, this will be cost per sale (CPS). But some businesses are solely focused on the new customer it is targeting. They measure their success in customer acquisition cost (CAC). Cost per lead (CPL) is used to measure the success of B2B marketing.
Cost per Action (CPA)
In this method we measure the campaign performance by looking at desired action we want the target audience to take. This could be subscribing to a publication, downloading an e-book, signing up for a course or purchasing a particular product.
Lifetime Value (LTV)
This measures the predicted lifetime value of an individual customer with the specific brand throughout their relationship. This is estimating the expected spending a customer may do based on their ongoing purchasing behaviours using predictive analytics. The efficiency of this metric in boosting ROI is soon driving its popularity.
How to Build a Performance Marketing Strategy?
Below given are the steps you have to follow for doing a campaign according to performance marketing.
- Set campaign goals before launch.
- Decide the bid for each action and the budget for the campaign as a whole.
- Choose the marketing partner with care.
- Keep the below-mentioned limitations in mind while designing the campaign as well as while choosing the channel.
- Collect information about the target audience in order to design the ad in a way appealing to them.
- Choose an appropriate performance marketing channel.
- Create the advertisement/campaign
- Launch the campaign
- Measure and optimise the campaign
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Limitations of Performance Marketing
Performance marketing could almost be described as an improved version of direct response advertising. This is enough to know what limitations might this marketing have. Let us look through a few of them.
- Heavily conversion based and hence not a good strategy when it comes to building and introducing a new brand.
- It is call-to-action (CTA) driven and hence may run the risk of brand dilution. Too much performance marketing can dilute the message of brands trying to build brand equity.
- No exact certainty in attribution. Performance marketers cannot be completely sure about how much money their ad has driven. This is mainly due to them being unable to see the customer activity like conversion due to privacy policy changes.
- Compliance-related issues and privacy regulations can make the tracking of performance marketing difficult.
- Click frauds and bot traffic.
- Things like publisher fraud and placement transparency are also potential pitfalls in the case of performance marketing.
- Delayed results when compared to some other forms of marketing
Benefits of Performance Marketing
Given below are a few benefits of performance marketing.
- Helps in diversifying the audience
- Efficient is reaching more people and at the same time capturing important data
- Easy to track the progress
- Low risk and quicker launch times
- Focussed on ROI
- Low upfront costs
- More transparency
Job titles under Performance Marketing?
Job titles given below come under the category of performance marketing.
- Paid search marketing specialist
- Advertisement copywriter
- Performance marketing manager
- Paid media associate (or manager or specialist)
Tips for Making the Most of Performance Marketing
Follow the tips given below to make the most out of your Performance Marketing campaign.
- Design landing pages and offers so that they are appealing to the target audience.
- Traffic sources should be chosen wisely.
- A/B test and optimize for more efficiency.
- Campaigns should follow the necessary rules and regulations set up by the country.
- The firm should have a good digital presence.
- Try changing the target audience or including other demography if the present campaign target is not giving the expected results.
- Try and test several landing pages.
- Change the appearance of the ad and allocate the budget differently from the already planned strategy if the present strategy is not giving good results
Performance Marketing Tools
Some tools that are essential for performance marketing are mentioned below.
- Affiliate management systems
- Tracking Software
- A/B testing tools
- Analytics tools
- Data management platforms (DMPs)
- Conversion Rate Optimization (CRO) tools
Performance Marketing Partnership Tools
A few Performance Marketing Partnership Tools are stated below.
- PartnerStack
- Partnerize
- Everflow
Performance Marketing Tracking Tools
A few Performance Marketing tracking Tools are stated below.
- io
- LeadDyno
- Impact
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Performance Marketing in Digital Marketing FAQs
1. What is performance marketing?
Performance marketing is the type of marketing that is driven by the results.
2. Does Performance marketing run the risk of brand dilution?
Yes
3. Is it necessary to find affiliates for performance marketing?
No. firms can do performance marketing independently if they have a good enough marketing team.
