December 27, 2019 ,
Performance marketing is a set of online strategies based on indicators that allow brands to promote a product or service and pay only when the outcome of the advertising is generated. In other words, clients need to pay performance marketing agencies only when the agency delivers profitable or agreed-upon results like sales, clicks, leads, conversions and other beneficial marketing outcomes.
Performance marketing has successfully reversed the traditional value proposition of advertising where the payment is made by the client or advertisers to an agency despite the failure of the ad campaign, thereby allowing real-time measurement of ROI.
Before beginning any marketing campaign, it is compulsory to set goals. These goals may be shared by the client or may be left on the agency to decide after discussing with the client. Having determined the goals of advertising campaigns, it is safe to proceed to the selection of marketing platforms and tools that can help in achieving them. Some of the popular goals include:
Performance marketing ad campaigns may range from web banners to pop-ups to cost-per-view and cost-per-click ads along with relevant content. Large amounts of traffic are generated through these ads which are purchased from web or mobile publishers.
Brands advertise via these platforms because it is easy to track, measure and quantify data about their ad spend with the correct tools. These can be linked directly back to sales. Popular sites like Google and Facebook use performance marketing but nowadays smaller brands are also going the same route.
Some of the benefits of performance marketing include:
1. Pay for Results
The most popular benefit of this form of marketing is that there are no overhead expenses before the desired results. Rather than paying an upfront cost for the services provided by an agency, performance marketing agencies charge brands or businesses every time the designated action or results takes place. Small businesses, like start-ups, often like this form of marketing because it satisfies their budgets. This is effectively applicable to brands that seek actions like leads and conversions.
In performance marketing, it’s important that brands set a goal and follow it properly. Ad campaigns that are optimized for conversions and then switched to clicks might underperform in both categories. It is best to design creatives and set budgets around a specific goal decided at the outset.
2. Track and Measure Performance
With performance marketing, it’s easy to track and measure results for actions taken. Performance marketing is digital, therefore brands benefit from near-instant results and detailed insights with regards to performance. It includes total spend, number of clicks, impressions and conversions.
With these metrics, brands can track performance throughout a campaign to determine the return on investment (ROI). If a campaign isn’t meeting the expectations, it can be paused and the budget can be moved elsewhere.
3. Better Planning
Performance marketing campaigns are easy to budget for because brands have to identify goals and provide an ideal cost per action at the beginning of planning. The Key Performance Indicators (KPI’s) play an important role in a brand’s ability to determine its goals. From there, it’s simple to find the proper budget based on the desired results. Since performance marketing focuses on driving higher performance levels and outcomes in businesses, therefore brands can optimize the number of impressions, leads, clicks and other performance markers.
4. Real-time Use
Most times performance is analysed by individual advertisements. Knowing how each creative performs with a particular target audience is a great advantage, thereby allowing brands to adapt and react to feedback throughout the campaign.
If an ad with a certain copy or headline delivers a higher click-through rate than others, brands can use that copy or headline with other forms of media to see if the conversion rate can be further optimized. Reacting to this performance of a campaign can deliver more results within the original budget of the campaign.
5. Low Risk
By paying only when a specific action is completed, a brand’s money is well-spent and remains unexploited. This automatically reduces the risk of overspending without getting the desired outcome.
6. New Formats for Experimentation
Single placement channels such as Twitter can conduct performance marketing or brands can also partner with performance marketing networks to broaden their reach. Various placement opportunities are offered by these networks, which can provide new details into valuable placements based on audiences.
Performance marketing networks like email, PPC, social media etc are especially helpful for brands targeting difficult-reaching audiences like developers who avoid display ads and are not very active on social media.
Brands that want to improve their advertising efforts and boost their results should opt for performance marketing and all that it has to offer. Unlike traditional marketing, performance marketing can help in better planning, track performances, make a brand pay only after the desired results and discover new placement opportunities.
With all these advantages, it’s no surprise that performance marketing is becoming the new standard for advertising. To know more about performance marketing, leave us a message and we will get back to you!