ShivaniPerformance marketing is one of the digital marketing tactics that mainly focus only on the outcome, performance, or results of marketing campaigns. And this approach is redefining how various companies promote and sell their products!
It has Born out of a necessity to diminish cost per acquisition and increase ROI; performance marketing continues to allow companies to measure everything from brand reach, to conversion rate, down to a single ad.
What is performance marketing?
Performance marketing is the incorporation of brand marketing and paid advertisement that only returns once the desired action gets completed. Firstly, you need to determine the action and only pay when the action gets completed.
What Makes Performance Marketing So Helpful.
- With performance marketing, you have to pay for ads only after a marketing campaign, or after getting successful conversions.
- You will only pay after you view the result of your campaign, and you’ll often pay a smaller fee for each conversion rather than a more substantial flat fee.
- Performance marketing also lets businesses pay marketing companies or third-party promoters when they assist you in accomplishing a specific action; for instance when a sale is made using their campaign.
- This cost-effective method allows a greater focus on reaching marketing and sales goals than paying flat fees.
- In distinction, with more traditional marketing campaigns, a promoter pays an upfront fee for ad space, independent of the performance or outcome.
- It means paying even without seeing the results of conversions, meaning money may get wasted.
Performance marketing vs. affiliate marketing
It’s crucial to distinguish performance marketing from affiliate marketing.
Affiliate marketing pays for accepted third parties whenever someone purchases your brand by employing a link they place on their website, blog, or social channel (known as an affiliate link). They get a part of each sale, known as a percentage or commission, in cash.
Some people apply “performance marketing” and “affiliate marketing” interchangeably because both are modes of marketing that pay a third party for each conversion rather than a flat fee.
While affiliate marketing is a form of performance marketing, it’s just a single marketing tactic under the larger umbrella of performance marketing. Any tactic that includes paying for marketing based on outcomes, after a task is complete, counts as performance marketing. We’ll see some of these examples below.
Common uses of the term performance marketing
While performance marketing is employed in digital marketing, it is good to note sometimes areas why it is applied can vary insignificantly. Below are the common areas in digital marketing, where performance marketing is applied:
Social media marketing
This kind of performance marketing means using social media platforms, such as Facebook and Instagram, to showcase content and increase brand awareness and traffic. Clicks, sales generated by the platform, lead generation, likes, comments, and shares are the most useful way to measure engagement on social media platforms.
Sponsored content
Sponsored content is a method of performance marketing frequently used by content sites and third-party content producers. This marketing happens when influencers and brand ambassadors support a product, service, or brand in return for some sort of compensation such as free products.
Sometimes, content producers write sponsored blog posts, or other long-form articles, to promote a brand on their websites. And of course, we can’t ignore the number of social media posts that influencers and brand ambassadors create for campaigns! This sponsored content holds great success because influencers and ambassadors’ followers believe what they have to say. Even though this content is advertising, it seems organic.
When performed well, sponsored articles and posts have shown to be a financial win for advertisers and publishers.
Native ads
Native ads meet the look, feel, and function of the media format in which they oblige. The standard payment models for native ads are pay per click or pay per impression.
Search engine marketing (SEM)
Search engine marketing can either be organic or paid, depending on the strategy an advertiser chooses.
- For paid options, an advertiser pays for clicks to ads on search engines like Yahoo, Google, and Bing.
- The organic (unpaid) option, which is very gratifying when done in the right way, means using methods such as relying on the search engine’s algorithm to boost a page’s rank and leveraging SEO.
As an advertiser, you can frequently measure your performance—monthly, quarterly, and yearly. Alternatively, you can partner with and pay commissions to outside SEM agencies based on the results they produce.
Affiliate marketing
As covered above, performance marketing and affiliate marketing are related. Since affiliate marketing pays the affiliate for each conversion, it helps build performance marketing is affiliate marketing at scale.
Benefits of performance marketing
There are many benefits incorporated with running performance marketing campaigns. Below we take you through some of those advantages:
- Performance marketing is low-risk. By paying when a particular action gets completed, you feel your money is being well spent. It automatically decreases the risk of spending and not seeing the desired results.
- Performance marketing is 100% measurable. This is one of the main benefits of performance marketing, as it makes it easier to trace your campaign’s performance. It is possible to monitor all your campaign metrics and make any needed adjustments based on the data collected.
- Performance marketing is entirely focused on ROI or return on investment. Thus, this marketing approach makes it more straightforward for businesses and marketers to target campaigns based on high ROI.
- Performance marketing enables you to build and grow your brand through third-party partners with their budgets and audiences. The outcome gets enhanced targeted traffic, audience, and more market share.
Potential difficulties with performance marketing
Like any other marketing, performance marketing also produces its own set of challenges. You must make sure to accompany regulatory rules and ensure ad placement transparency, especially when it comes to working with brand representatives. And you may deal with publisher fraud. Challenges will come and go, but the most crucial question is how you address them. Luckily, there are ways to overcome most of the challenges of performance marketing.
Starting a performance marketing campaign
Before getting started with a performance marketing campaign, you must first clearly define your campaign goals.
- Your goals play a crucial role in determining where your ads will show, who will see them, and so on.
- Besides, by establishing your goals, it becomes easier to choose ad platforms that target those specific goals.
Consider setting goals based on these metrics, which are among the most popular digital marketing objectives overall:
- Leads generated
- Sales
- Engagement (likes, comments, and shares of content pieces)
- Website traffic
- Repeat website visits
Remember that performance marketing will take a lot of work, mainly to track your progress towards these goals—but the work is well worth it.
Pre-launch plan
Make sure your performance marketing strategy is based on your overall business goals. Don’t be tempted to cut corners— if you cut corners, performance marketing will not work for you.
- Know the strategies that will best help you accomplish your objectives. Understanding that a strategy for brand awareness is different from a strategy for lead generation will help you define your goals and tactics well.
- Also, evaluate your team. Rating your team helps you understand their weaknesses and strengths. Additionally, this helps you to work toward constant improvement.
- Once your campaign goals have been established, begin to research ad opportunities.
Launching the campaign
Once you have a stable team and a sound strategy, you are ready to launch your performance marketing campaigns.
Post-launch plan
It is the stage where the real work begins, where campaigns start to produce data. Marketers will be more focused on optimizing individual campaigns for performance, and advertisers will have the responsibility of optimizing for top-performing ad sources. It is a step that is quite involved, but it permits advertisers to increase sales and increase ROI.
How does performance marketing work?
Four essential groups come together for performance marketing to work. Below is a breakdown of these groups:
Retailers/merchants/advertisers
The businesses that want to promote their products and services through publishers or affiliate partners.
Affiliates or publishers
The best way to describe affiliates or publishers is by referring them to as marketing partners. They come in many styles, such as product reviewers, coupon websites, online magazines, blogs, etc.
However, affiliate marketing shifts towards an all-encompassing performance marketing model, which includes content sites, social influencers, product review sites, artificial intelligence, mobile apps, complimentary merchant partnerships, remarketing ad managers, and personalization applications.
It is fair to have a strategy, and an understanding of each marketing partner needs from a merchant to succeed.
For example, influencers are publishers that mainly promote through their blogs, social groups, and social channels. The main focus of influencers is to guide others through reviews and personal experience, and often you will find them being the first to announce new product releases, sales, and offers.
Affiliate networks/third-party tracking platforms
Affiliate networks or third-party tracking platforms are critical to the merchant/affiliate partnership.
They offer a one-stop-shop for information and tools such as banners, text links, product feeds, promotions, and payouts.
For both the affiliate and merchant, these networks and platforms are a way to keep track of clicks leads and conversions.
Below are examples of leading affiliate networks and tracking platforms within the Performance Marketing industry:
- Commission Junction
- Rakuten Marketing
- Partnerize
- PepperJam
- AWIN
- Avantlink
- Impact
- HasOffers
Keep in mind that different affiliate networks and tracking platforms have different strengths, weaknesses, vertical merchant expertise, cost structures, and other features. Research these platforms carefully before reaching a decision.
Affiliate managers or outsourced program management companies (OPMs)
Between merchant and affiliate, OPMs are considered to be the main driver. Affiliate managers can be in-house, or brands may choose to work with outside companies to handle the entire program or give the in-house team a hand.
Affiliate managers within companies make sure everything the affiliates want is within reach for both the merchant and partner within the network. Everyone is supported by brand strategy and approach.
Outsourced agency partnerships tend to be more useful, though. In most cases, in-house teams have a limited market reach, expertise, resources, and limited existing affiliate relationships. So, working with another company can help fill these gaps and accelerate results.
Tasks that agencies can back frequently include growth strategies, partner recruitment, long-tail program optimization, campaign management content creation, etc.
Robust partner databases, technical and strategic expertise, and existing proven processes add to the advantage of working with a company, such as Global Excellence Award winners.
Consider these and other variables when deciding whether to work with an affiliate program management company or OPM:
- Goals
- Budget
- In-house team size
- Vertical expertise
- Timeframes
- Brand alignment
Common performance marketing payment structures
Now that we have gone through the four groups included in performance marketing let’s examine the four most common payment structures used within performance marketing.
- Pay Per Sale / Cost Per Acquisition: In this case, a merchant or retailer pays a publisher or affiliate for the sales generated once the transaction is complete, often as a percentage of each sale. Note that, in commerce, this is the kind of payment model usually set up by merchants.
- Pay Per Click: This is yet another payment model where retailers pay an affiliate for every person they refer to the coveted landing page. It is good to note that although this model exists, it is less used in performance marketing.
- Pay Per Lead: Within the context of performance marketing, a lead is a consumer who has completed a sign-up form that includes specific information about them, or who has shared identifying information with a merchant via another outlet. Information a lead might share includes their name, email address, phone number, and professional role.
- Pay Per ‘X’: For this payment model, the ‘X’ can represent whatever the merchant defines as the desired action outside of a lead, click, or sale. Upsells within apps, downloads, and rewards program sign-ups are examples.
Platforms in performance marketing: an overview of how they operate
Every channel has a specific audience and offers different types of advertising platforms to reach them.
For example, Google displays your ads in search results pages and across the Google Ads network.
Facebook, one of the leading social media channels, offers various options to show your ads to people visiting the Facebook or Instagram platform
Taboola, a leading content discovery network, allows advertisers to reach the readers of tens of thousands of leading online publications.
Remember, though, that no channel shows all the ads available to everyone all the time. So how do these platforms choose what to show? They use a combination of the following factors to show those ads:
- Quality and relevance: In any form of advertising, trust is such a big thing and one that contributes to ad performance. This means you have to make sure your ads work or are relevant. Otherwise, they will earn a low rating, which will result in your network getting less exposure.
- Target audience and segmentation: Each ad platform now offers ways to target your audience in the form of audience segments.
- Bid: Today, the modern advertising landscape allows you to choose ads to display, who to show, and what time to show them based on what you have agreed to pay.
- Conversion: The economics of performance marketing is entirely based on consumers taking action. When the needed action fails to take place, this means the network doesn’t get paid. So, your ad gets displayed more when it works.
Best performance marketing tips
You’ll find there are some great tips out there, here are a few of the most common in this space.
- A/B test and optimize for revenue-driving KPIs: It is obvious to any marketer testing, and measuring are essential for any marketing strategy to work. With performance marketing, trying different techniques and strategies for traffic, optimizing conversions, and click-through rates are crucial. Conduct A/B testing until you are certain about what is and is not working for you.
- Choose your traffic sources wisely: Always make sure your traffic is coming from reputable sources.
- When most of the traffic comes from less reputable sources, consumers usually think twice about a brand. You don’t want your visitors to have second thoughts about your brand.
- Craft an enticing affiliate offer: If you are running an affiliate program or a similar model, make sure the offer is enticing. Otherwise, you may deter partners from working with you.
- Are your offers attractive enough to grab the attention of potential publishers (affiliates)? Do everything possible to motivate publishers to market you through valuable rewards.
- Focus on an excellent landing page: While focusing on performance marketing, it is crucial to pay keen attention to your landing page (where visitors end up if they click on an ad, affiliate link, etc.)
- If your landing page is too cluttered or is unclear about what your business offers the potential customers who visit, you will decrease the likelihood of conversion.
- So, clearly state the benefits of your business to your target audience, offer them something valuable, and clarify what you want visitors to do. And streamline the layout of your landing page.
- Audit your website for any problems your visitors might encounter when they arrive on your landing page.
- Track and monitor your performance: Periodic monitoring of your performance, based on your campaign goals, will help you make the necessary changes, build your brand, and grow your ROI.
- Comply with regulations: Performance marketing is driven by rules which must be followed. These rules define the relationship that exists between brands and publishers in performance marketing. When you and your publisher adhere to these regulations, you can be confident your efforts will pay off.
The evolution of performance marketing
Over the years, performance marketing has evolved, and more changes are yet to come thanks to technology and consumers behaviour. The amount of time that customers spend on mobile devices keeps increasing—consumers interact with brands twice as often on mobile, compared to other mediums. This evolution has led to marketers to focus more on reaching potential customers on mobile, as compared to reaching those on a desktop.
SEO and SEM professionals equally have also been forced to adjust to fit in the new and promising mobile landscape. For SEO professionals, keyword optimization and link building are no longer sufficient. Instead, they must now look for ways to create and use compelling mobile content, which motivates current and potential customers to stay engaged.
For SEM experts, this means learning how to leverage Product Listing Ads (PLAs), how to optimize for mobile, and how to navigate sophisticated enhanced campaigns to fit the performance marketing environment.
Wrap up
As long as technology advances, performance marketing will continue to create room for businesses to thrive. And since technology keeps advancing rapidly, there will always be room for your business to advance with performance marketing.
