The Complete Guide To Performance Marketing

What is Performance Marketing?

Performance marketing is a type of marketing in which advertisers only pay when a desirable action (e.g., a sale, lead, click, or impression) is successfully performed.

Marketers use performance marketing when leads, sales, or other actions represent their most important goals. In most performance marketing campaigns, advertisers pay only for results but pay nothing for impressions.

Knowing what performance marketing is important, as it can be an extremely effective method for acquiring new customers. However, it can also be expensive.

Performance marketing is distinct from other marketing methods, such as traditional advertising. In traditional advertising, marketers pay a flat rate for advertisements to air, regardless of their effectiveness.

Mathematically speaking, performance marketing is the industry of buying media online and measuring what “more” you can get for a client. So, if you spend $100, you get X amount of volume. If you can spend $120, you’ll get X+5. Similarly, if you spend $150, you’ll get X+10. Optimal performance marketing is about finding the channels where you can achieve 20% more for your clients.

Performance marketing originated around the idea of search being the measurement point. If you could get the search user to your site, you’d be able to have a conversion. The amount of money spent would correlate to the number of conversions. Such marketing strategies are often based on targets. It emphasizes fulfilling the targets, such as the reach, likes and/or comments, clicks, new purchases, etc. 

Performance Marketing Vs. Brand Marketing

When it comes to performance marketing vs. brand marketing, although they are sometimes used interchangeably, they are two very different strategic terms. While brand marketing relies on branding activations, i.e., building a strong brand that drives top-of-the-mind recall, performance marketing relies more on outcome-driven individual activation.

A brand is a name, term, design, symbol, or other feature that distinguishes an organization or product from its rivals in the eyes of the customer. Brands are used in business, marketing, advertising, and corporate strategy as a way to focus the efforts of a corporation on particular products or services, to imbue in the targeted consumers a sense of what the product stands for, and to differentiate the entity from its competitors.

Branding is an important technique in stimulating and maintaining interest in a product or service. It is used in marketing to both differentiate a product and create a lasting impression in the minds of customers.

Brands are valuable because they serve to build loyalty among customers. Brand loyalty means that a repeat customer is likely to continue to purchase the same specific product rather than switch to a similar competing product. Differentiating a brand allows a company to charge a premium price because consumers may be willing to pay more for the branded product. Alternatively, when a consumer has to choose between two similarly priced products—one branded and the other not—they may purchase the branded one.

The brand also works to build loyalty among employees, business partners, investors, and other stakeholders.

Here are some of the key differences between performance marketing vs. brand marketing:

What is affiliate marketing?

Affiliate marketing often refers to collective performance marketing. They deliver traffic for advertisers, for which they get commissions.

As an affiliate, you can choose between a variety of models. The most common ones are:

• Pay-Per-Click: This performance model is based on fixed payments from advertisers to affiliates. The affiliates earn a fixed amount every time a customer clicks on an ad.
• Pay-Per-Sale: With this model, an advertiser only pays an affiliate when the affiliate actually manages to make a sale. 
• Pay-Per-Lead: Following this strategy, an affiliate gets paid every time a user provides their personal information or makes a purchase.
• Pay-Per-Action: This performance model ensures that the advertiser only pays the affiliate if the intended action is completed. An example of performance marketing of this kind is when an advertisement states that users can get a product for free. The advertiser will be charged only if the users perform this action as a result of the advertisement.
• Pay-Per-Impression: This type of performance marketing ensures that the advertiser only pays an affiliate if an advertisement is viewed without resulting in a click or a sale.
• Invisible Affiliate Marketing: This strategy does not involve any user-centric ads. Using this strategy, ads are more integrated into the regular content posted by creators. The advantage of invisible affiliate marketing is that it cannot be blocked by ad blockers or pop-up blockers.

Performance Marketing Vs. Affiliate Marketing

Performance marketing relates to immediate sales, whereas affiliate marketing is focused on generating leads. In affiliate marketing, publishers are rewarded if they generate valuable leads for advertisers. They can get a monthly payment, pay-per-click, or sales commissions.

Performance marketing allows you to generate sales in the short term. The campaigns are aimed solely at generating revenue. These ads only appear on (potential) customers who are ready to buy. In affiliate marketing, you pay a fixed amount for a given outcome, irrespective of the result of the campaign.

The table below summarizes the differences between performance marketing and affiliate marketing. 

Performance Marketing Vs. Content Marketing

Performance marketing and content strategy are relatively new fields, so it makes sense that the folks who are usually best at being early adopters are also attracted to them.

For some, this is a natural fit. For example, ad tech pros who have worked on performance campaigns have likely come across some content created as part of the effort.

But it’s less common that marketers who only work on content are jumping into performance marketing. (The reverse seems more common, with marketers coming from performance marketing into content creation.)

Content marketing is marketing that utilizes content assets to attract, acquire, and engage a target audience. In turn, performance marketing is marketing that utilizes paid advertising to drive relevant, measurable, and scalable results.

To the point, content marketing can be a part of performance marketing – however, it is not performance marketing.

Also read: Develop An Effective Diversity Marketing Strategy

Here’s how they’re different:

Content marketing is marketing that utilizes content assets to attract, acquire, and engage a target audience. It is the practice of creating, publishing, and distributing content for a targeted audience online.

Content marketing is the creation of high-quality and relevant content that meets the needs and interests of a specific audience and ultimately drives profitable customer action.

On the other hand, performance marketing is marketing that utilizes paid advertising to drive relevant, measurable, and scalable results.

One common example of performance marketing is affiliate marketing. Affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate’s marketing efforts.

Another is search engine marketing (SEM). Search engine marketing is the practice of marketing a business using paid advertisements that appear on search engine results pages (or SERPs).

Performance Marketing Vs. Programmatic Marketing

Programmatic marketing uses real-time bidding (RTB), allowing advertisers to bid on automated platforms. These platforms use algorithms to buy impressions/clicks “on the fly”. This way, they can pay the best price for ad space.

Programmatic marketing can be individually tailored to the publisher’s inventory or can be completely transparent and automated. It lends itself particularly well to retargeting because it’s based on consumer information.

Programmatic marketing is becoming more and more popular among publishers because:

• Publishers can help advertisers to reach their target audiences.
• Publishers can reach publishers directly.
• Publishers have 100% control over their data.
• Publishers usually offer a lower CPM, but a higher CTR.

When it comes to performance marketing vs programmatic marketing, here’s how they differ:

Types of Performance Marketing/Performance Marketing Strategy

Performance marketing focuses on conversions and ROI rather than CPMs and impressions.

Here are a few performance marketing strategies you might want to check out:

1. Optimize Payment Channels

The performance marketing industry has seen a dramatic shift towards mobile devices in the last few years. This number will only increase as people are now shopping more and more on their mobile phones.

Given this, you need to make sure that your payment options – such as Google Pay, Apple Pay, Paytm, etc. – are optimized for mobile conversions.

2. Optimize Performance Marketing for Mobile

Did you know that 90% of consumers use mobile devices to research products and compare prices, 30% of mobile searches lead to action within 30 minutes, or 12% of local mobile searches lead to a purchase within a day? 

All of these make it clear that it is important for any business to optimize their performance marketing for mobile devices. 

3. Personalization as a Tool in Performance Marketing and Funnel Optimization

Personalization has become the name of the game in 2022. Consumers are bombarded with advertising and information on a daily basis. Hence, if you want to stand out, personalization is key. Consumers are more likely to shop with retailers that provide personalized experiences. Ad-targeting and setting different groups in your Google Ads account and then using separate content for those is the smart way forward.

This is a great way to optimise your buyer funnel and ensure that each stage has more and more conversions.

4. Use AI Tools

In 2022, most PPC platforms are introducing AI features. AI tools like bid multipliers, device bidding, and automatic bidding are built with machine learning to help them self-optimize. AI tools such as WebEngage enable marketers to spend less time managing campaigns and let them focus on other more strategic efforts.

AI is helping marketers increase their efficiency and productivity. There are many strategies available, and it is important that you understand what they are and how you can use them for your business.

• Smart Bidding: This feature that lets AI optimize campaigns is based on human feedback. Smart bidding means that you can set your bid parameters, your ads will show on the best performing days and times, and your ads will show to the best performing audience segments, i.e., the highest hit rate among different target audiences on a set group of ads.

• Budget Optimization: With budget optimization, marketers can set their budget and bid parameters based on the amount of revenue they want to drive for their business or ad spend. This is an effective way to ensure that your ads are showing to the best or the most relevant (by conversions) audience and have the best potential performance.

5. Retarget Your Prospects

Retargeting has been a powerful digital marketing solution for many years. Retargeting is when you show your ads to people who have previously visited your website. When someone lands on your website, they leave a digital footprint in the form of cookies or submitting their details like email id/phone no. This footprint can be picked up by a retargeting platform and used to target certain ads to the people who have already visited your site.

Retargeting is a great way to reach people that have previously shown interest in your products but have not taken the desired action.

You must structure your business around data, as it will give insight into:

• Which marketing channels are working
• Which ads are working
• Which companies are spending money on ads
• Who is driving sales for your business

Once you have gathered the data required, you can use it to make smart marketing decisions.

But how do you gather this data, and what do you do with it? Let’s delve a little further into data-driven performance marketing.

Performance Marketing backed by Data Analytics

Companies may use the information from data analytics to make better decisions, resulting in better outcomes. Many assumptions are eliminated when using performance marketing with data analytics, including which content to use, which marketing plan to use, which goods to design, and so on. When marketers know your target better, they will be able to tell which of their marketing efforts or advertisements are the most popular with them and produce the finest results. It also aids in reviewing ad campaigns to see if they are working properly. It also tells you when it’s time to switch up your adverts. 

The data of a company might help them predict the future results of the campaigns they are running as part of their performance marketing plan. This allows them to figure out what is successful and what isn’t. Proper optimization aids in determining which expenditure should be used and which should be altered. An advertiser may also tailor the ads to the demographics of their target audience or create personas depending on the product or service.

Benefits of Performance Marketing

1. Cost-effectiveness

Performance marketing is the most effective method for all types of businesses at any scale. The advertisers have to pay according to their chosen plan. 

• CPC (cost per click)

In this, advertisers have to pay according to the number of visits to their site. 

• CPM (cost per impression)

In this, advertisers have to pay according to the views on the ad. They have to pay per thousand views.

• CPS (cost per sale)

In this, advertisers have to pay according to the sales made from their ad. 

• CPL (cost per lead)

This is done by paying for the lead generation from the ad. It can be signing up for email, etc. 

• CPA (cost per acquisition)

The visitor or customer will have to complete specific actions like buying something, visiting another blog, completing a specific task, etc. 

2. Better monitoring

With the help of performance marketing, advertisers can easily monitor their leads, efficiency, and the performance of their business. The performance marketing tools can track the outcomes of the company’s performance automatically whenever a campaign’s desired goals are fulfilled, whether it is a potential client that signs up on the email of a company or clicks on the company’s ad. 

3. Actions with integrity

Business owners can use performance marketing to evaluate how much value they’ll get through their expenditure. Organizations can observe what intended activities are being accomplished in real-time with advertising software solutions as advertisers can get accurate results of their performance.

Conclusion

Performance marketing is becoming more and more popular day by day. Today, there are thousands of companies using performance marketing, and this number is only going to increase. There are many benefits associated with performance marketing, which is why it is so popular. However, it is primarily beneficial to organizations as they do not have to pay the publisher until the latter proves the value of their services. It would make no sense to pay a publisher who is providing no value. This way, the companies pay a publisher only when they are able to provide results.