What if I tell you that instead of spending your dollars on impressions and clicks, you can instead focus your spending on key performance metrics (KPIs) that can help you get better results?
It’s the whole point of starting out with a superior performance marketing strategy done by professionals.
What is Performance Marketing?
Performance marketing is all about shifting the marketing perception from an awareness-focused marketing strategy to an action-based one. The term envelopes various aspects of digital marketing. It is a specific marketing type that runs on media and involves the latest technologies. It is an overwhelming marketing strategy that works under a strict creative-first advertising model.
Performance marketing ensures that the budget you spend on marketing is only when it generates profitable results. These results can range from clicks to product pages, coupon code redeems, and even lead to purchases. As a result, marketers get a much accurate insight into ROI. Marketers then find out which tactics, Ad types, and social channels were the best and inspired users to take measurable actions.
The Significance of Performance Marketing
That’s almost $74 billion. By the year 2021, these spendings are expected to increase and reach an alarming $118 billion. It makes up for almost 80% of the complete online ad budget available surpassing other traditional marketing budgets such as TV, Radio and Print Media.
Today, mobile technology has successfully earned the power of keeping audiences hooked to their screens. It has the capacity to engage an audience for almost three hours a day on average.
Most digital marketing specialists in UK perform their daily marketing activities, keeping the return on ad spend (ROAS) in mind. With performance marketing, they can bag most of the authentic clients within their respective client list. Moreover, it helps them establish a potent business model that solely works on client-defined objectives. Why is it a favorite with the clients? It is because Performance Marketing is all about performance. If there are no lead generations, you won’t get paid.
That’s one of the reasons why performance marketing is readily adopted among modern businesses.
Some Important Facts About Performance Marketing
In the near future, we will see an incredible uprise in the field of performance marketing. To elucidate how I have deduced this result; here are some interesting facts for you.
- Performance marketing is predicted to grow up to 10 percent by the end of 2020.
- More than 62 percent of average brand marketing budget will go towards performance marketing.
- Almost 57 percent of performance marketers will use social media as a marketing platform.
How Does Costing Factor in Performance Marketing?
Basically, the costing model in performance marketing comparatively works quite differently than other marketing methods. When we talk about cost, clients are entailed to pay the service providers when they generate a lead. In digital marketing, performance marketing revolves around two key metrics; cost per acquisition (CPA) and cost per lead (CPL). Clients particularly measure KPIs based on these two factors and accurately define how much investment is further required to achieve a set target.
Once the end-goal of the client is identified, the performance metrics are determined. Whatever the purpose of your marketing, be it getting more sign-ups on your website, or getting people to experience your product in a demo, or boosting your product sales; the costing for this particular type of marketing strategy is defined by how often these assigned goals are met.
How Does Performance Marketing Work?
To better inculcate the concept of how performance marketing works, I am going to create a hypothetical situation and educate our masses on how businesses make the best use of this marketing strategy.
An Imaginary Scenario
Suppose you are working for SaaS-based cloud business, known as (CloudFast). The purpose of your product is to deliver a seamless managed cloud hosting solution to end-users. You are currently employed at the firm and actively working for their marketing department. You have been continuously investing in the company’s budget in various marketing channels, but you can’t see any probable results.
Therefore, you decide to take the performance marketing approach in your business. Upon browsing the Internet, you come across a CPA network of B2B blogs run by an affiliate marketing analyst. He boasts a rather vast network of consumers belonging to a range of review websites, online courses, media sites and much more. He works with them on sub-affiliate bases and your product can benefit from him.
As a shrewd business person, you can strike a deal with this affiliate marketer by setting a certain budget spending of let’s say around $50 on every cost-per-acquisition (CPA). It will be a mutually benefiting contract between both parties. As a result, you will see solid potential paying customers and he will get $50 on each successful lead. You can apply this use case on just about any business of your choice. Imagine you are running an e-commerce store and want to make the most of affiliate marketing… this strategy will still be a win-win game and is the best way to increase your earnings.
The Wrap Up
Performance marketing is a parent marketing method, under which a number of different strategic marketing styles work coherently to establish a brand presence in the market.
Other facets of performance-based marketing include:
- Native Advertising
- Sponsored Content
- Social Media Marketing
- Search Engine Marketing
As far as the benefits of performance-based marketing are concerned:
- You can have better trackability of your ROI metrics.
- You will have to face low risk when investing budget.
- You will get better ROI results as compared previously.
- You will have an extended advertising reach.
- You will not have to handle any third-party validations.
So that’s all folks, I hope it was an informative read.