Performance, by definition, is the completion of a job, task, feat, etc. Performance marketing is often confused with affiliate marketing, which is the incorrect term to be utilized. Affiliate marketing only requires the client to pay marketing companies once the desired action is completed. Performance marketing is broader than and encompasses affiliate marketing and works on the basis of the statistics of a company’s advertising performance. Here, each click, lead, or sale is liable to be paid for by the advertiser, and the client pays to the extent that the campaign performs.
Performance marketing has transformed the advertising process altogether, with a focus on improving advertising outcomes. Advertisers are empowered by the ability to predetermine their targets and only pay upon target achievement. The process followed by performance marketing imparts total transparency as marketing companies are bound to keep the advertiser in a continuous loop. Meanwhile, advertisers can rest assured the marketing company puts in its best efforts since that’s how it would get paid. Therefore, performance marketing is greater than affiliate marketing as it imparts a certain value to a business that was not present before.
Why and How Performance Marketing Is Measured?
To track user behavior on social media platforms and websites, businesses generally use an approach that starts from the first interaction/ touch/ click and up to the final closed revenue; in simpler words, a customer/ client lifecycle. Furthermore, to get a wholesome idea about a marketing campaign, along with tracking the customer up to the point of sale, marketers also need to observe the interaction between the customer/ client with the sales team post-sale.[emaillocker]
The tracking of customers/ clients after the sale is difficult for most businesses to follow as the marketing and sales teams use different systems and produce large volumes of data to interpret. However, the data from both these teams are equally crucial — the tracking of traffic, form completions, links, and time spent on site, among others, from the marketing team and metrics such as revenue, conversions, and repeat purchases from the sales team. A process/ tool is required to take into account both these data sets and formulate one clear marketing analysis result.
To simplify this arduous, yet efficient, process, here’s a step-by-step guide by Ruler Analytics that makes use of its custom software:
- Track Website Visitors
The website is tracked for anonymous visitors over multiple sessions, keywords, and traffic sources.
- Send Conversion Data to CRM
The ruler also tracks conversions via phone calls, live chats, and forms.
- Send Sales Revenue to Ruler Analytics
Marketing touchpoints are then matched with real user details by Ruler.
- Integrate With Other Web Applications
Data is finally sent into the client’s Analytics, CRM, and other products.
This measurement process followed by Ruler Analytics enables businesses to close the gap between online marketing and offline sales and connects real revenue amounts back to the marketing campaigns that helped generate them.
How Is Performance Marketing Different?
Performance marketing is different from traditional marketing methods on a substantial number of fronts. Many businesses often find themselves in a fix as to which marketing approach should be selected and, more importantly, which would provide a greater ROI. While it is easy to think about having the best of both by a mix of traditional and performance marketing, most businesses simply cannot afford this approach. The major advantages that performance marketing possesses over traditional forms of marketing are as follows:
- Increased interaction with customers
- More cost-effective than print media
- A fee is only paid for successful transactions
- Marketing efforts can be easily measured
- Broader target audience
- The audience can choose how they receive content
- Level marketing field, regardless of business size
- Real-time result optimization is available
- The brand development process is simpler
- Outsources marketing along with its associated risks
- Greater chances for widespread popularity (ads going viral)
Businesses can utilize hard copy marketing techniques in cases where relationships can be strengthened with a contact or client. Therefore, to sum it up, performance marketing should be used to garner leads, create brand awareness, and advertise products/ services, among others, while other forms of marketing, such as print media, should be used to give targets that final push needed to close a sale or increase trust in the case of existing clients.
Performance marketing is a unique combination of advertising and innovation, which requires marketers to take a scientific approach. It has been successful in downplaying the traditional advertising value proposition and enables real-time ROI measurement.
Advantages Offered by Performance Marketing
- Shared Risk
The risk is shared by the client and the marketing company that is promoting it. The payment made to the marketing company is facilitated through the sales that the marketing company achieves for the clients and does not run the client’s budget dry. The amount of risk either of the two parties takes up depends on the type of campaign selected by the client.
The risk varies with the marketing campaign type; in cost per thousand impressions (CPM), the risk is handled majorly by the client, whereas a cost per download, lead, or application campaign divides the risk equally between the client and the marketing company, and in cost per acquisition (CPA), the risk lies almost entirely on the marketing company. In every case, however, the marketing company strives to perform the best it can by targeting the ideal audience, so as to maximize its own profits and benefit its client as well.
- Superior Returns on Same Investment
Performance marketing provides greater ROI to clients as compared to any other form of advertising. To make this clearer, let’s take an example of a client that takes up a paid advertising campaign and receives clicks in return. This type of advertising campaign requires pre-payment, which is sourced from the client’s budget and, ultimately, the clicks do not guarantee sales. In this case, the risk is borne completely by the client. Now, take an alternative example with the same budget, but with a performance-based outlook. Here, the client takes up the services of a marketing company and receives clicks in return but pays only when a sale is completed.
The marketing company in the second alternative will most likely strive harder to ensure that the clicks are converted into sales. This way, the risk is shifted entirely from the client onto the marketing company. Performance-based marketing induces efficiency, customer engagement, and customer acquisition with a financially attractive background.
- Campaign Tracking
Performance marketing allows clients to efficiently track their campaigns, which is important since clients need to know whether the campaign is working. Being informed about campaign parameters puts clients in a position to accordingly make changes to enhance the campaign for improved results.
Real-time tracking also increases engagement with customers on social media platforms by replying to conversations, which, in turn, keeps customers satisfied. In brand advertising, results are a crucial ongoing improvement process.
Performance Marketing for B2B Models
B2B performance marketing refers to performance marketing that is centric to marketing products/ services between businesses. Many marketers are of the thinking that performance marketing works only in B2C models, however, it can and is being effectively utilized in B2B businesses as well. For performance marketing to work in a B2B business model, there are a few requirements that must be kept in mind. These conditions need to be met for a B2B business to make its advertising campaign prosper. The requirements are as follows:
- Sufficient resources for a professional performance marketing program
- Incentives for affiliates to promote business products/ services
- Affiliates that are capable of effectively promoting the business
Businesses need to ensure that the affiliates whose services they avail provide performance marketing specifically for B2B models as B2C affiliates might not always be a practical match. Since referral sales are standard B2B practices, affiliate marketing opens new avenues, specifically in the promotional efforts of a business. Most referral programs are limited by the promotional efforts of the existing customers, whereas affiliates expand the network of partners to third parties that generate leads and drive sales for a business.
Here is a list of tips that not only help marketers in effectively implementing a marketing plan but also measures its progress.
- Take Up Services of an Affiliate
Businesses can benefit from performance marketing through its affiliate marketing subchannel, in which an affiliate brings on clients, and the performance of the affiliate can be measured based on the number of conversions.
- Don’t Rely on Traditional Ads
In a business, ads posted by affiliates work when users actually pay attention to them, click on them, and are redirected to the actual website. Most people simply ignore banner ads on any website. To get around this problem, businesses require affiliates to write reviews or provide links to the site in creative modes. Clients are more likely to trust writers whose blogs they generally read and take their suggestions seriously. This increases the chances of clients visiting links that are provided in such blogs and other such techniques that promote business.
- Work With More Than One Affiliate
A way to ensure business promotion is to work with as many affiliates as possible, each specializing in different niche promotional categories. The primary aim of this method is to gain as many leads, clicks, websites visits as possible. Therefore, it is advised to find businesses that are willing to work with yours to advertise your products/ services in an attempt to increase conversions. This is beneficial for the client and, at the same time, the affiliate as well.
- Make Use of an Affiliate Network
This step is beneficial for businesses that are looking to work with multiple affiliates. In this step, businesses can opt to join an affiliate network, which eases the process of finding trusted affiliates individually. With the added advantage of using an affiliate network, along with the instant provision of a database of affiliates, businesses are given the privilege of access to effective and accurate tracking and reporting promotional methods and technology.
- Measure Progress
To keep track of the efficiency of a performance marketing program, businesses can start by using their own web analytics software. Program measurement is a way of double-checking the success of a B2B marketing program in performance marketing and can include factors such as when the highest number of visitors viewed your website, and the page they most frequent.
Other than just website analytics, progress can also be measured by the analysis of how a business’ inbound links are performing, social media analytics, and web page ranking. The most effective check would be to keep track of the ROI bottom line; how much money the performance marketing program has actually generated for the business, and whether it meets the initially set goals.
Strategies to Make Your Performance Marketing Campaign a Success
While there are no set combinations that can be utilized to ensure the success of a performance marketing campaign, there are a few important details that marketers are required to keep in mind when designing one; the measurable actions and the marketing channels.
Since performance marketing is about paying for the completion of certain actions, here’s a look at some of the actions and what they represent.
- Cost Per Impression (CPM)
CPM relates to the amount a business pays a publisher per one thousand times that an advertisement is seen.
- Cost Per Click (CPC)
CPC relates to the amount a business pays a publisher per click on the advertisement.
- Cost Per Sale (CPS)
CPS relates to the amount a business pays a publisher per sale generated directly by an advertisement.
- Cost Per Install (CPI)
CPI relates to the amount a business pays a publisher per download and installation of an app. This action is specific to mobile downloads.
- Cost Per Lead (CPL)
CPL relates to the amount a business pays a publisher per sign-up they receive from a potential customer/ client, directly by an advertisement.
- Cost Per Acquisition (CPA)
CPA relates to the amount a business pays a publisher per specific action, such as a sale, lead, form filled, click, or result, among others.
Each of the aforementioned actions is an advertising objective, which, therefore, serves as a measure of performance marketing campaign effectiveness. To optimize performance marketing to a particular business, marketers need to evaluate choices, continue refining these choices, consider campaign goals, choose advertising platforms, costs, and, ultimately, results.
Due to the measurable nature of performance marketing, it demands accountability, which is provided through marketing channels that empower marketers to measure each specific action. A few top marketing channel contenders that enable measurement of the already mentioned actions are as follows.
- Native Advertising
Many customers/ clients use ad blockers while browsing the web and remain oblivious to advertising. Native advertising advertisements to blend in seamlessly in the environment. Content discovery programs enable marketers to dramatically scale the reach of their content and achieve click-through to specific landing via the publisher’s websites. This form of performance marketing is especially useful for brands that aren’t reaching their targets via search and social media channels.
Common Pricing Modes: CPC
- Sponsored Content
Similar to native advertising, although not immediately driving traffic offsite, sponsored content takes the user to another page on the publisher’s site. Sponsored content only drives a highly targeted audience to the website of the business, thereby increasing overall online visibility.
Common Pricing Modes: CPC
- Affiliate Marketing
Affiliates offer numerous advantages to businesses looking to outsource their marketing campaign. The most important factor that affiliate marketing provides businesses with is a strong ROI. Affiliate partners can range from blogs to influencers to discount sites.
Common Pricing Modes: CPC, CPL, CPI
- Social Media Marketing
Despite being an expensive affair, social media advertising can enable highly precise audience targeting, which overcomes the hurdle of gaining exposure via original, quality content. Social networks such as Facebook, Twitter, and Instagram, among others, provide businesses with visibility, traffic, and customers through various advertisement programs.
Common Pricing Modes: CPC, CMP, CPV, CPA, Cost-Per-Like
- Search Engine Marketing
Potential customers are reached by search engine advertising through ads that show up when specific terms are entered into search engines. This form of advertising can be used for various forms of business and is one of the most common forms of advertising today.
Common Pricing Modes: CPC
Efficiency-based marketing necessitates tracking to measure customer satisfaction and a well-thought-out performance marketing plan that includes a statistical combination of marketing actions and channels can work wonders for businesses. These strategies and tips are to be implemented in each step of the marketing plan to ensure performance marketing provides value to businesses, independent of the nature of the business.
Performance marketing, in this day and age, is one of the most practical marketing approaches a business can make use of when it needs to measure results quickly and make alterations equally quick. Every business, in order to reach its industry pinnacle and emerge as a market leader, needs to opt for the apt platform, ad type, target optimization, correct audience, and, most importantly, relevant and quality content.[/emaillocker]