What is Performance Marketing?
In performance marketing, advertisers only pay when a specific action takes place. For example, when a viewer clicks the page and makes a purchase. It is a digital marketing strategy that is based on results. It is performance-based marketing in which brands pay marketing service providers only after a specific business objective is achieved. The objective can be a click, lead, or sale.
How does it work?
Brands put their ads on channels and pay based on how the ad performs. Here are the different ways to pay in performance marketing.
Cost Per Click (CPC):
In CPC, payment is made based on the number of times their ad is clicked on.
Cost Per Impression:
Payments are made based on every 1000 views.
Cost Per Sale:
Payment is made when a sale is made and that sale should be driven by the ad. It is commonly used in affiliate marketing.
Cost Per Lead:
Payment is made when someone signs up for something such as webinars or email newsletters.
Cost Per Acquisition:
Payment is made when someone completes a specific action such as sharing contact information, making a sale, or visiting your blog.
Top Performance Marketing Channels
There are five types of performance marketing channels that advertisers use to drive traffic.
Banner (Display) Ads
Display ads appear at the top or bottom of any news web page or on the side of your Facebook newsfeed. It contains interactive content and engaging videos. Though the increasing popularity of ad blockers is declining the appeal of banner ads, some companies are still finding them useful.
It appears as sponsored content besides other kinds of organic content. Users cannot differentiate between organic content and sponsored content as it takes advantage of the natural appearance. It allows the promotion of brands naturally.
Content marketing educates the audience by providing useful information and generating three times more leads. Content marketing includes blog posts, case studies, and much more content that put your brand in context.
Social media is a very effective channel for this. Brands can reach many users and drive them to their sites. Also, users share brands’ sponsored content organically which extends the reach of brands beyond the original post. Social media platforms like Facebook, Twitter, Instagram, and Linkedin offer many opportunities to extend their reach to new customers.
Search Engine Marketing
People perform online searches via search engines. It means that having a website that is optimized for search engine marketing (SEM) is important. The focus is primarily on cost-per-click in terms of performance marketing. For organic search engine marketing, many performance marketers depend on content marketing and landing pages that are SEO optimized.
Benefits of Performance Marketing
Here are the five key benefits of performance marketing.
Marketers identify goals and an ideal cost per action at the initial stage of planning for performance marketing. So it is very easy to set a budget for it. Goals are set at the initial stage. So, ads are optimized based on the campaign goal. it helps in better planning for performance marketing.
Pay For Results
Brands pay only for results without any undefined overhead. It is the most important benefit. It is very useful for small-budget campaigns that are aimed at specific conversions or goals. However, it is very important to set goals at the initial stage and stick to them as changing goals in the middle may cause fluctuations in the cost.
As this works on the number of impressions, clicks, and conversions, these metrics can be used by marketers to track performance throughout the campaign. Tracking these metrics can also be used to determine the return on investment. If a campaign isn’t yielding desired expectations, it can be put on hold and the budget can be moved somewhere else.
Pivot in Real-Time
If an ad with a particular headline yields a higher click-through rate than others, marketers use that headline with other media to further optimize the conversion rate. Responding to this performance throughout the life of a campaign can result in a more positive outcome within the original campaign budget.
Discover New Formats
Performance marketing networks are helpful for marketers who target audiences that are hard to reach. Though single placement channels such as Twitter are used for performance marketing, marketers can also collaborator with performance marketing networks to increase their reach.