Digital marketing strategies that deliver results are crucial for B2B and B2C businesses seeking to connect with their target audience and drive sales or leads. However, navigating the complexities of performance marketing can be challenging for new marketers due to the intricate blend of strategies, channels, and tactics involved. This article provides a comprehensive guide to help you become a performance marketing expert.
Table of contents
- What is performance marketing?
- What’s the difference between performance marketing vs. brand marketing?
- What are the benefits of performance marketing?
- What are types of performance marketing?
- How do you measure performance marketing?
- How do you build a performance marketing strategy?
- What are some performance marketing examples?
What is performance marketing?
Performance marketing is a results-driven approach to digital marketing where businesses only compensate marketing agencies, advertising platforms, or affiliates when specific campaign objectives are achieved, typically measured in sales, clicks, or leads generated.
What’s the difference between performance marketing vs. brand marketing?
Performance and brand marketing represent distinct strategic approaches for reaching target audiences. Both offer unique advantages, but their primary difference lies in their focus. Brand marketing prioritizes establishing long-term brand recognition and reputation among potential customers, while performance marketing emphasizes immediate sales generation without necessarily prioritizing emotional connections with customers upfront.
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What are benefits of performance marketing?
Despite posing challenges for some, this marketing strategy offers numerous benefits for businesses willing to embrace it. Here are three reasons to consider performance marketing.
Low risk
Performance marketing presents a low-risk avenue for introducing new strategies due to its relatively low initial investment. Successful campaigns can be scaled up with increased budgets, while underperforming campaigns can be easily adjusted or paused without significant losses.
Targeted
This strategy enables precise targeting, allowing businesses to reach the right audience with tailored messages. Targeting parameters can include demographics, geographic locations, interests, and behaviors, such as recent website visitors or those who have clicked on ads within a specific timeframe.
Increased ROI
A key advantage of performance marketing is its potential for higher ROI compared to other advertising methods. This stems from its laser focus on specific goals and measurable outcomes.
What are types of performance marketing?
Performance marketing encompasses various methods, with some of the most prevalent listed below:
Social media advertising
Social media advertising stands as a widely adopted form of performance-based advertising. These ads can effectively target individuals who have previously interacted with a website or demonstrated interest in similar products or services.
Search advertising
Search advertising, commonly referred to as PPC (Pay-Per-Click), involves advertisers paying to have their ads prominently displayed above organic search results on search engine result pages (SERPs) of platforms like Google and Bing.
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Display advertising
Display advertising encompasses ads appearing on web pages, typically in the form of banner ads. These ads are strategically positioned on high-traffic websites, news sites, and various other platforms to attract users and direct them to the advertiser’s website.
Affiliate marketing
Affiliate marketing operates on a performance-based model where businesses incentivize affiliates for every customer they successfully refer through their promotional endeavors.
How do you measure performance marketing?
Performance marketing centers around achieving business objectives through paid advertising. It’s a data-driven approach that goes beyond simply running ads; it emphasizes measuring performance and adapting strategies to optimize results. Monitoring specific metrics is crucial for ensuring campaigns are on track and meeting predetermined goals.
Cost per click (CPC)
Cost per click signifies the expense incurred for each click on an ad. A higher CPC translates to increased advertising costs for businesses targeting a specific keyword or keyword phrase.
Cost per impression (CPM)
CPM represents the average expenditure incurred by an advertiser for every 1000 ad impressions. Calculated by dividing the total ad cost by the number of times it was displayed, CPM provides insights into the cost-effectiveness of reaching a broad audience.
Cost per lead (CPL)
CPL measures the cost associated with each prospect who responds to an ad and completes a form. Widely used in PPC campaigns, CPL offers valuable insights into the cost-effectiveness of lead generation efforts.
You can use our search advertising benchmarks to find average the CPL for your industry.
Cost per acquisition (CPA)
CPA reflects the expense incurred in acquiring a new customer. When analyzing CPA, it’s essential to factor in both the ad cost and the value generated from each sale or conversion.
Lifetime value transaction (LVT)
LVT provides marketers with valuable projections of potential revenue a customer might generate over their entire engagement with a business. By estimating a customer’s lifetime spending on products or services, businesses can make informed decisions regarding customer acquisition and retention strategies.
5 steps to build a successful performance marketing strategy
Crafting a winning performance marketing strategy demands time, commitment, and a willingness to adapt through trial and error. The potential rewards, however, can be substantial when executed effectively. Outlined below are essential steps to build a high-performing performance marketing strategy.
1. Define your objectives
A clear understanding of your goals is paramount for creating effective performance marketing campaigns. Well-defined objectives will guide every subsequent step in the process. Your goals should adhere to the SMART criteria: Specific, Measurable, Achievable, Relevant, and Time-bound. Moreover, they should align with your overarching business goals.
For instance, social media advertising might be ideal for promoting a product or service. However, if your goal is to drive traffic to your website, paid search might prove more effective.
Once defined, these goals should serve as the bedrock of your marketing endeavors. Every campaign should be strategically designed to contribute to their attainment.
2. Choose the right digital channels
Leveraging multiple channels effectively is key to performance marketing success. However, it’s important to recognize that not all channels are created equal, and some will yield better results for your specific business. The most effective approach involves testing a few channels with smaller budgets initially. By tracking results over time, you can make data-driven decisions and allocate resources to the most promising avenues. Here are some prevalent digital marketing strategies to consider:
- Content marketing: Content marketing focuses on creating, distributing, and promoting valuable, relevant, and consistent content to attract and engage your target audience. By providing valuable content, businesses can establish authority, build trust, and foster customer loyalty.
- Social media marketing: Social media has become indispensable for online marketing success. Platforms like Facebook, Twitter, and Instagram command significant user attention and offer valuable channels for reaching target audiences.
- Display ads: Display ads, commonly found on news websites, blogs, and e-commerce sites, often appear as pop-up banners directing users to the advertiser’s website.
- Email marketing: Email marketing remains a powerful tool for nurturing relationships with prospects, building brand trust, and guiding them through the sales funnel.
3. Identify partners
A significant challenge in performance marketing lies in finding the right partners. The success of your campaigns hinges on establishing strong, collaborative relationships with partners who share your vision and goals. Effective partners should grant access to a sizable and engaged audience. Additionally, they should deliver high-quality leads with strong conversion potential, increasing the likelihood of converting prospects into paying customers. When evaluating potential partners, prioritize transparency regarding their operations and methods. This will provide insights into their track record and the potential return on investment (ROI) you can expect from the partnership.
4. Launch and optimize campaigns
With your budget defined and target audience identified, it’s time to launch your campaigns. Creating dedicated landing pages and ensuring your website is optimized for conversions are crucial steps in this phase. Continuous optimization is essential for maximizing campaign performance. This involves consistently tracking key metrics, such as customer acquisition costs, customer lifetime value, and engagement levels. Remember, optimization is an ongoing process. It’s not about finding a single winning formula but rather continuously testing new approaches and adapting to changing market dynamics.
For instance, if an ad is generating clicks but not conversions, adjustments or a complete overhaul might be necessary. Conversely, ads failing to garner clicks might require experimenting with different approaches, keywords, or titles to improve visibility.
5. Monitor results
Monitoring campaign performance is non-negotiable for sustained success. It’s about understanding what resonates with your audience, identifying areas for improvement, and making data-driven adjustments. Dedicated software programs can significantly streamline performance tracking. These tools aggregate data from various channels, providing a comprehensive overview of campaign performance and highlighting areas that require attention. Equally important is monitoring the quality of traffic driven to your website. Analyzing metrics such as bounce rate, click-through rate (CTR), and conversion rate over time provides insights into user engagement and campaign effectiveness. Regularly reviewing results, daily, weekly, or monthly, depending on the campaign, allows for trend identification and performance evaluation over time.
3 performance marketing examples
Let’s explore some successful performance marketing campaigns.
Dove Chocolate sponsored content on BuzzFeed
BuzzFeed, a prominent digital media company, offers advertising opportunities on its platform. These ads often seamlessly integrate with regular content but are sponsored by businesses or individuals looking to reach BuzzFeed’s vast audience.
Dove Chocolate capitalized on this opportunity by publishing a sponsored recipe post on BuzzFeed. This strategic move generated impressive engagement, garnering over 2K re-pins and 253 shares on Facebook.
Hostinger’s paid search ads
Paid search ads are a cornerstone of performance marketing, even for industry giants like Hostinger, a company renowned for its domain name registration, WordPress hosting, cloud hosting, and website builder services. To promote a new blog theme, Hostinger created a comprehensive blog post titled “32 Best Free WordPress Blog Themes.” By leveraging paid search ads, they secured prime real estate for their post on the first page of relevant search engine result pages (SERPs).
CME Group’s display ad on Forbes
Display advertising remains a classic and effective form of performance marketing, employed by leading brands across industries to drive sales and enhance bottom-line results. Display ads can appear on any website that utilizes an advertising network, with a prevalence for high-traffic platforms like Forbes, HuffPost, and similar sites.
Is performance marketing right for you?
Performance marketing has become an integral aspect of modern marketing strategies for businesses of all sizes. By optimizing ad spend and generating high-quality leads genuinely interested in your offerings, this approach minimizes wasted resources and maximizes marketing ROI. By implementing the strategies and principles discussed in this article, you can effectively integrate performance marketing into your overall marketing plan and achieve your business objectives.