In the not-so-distant past, business leaders often had an uphill battle convincing CEOs to widen marketing budgets. The boom and effectiveness of internet marketing have largely changed perceptions. Performance marketing makes the job of petitioning finance departments and CEOs even easier by taking a contingency approach.
What Is Performance Marketing?
It’s impossible to argue with ROI, which is why so many marketing platforms and advertising agencies now allow clients to pay only for results. Advertising platforms that only charge for clicks, leads or sales provide excellent examples. This approach is much different from paying upfront for ad space that might never lead to any conversions.
What Are Some Types of Performance Marketing?
If performance marketing appeals to you, the good news is that there are several different ways to leverage it. These can range from payment models to the types of marketing campaigns you create.
1. Affiliate Marketing
Affiliate marketing is one of the best ways for bloggers and social media influencers to monetize their audiences. They share content and place strategic links or coupon codes that point back to them when their audience uses the code or link to make a purchase. This pays them a commission.
2. Online Ads
What is the value of an action, such as a click? That’s what you’ll need to determine for this form of performance marketing before setting a budget and a timeline. Note that pay-per-click visitors are 50% more likely to make a purchase than organic visitors. Consider these four main types of ads:
- Cost per action (CPA): Some platforms charge for every action viewers take on the ad. On social media, this might include likes, shares, comments and clicks.
- Cost per click (CPC): Cost per click is a type of advertising that compels the marketer to pay a fee every time someone clicks on the ad. This is where click-through rates become important.
- Cost per mille (CPM): Cost per mille or cost per thousand refers to impressions per 1,000 people in a digital ad. This does not necessarily measure the action but, rather, the reach of an ad.
- Lifetime value (LTV): A more complex performance marketing option, this looks at the lifetime value of customers when determining ROI. Some marketing agencies take this approach.
Sometimes agents will offer to work on a contingency basis, where you only pay for the results you get. This could be in the form of traffic, leads or sales. In some cases, there is base pay, while in other cases, agents work 100% for the results they provide.
What Are Some Challenges of Performance Marketing?
It is not always easy to track the source of a sale or lead. Someone could stumble across a website by way of an influencer, for example, but then forget to use the person’s code at checkout. Performance marketing is also difficult to track for mixed or offline campaigns, but marketers are working on more efficient ways to do so.
While there are a lot of metrics that determine the effectiveness of each campaign, the compound effect is difficult to measure. Seeing multiple ads for the same company over time can lead to a more favorable perception, but even retargeting ads might struggle to measure this. That’s because branding generates more qualitative than quantitative data.
How Do Marketers Create Solid Performance Marketing Strategies?
Determining a strategy will depend on your marketing mix. Consequently, the entire marketing team will need to pool resources to determine which marketing methods fall into this category. Then, you can move forward with creating a plan.
1. Determine Your Budget
Performance marketing provides an excellent way to monitor your budget, but the cost can still add up. Consequently, it’s important to know what your monthly budget will look like. Marketers will also need to allocate that budget across different methods to ensure there are no financial surprises.
2. Set Realistic Goals
What is the goal of your campaign? It is perfectly possible for this to vary across ads and across platforms. However, knowing the main goal is crucial. In fact, sometimes ad platforms will ask before launching your ad. These are the most common options to consider:
- Retargeting or remarketing
- Brand awareness
- Lead generation
- Website traffic
3. Choose Your Digital Methods
The more digital channels you use for performance marketing, the better off your marketing strategy will be. Of course, this also depends on your budget. While you want to cover as many bases as possible, you also don’t want to stretch your budget too thin. In time, you will have the results you need to determine which methods deliver the best results and whether the methods with lower results can be improved or should be discarded.
4. Complete Marketing Research
Who are the people most likely to buy your products? What do they like, and what are their interests? What are the keywords they search for online? What kind of content do they enjoy reading or viewing? What is the level of competition for attracting this market? These are some of the questions you will need to answer before moving forward.
5. Create Landing Pages
Most marketers agree that sending potential buyers to the homepage of the corporate website is a bad idea. Create dedicated pages for each campaign. If you create regional pages for the same products and services, ensure each page is unique. Plagiarism can negatively impact SEO, even if you’re only plagiarizing your own work.
6. Create and Test Campaigns
Even the smallest changes in ads can create astounding results. To determine what those changes will be, you’ll need to do some pilot testing. Some of the elements you might toy with include caption lengths, phrasing, types of photos and ad sizes.
7. Optimize Your Campaigns
Use the lessons learned during your testing period to create beautiful and effective campaigns that generate leads and convert visitors into buyers. While you are sure to find a formula that works from your testing, be open to continual tweaking.
Are you ready to leverage results-based marketing to boost sales and improve your ROI? You’ve come to the right place. We have spent the past 15 years managing more than $100 million per year in performance marketing funds for companies around the world. Work with our Tier Eleven team and unlock your business’s true potential.