What is performance marketing?
What is performance marketing? Here's everything you need to know to leverage the benefits of performance marketing.
Performance marketing, also known as performance marketing, is a form of digital marketing that focuses on measurable results such as clicks, leads or sales (also known as conversions) and evaluates performance based on the frequency and costs of generating those results.
Performance marketing uses digital channels to drive traffic to a website or applications and then uses various methods to measure the impact of that traffic and optimize the desired outcome. According to Google, it is a tool that can help you discover “more effective ways to achieve business goals”. This type of marketing is becoming increasingly popular as results can be accurately tracked, measured and analyzed to identify potential success.
As a form of online advertising where the advertiser only pays for desired results, such as clicks, leads or sales, performance marketing is in contrast to traditional advertising models where the advertiser pays for impressions or an ad placement, regardless of whether the user interacts with those assets or not. Therefore, for companies with small budgets, performance marketing is a must-have in their digital marketing toolkit.
One of the main advantages of performance marketing is that it allows precise targeting to reach your potential customers. Advertisers can target their campaigns based on demographics, interests, location and other factors. This allows them to reach the right audience and increase the likelihood of conversions. For example, a company that sells sports equipment can target its ads to users who have previously been interested in sports or fitness in general. This precise targeting can help improve the effectiveness and efficiency of marketing campaigns and their budgets.
Another important benefit of performance marketing is that it allows marketers to constantly optimize campaigns based on real-time data from, for example, Google Ads Manager.
By analyzing campaign performance and making adjustments, marketers can improve their results over time.
This ability to continuously monitor and adjust campaigns ensures that marketing budgets are used efficiently according to their marketing objectives.
However, performance-based marketing is not without its challenges. One of the biggest challenges is the risk of ad fraud, which occurs when fraudulent clicks or impressions are generated to falsely inflate the success of a campaign. Marketers must be vigilant and take steps to prevent ad fraud, such as implementing fraud detection tools and working with trusted advertising partners. That’s why it’s important to work with an agency that is accredited and certified by Google.
Performance marketing channels
There are different types of channels that fall under performance marketing.
One common form is search engine marketing, where the advertiser tries to reach potential customers through a search engine such as Google or Bing.
Search engine marketing (SEM) refers to search engine advertising(SEA) and search engine optimization(SEO).
In other words, paid and organic marketing through a search engine.
Google Ads is the primary tool for advertising a company’s product or service.
Another example of a marketing channel would be affiliate marketing, which, according to the Performance Marketing Association, is “a comprehensive term that refers to online marketing and advertising programs in which advertisers (also known as “retailers” or “merchants”) pay marketing companies (also known as “affiliates” or “publishers”) ….. to promote their products or services. Affiliates receive a commission for each sale made through a link they recommend.”
Is performance marketing right for my company?
There are different types of metrics used in performance marketing to track and optimize campaigns based on your type of business and specific objectives. Below are three commonly used metrics in performance marketing and examples of channels for which they can or could be used:
Cost per click (CPC) or Pay per click (PPC): CPC/PPC is a pricing model used in digital advertising where the advertiser pays a fee each time a user clicks on their ad. This type of measurement is often used for search engine advertising, such as Google Ads, where advertisers “bid” on keywords relevant to their business to display their ads on search engine results pages. It is also used for social media advertising such as Facebook Ads, Instagram Ads and LinkedIn Ads, where advertisers pay to have their ads shown to their target audience.
Example: A shoe retailer can bid on the keyword “running shoes” in Google Ads and pay a certain amount when someone clicks on their ad. You can also use CPC/PPC on Facebook Ads to show your ads to people interested in running or fitness.
Cost per lead (CPL): CPL is a pricing model in digital marketing in which the advertiser pays a fee for each lead (email sign-up, contact form request, etc.) generated by a campaign. This type of measurement is often used in lead generation campaigns, such as email marketing, whose objective is to collect information from users, such as email addresses, phone numbers and other relevant data.
Example: A B2B software company can run LinkedIn Ads campaigns targeting decision makers in specific industries to generate leads. It pays a flat fee for each lead generated, such as sign-ups for a free trial or requests for a product demo.
Cost per acquisition (CPA): CPA is a pricing model used in digital advertising where the advertiser pays a fee for each completed action that is valuable to the company, such as a sale, form submission or download. This type of measurement is often used in e-commerce and affiliate marketing campaigns.
Example: A fashion retailer can use CPA in their Google Ads or affiliate marketing campaigns and pay a flat fee for each sale made through their website or affiliate link.
In summary, CPC/PPC, CPL and CPA are three different types of measurement used in digital marketing. Each of them can be used for different channels depending on the objectives of a campaign.
To answer the question “what is performance marketing?”, one could say that it is a powerful and comprehensive tool for companies looking to increase their online presence and improve their conversion rates, while controlling costs.
It is a data-driven approach that focuses on performance measures and enables accurate targeting and optimization. The ability to accurately track and measure results makes it a valuable and important investment for many companies.
If you are selling a product or service, performance marketing is certainly something that can help your company achieve its business objectives.
Talk to us today about how to make it work for you!
How can I get started with performance marketing?
This is how we work; there are 4 main phases of performance marketing and we work with you throughout to make sure you understand what we do and why we do it.
Research and analysis phase: Integrating a performance marketing strategy into your company requires a lot of preparatory work and planning.
Extensive competitor research is necessary, as well as a solid understanding of the business and target market.
Sophisticated tools and systems are used to gain insights to drive campaigns.
The more time invested upfront, the better the campaign performance, it’s as simple as that.
Strategy
Using our 20+ years of experience, we bring together knowledge of your target audience, business intelligence and intelligence derived from our various tools and systems, and develop a plan and indicative budget to achieve your objectives.
With your input, we agree on a budget, targets and KPIs.
Then we get going!
Campaign organization
Using Google Ads, Meta, LinkedIn or any other system we work with, campaign setup is where the strategy becomes action: audiences are created, video assets are produced or sourced, banners are created, keywords, ad groups and campaign copy are written.
Again, you and your team are consulted every step of the way.
Let's go!
Campaigns are launched and constantly reviewed and optimized by our tools and humans.
We then communicate with you in person or via weekly video calls to share results, learnings and optimizations.
To you
Whether we’re targeting leads or sales, performance marketing can’t do it all: it’s imperative that your website content and order process are optimized to convert those inquiries and sales into customers.
If we spot something that can be optimized and lead to a better result, we let you know.
We really work as an extension of your existing team.
If it’s not successful, we go out of business!
All our performance marketing includes a free consultation and the promise of “guaranteed results”, and we have team members who can speak to you in English, German or Spanish, either in person in Mallorca or via video call elsewhere.
What do you have to lose?
We form long-term partnerships.
More than 90% of our clients continue to collaborate with us in the second year of their campaign.