Digital marketing encompasses a range of different specializations. It isn’t uncommon to feel a little overwhelmed and at times confused about what they all mean for a business or marketing team in the grand scheme of a well-planned strategy. In the same way that organic search, email marketing, pay-per-click, and media buying are understood to fall under the umbrella of digital marketing, performance marketing is a key segment to consider, as well.
We will provide a quick overview to get you familiar with performance marketing, so you are better able to incorporate best practices into your business strategy or marketing career.
What is Performance Marketing
A segment of digital marketing, performance marketing is sometimes known as cost-per-action marketing, acquisition marketing or affiliate marketing.
Performance marketing is data-driven and goal-driven. It encompasses everything you can measure in marketing, with the added benefit of developing a deeper understanding for the overall efficiency and total cost of your advertising efforts.
While brand marketing may be meant to familiarize your target audience with who you are, performance marketing is all about driving results and measuring the success of advertising efforts through various tracking methods. Future strategy decisions are made based on collected data, and businesses and individuals pay directly for the results.
Since it is purely based on performance, impressions are not typically a comprehensive target on which to focus. Performance marketers make decisions based on data and choosing the right Key Performance Indicators (KPI) is vital. Clicks, leads, conversions, actions taken, and other KPIs, are more important signifiers of a strategy’s success.
Who Can Leverage Performance Marketing?
While any business, organization or individual can benefit from taking a data-driven approach to their marketing efforts, businesses that need to make money online or have online acquisitions stand to benefit most from a strong performance marketing strategy. These companies can range from global Fortune 500 companies to small, local businesses. No matter the budget size, any business is capable of setting clear goals and using performance marketing to inform which strategies are working best to reach them.
Team members and individuals for whom performance marketing would be the most impactful include ad managers, merchants and retailers, publishers, affiliates, outsourced program managers (OPM), and solution providers.
How to use Performance Marketing
To set a strong foundation for your Performance Marketing efforts, it is important to start off with a mindset of curiosity. Testing out a few channels initially to see which are working most for your business will make it easier to determine where to invest money right from the start. It can help to be familiar with Product Listing Ads (PLA) like Google Shopping Ads, Dynamic Product Ads (DPA) for remarketing purposes, and affiliate marketing and networks. Performance marketers look to drive results through these methods, and leverage ad platforms such as Amazon, Google, social channels, and more.
Performance Marketers can also benefit from an understanding of Search Engine Optimization (SEO) principles. Doing research on lower funnel keywords your target audience might use to find your product or service can allow you to create copy oriented content that will resonate and convert. SEO is also a valuable tool for crafting longer term goals in the performance marketing space. Looking into search terms and separating out branded terms from unbranded terms enables you to begin to target potential customers who are not currently aware of your product and continue to feed the sales funnel.
Affiliate marketing and collaborating with influencers are also channels your business can explore along the performance marketing journey. The ability to measure how well an advertising effort executed is critical to performance marketing and both affiliate and influencer marketing make it easy. From custom links to custom discount codes, having affiliates or teaming up with an influencer in your industry are two opportunities to track and measure results to inform future advertising decisions.
Effective Technologies & Tools for Performance Marketers
The vast number of channels on which to perform advertising efforts leads to the same number of sources for data. Finding tools to make data analysis more efficient and less of a time-consuming manual process are vital to effective performance marketing.
Data visualization tools easily allow marketers to take large data sets and create a visual representation that is less arduous to understand.
Attribution tools are key to understanding where your customers are finding you or converting. Having insight into what touch points are leading to the most conversions can influence future strategy.
Business Intelligence (BI)
BI tools allow performance marketers to better understand trends and derive insights from the data that will inform future strategy decisions.
Large companies with access to more resources may opt to build custom tools to fit their organization and goals. For most, finding retrofit tools is the best option. Some of the better known and more widely used include Sisense, Tableau, and Branch Metrics.
Tips for Performance Marketing
Understand the cross-channel story
Combine data and insights as much as possible across channels versus looking at them as separate. For example, how paid search could be impacting you on social and vice versa. Adopting an independent reporting system is key because when given the opportunity, separate channels will cannibalize credit for performance.
Let one channel influence strategy on another
Ask yourself how you can use one channel’s findings to influence what you do next. For example, using a search terms report in Ad Words to develop keyword strategy can also impact messaging for social ads.
Don’t sacrifice long-term growth for short term success
A misleading assumption is oftentimes that performance marketing is only concerned with immediate ROI and short-term goals like revenue or conversions. Don’t treat every effort as an immediate revenue driver. Invest in your referral programs and organic strategy, not just paid acquisition. For example, referral program performance can be tracked with surveys, tracked share buttons, and vouchers.
Don’t be afraid to experiment
Most importantly, if you’re not testing something, then you’re doing it wrong. Setting aside some of your budget for trying out creative, experimental strategies is the only way to keep learning and growing.