How to Begin with Performance Marketing
The way people shop for and purchase goods has been irrevocably altered by the internet. It also dramatically changed the way businesses market and sell. The opportunity to contact and engage more customers, more frequently, has increased with the emergence of multichannel marketing and the growth of online purchasing during the worldwide pandemic (a surge of 43% in 2020!).
Today’s marketers have the amazing capacity to collect campaign data around the clock and monitor results in real-time. While attribution was previously practically impossible, data openness today allows marketers to improve the performance of their efforts. It is referred to as “performance marketing” for this reason.
Performance Marketing: What Is It?
The phrase “performance marketing” refers to internet campaigns in which advertisers pay marketing firms or ad networks based on the outcomes, such as clicks or conversions.
Performance marketing is used expressly to drive activities and track and measure those actions, all while attributing the ROI of each asset, campaign, or activity, in contrast to traditional and organic marketing.
The majority of firms need to concentrate on the bottom line to be successful, even if big corporations might spend millions on branding. Performance marketing returns control to the advertiser. Whether it’s a sale, lead, or click, you choose the activity, and you pay when it’s finished.
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What Makes Performance Marketing Unique?
In the majority of conventional forms of advertising, an upfront charge is paid by the advertiser for ad space regardless of performance. That can entail spending hundreds, perhaps thousands, without ever seeing a convert. Advertisers only receive payment in performance marketing when the success metric (conversion, action, or transaction) is satisfied.
Brand Marketing vs Performance Marketing
Brand awareness is crucial because it helps businesses stand out in a market that is becoming more and more crowded with competing brands. Brand awareness may be raised through a variety of methods, including social media campaigns, native advertising, content marketing, and more. Because they are quantifiable and marketers only pay for certain activities, some of these may fall under the category of performance marketing.
For instance, introducing target consumers to pertinent, top-of-funnel material that answers their problems and piques their curiosity, for instance, Outbrain suggestions, is an effective approach to increase brand recognition. This is a type of performance marketing since the outcomes of these campaigns may be linked, and the advertiser only pays for a set budget and conversion target.
Affiliate Marketing versus Performance Marketing
As it is driven by measurements and goals, affiliate marketing is unquestionably a subset of performance marketing. When a company’s product or service is promoted online through affiliate marketing, a commission is made. The affiliate marketer promotes products on behalf of the merchant to increase website traffic, clicks, and purchases. Only affiliate-initiated activities that result in money, such as clicks, conversions, or leads.
Programmatic versus Performance Marketing
Advertising space may be purchased automatically using programmatic marketing, which targets the most appropriate audience at the most competitive price. Performance marketing is increasingly reliant on programmatic since it enables marketers to purchase superior placements at scale and increase their ROI. The thorough data and analysis provided by programmatic advertising allow marketers to investigate the effectiveness of these ads and target their optimization efforts.
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How Can Performance Marketing Be Measured?
ROI (return on investment) is a key component of performance marketing; each activity and action is tracked, recorded, and compared to established KPIs. The campaign outcomes may be comprehended in this way, and performance can be optimised as a consequence.
The secret to effective digital marketing is measurable ROI, so it’s crucial to track it frequently. Whatever performance optimization tool you use, give your campaigns time to collect data. There is a tonne of them on the market. The more data you have, the deeper your insights will be and the more accurately and successfully you will be able to optimise.
The following are some key metrics and KPIs that are frequently used in performance marketing:
CPM
The amount an advertiser pays for 1000 impressions of a digital ad is known as the CPM, or Cost Per Mille, rate. In other words, it is the cost of every 1000 times a viewer sees an advertisement. The CPM merely calculates the cost of having the advertisement aired; it does not track any actions that viewers take. Some performance marketers are putting greater emphasis on KPIs with a tangible, action-based meaning rather than CPM.
CPC
The cost associated with each time a viewer clicks on an advertisement is known as CPC, or Cost Per Click. Due to the viewer’s activity of clicking on the advertisement, CPC is a better measure of engagement than CPM. The value of the conversion is often higher when the CPC is higher. For instance, a luxury vehicle manufacturer may choose to target a much smaller audience of high-potential clients who are likely to purchase an expensive car by setting a higher CPC. The click is more costly, but it also has a considerably bigger potential return.
CPA
Cost Per Action, or CPA, assesses the effectiveness of a campaign for a certain desired activity that you want the target audience to undertake, such as downloading an ebook, signing up for or subscribing to a service, buying a product, or performing any other action. The action that potential consumers do take is regarded as the most significant tangible and measurable consequence of performance marketing, making CPA one of the most significant and well-liked metrics.
LTV
This measure is focused on the estimated “lifetime value” of a certain consumer throughout their association with the brand or business. Using cutting-edge techniques like predictive analytics, LTV calculates the projected spending of acquired clients based on their continuing behaviour. Thanks to ever-sophisticated measuring tools, LTV is quickly gaining popularity as a statistic since it helps marketers plan their entire strategy with the ultimate objective of increasing ROI.
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Types of Performance Marketing
Through the years, performance marketing has changed due to advancements in technology and shifting customer habits. Digital marketing is all about “hitting the right people on the right device at the right time” in today’s performance-driven society. Performance marketers now have more alternatives than ever to build high-performing campaigns for a variety of demographics and objectives because of the considerable advancements in tools and targeting possibilities.
Search engine marketing, or SEM, is a crucial component of performance marketing and is unquestionably time and money well spent. Paid advertisements are displayed in SEM on search engine results pages (SERPs). Because it exposes the user to highly tailored adverts for the good or service they are looking for at a time when the intent is high and there is a good possibility of catching their attention, it is incredibly successful. Check out this awesome SEM manual.
Native advertising is a performance marketing strategy that is also gaining popularity. Because native advertising doesn’t appear like an advertisement and doesn’t interfere with the user’s surfing experience, it is more effective than display ads. Instead, they appear “natively” on the web page where they are placed. Native advertising is incredibly quantifiable because of platforms like the Outbrain Amplify dashboard. Additionally, by selecting a top-notch network, you may achieve outstanding visibility on publisher websites with high-quality traffic and viewers.
Ways to Create a Performance Marketing Plan
There is no one technique to implement performance marketing because there are so many different channels and strategies available. These are the primary phases of developing a performance marketing plan, regardless of the type or target market. Utilize them as a roadmap to get your performance campaign up and running.
Step 1: Decide on Your Campaign’s Objective.
It’s crucial to set your campaign goals before you can assess the success of any effort. Setting goals before a launch, whether for brand recognition or product sales, is the very foundation of performance marketing.
Step 2: Choose Your Digital Channel
Instead of concentrating just on one channel while employing performance marketing, it is advisable to leverage a variety of channels. This increases the visibility and reach of the campaign and increases its likelihood of success. Look for channels that specialize in your conversion type and where you are most likely to reach your target audience, whether it be through affiliate marketing, native advertising, or social media platforms.
By diversifying on other social media networks, for example, or expanding beyond straightforward display advertisements to native advertising, you can significantly increase your potential reach and make your performance campaigns visible to a much larger audience.
Step 3: Create and Launch the Campaign
The effort that goes into performance marketing campaigns mostly consists of defining the target market, ascertaining their wants and aspirations, and developing advertising and messages that will appeal to them. The easier it will be to generate the greatest ad graphics, headlines, design, and timing, the more you will grasp the target demographic and how the product or service might appeal to them. Of course, the specific platform or channel you are using will also affect the technical aspects of the campaigns, such as widths, text character restrictions, and permitted imagery.
Step 4: Assess and Improve Your Marketing
The actual job begins after launch. Data generation for performance campaigns starts as soon as they are operational. The marketer is responsible for maximising each campaign’s effectiveness across all active channels. Analyze metrics and analytics to determine the best traffic sources, then allocate advertising budgets accordingly. Use performance marketing campaigns to improve sales while also determining the optimum audiences, platforms, and campaign goals for a higher return on investment.
Step 5: Handle the Probable Difficulties
Performance marketing may provide various difficulties and risks, just like any other marketing strategy. Focusing your efforts on high-quality advertising networks and platforms, where concerns like brand safety and data privacy are handled responsibly and consistently, is one method to minimise possible complications at the beginning.
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Performance Marketing Advantages
Performance marketing is best demonstrated by native advertising when marketers design ad campaigns with a specific conversion objective in mind and only pay for clicks or other conversion-related activities. For instance, contrast this with a TV advertisement, which airs at a specific time and frequency but whose viewership and response rate are not determinable.
This focuses on the core advantages of performance marketing. Performance marketing puts a strong emphasis on tracking and attribution, giving advertisers far greater control over their spending and return on investment.
Performance marketing campaigns are created specifically for tracking and evaluating results. Keeping an eye on performance campaigns and modifying them to get better outcomes is simple with the aid of numerous data analytics tools created particularly for performance marketers.
Marketers are in a far better position to improve and decrease risk when required since they always know exactly what is happening with their performance initiatives. Additionally, speedier launch times are achievable with lower risk. Do not demand permission anymore.
Examples of Performance Marketing
1. One&done – Native Video Commercials
One&Done Workout (O&D), a fitness training programme, provides a fantastic example of how native video may be used for performance advertising. The company utilised Outbrain’s Clip native video ad, created with engagement-focused components like a CTA button in the last frame to compel viewers to click and act, in collaboration with award-winning agency Kendo. With the aid of conversion bid strategies, Kendo was able to optimize the native campaign for conversions and achieve its remarkable KPIs. In just two months, One&Done increased the number of paying members by 3,900 and increased the Clip ad’s ROAS (Return on Ad Spend) by 30% in comparison to traditional native advertisements.
2. The Search Campaign From Outbrain
To increase awareness of the Outbrain recommendation platform and produce leads, the growth marketing team at Outbrain employs a variety of performance strategies. The team just launched a brand search campaign in Italy, with paid search advertisements directing consumers to a sales landing page when they search for “Outbrain” online.
The campaign’s performance was outstanding, with a CTR of 18.47%, a CVR of 13.39%, and a staggering ROI of 2028%. In other words, the return was $20 for every $1 invested in search advertising.
3. The Youtube Video Campaign VAVAVOOM
TrueView for Action is a sort of video campaign offered by Google Ads that use elements that encourage action to increase conversions and leads. A YouTube video campaign employing TrueView for Action produced some astounding results for the international fashion brand VAVAVOOM. To meet this objective, the business established a ROAS of 10:1, combining the TrueView campaign with targeted in-market audiences and unique intent audiences. They did, in fact, vastly surpass it, reaching 304,517 engagements throughout the 11-week campaign and a ROAS of 1409%.
The Focus of Performance Marketing is ROI
Performance marketing campaigns enable you to track everything from conversion rate to brand recognition down to a single ad. Advertisers are seeking to go beyond branding to develop marketing strategies with demonstrable returns on investment as advertising becomes more open. Performance marketing was developed in response to this demand and has continued to evolve and become more complex. So get started with performance marketing right away and start enjoying the advantages of tracking, measuring, and ROI improvement.
