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Table of Contents
Effective marketing strategies are essential for the growth of a company. They help companies tap into their target audience, connect with them, increase brand recognition, strengthen brand affinity and influence consumer behaviour. It is like a roadmap that helps entrepreneurs achieve goals and increase market share. Performance marketing means exactly as the name suggests - marketing based on performance, i.e. performance. This performance can be a number of desired goals, such as a closed lead, a sale, a registration or a download. Alongside content marketing, SEO and paid advertising, performance marketing is on the rise and changing the way businesses promote and distribute their products and services. Marketing campaigns based on performance make it possible to target them strategically and with high ROI, based on the evaluation of performance and the resulting optimisations.
Well-used performance marketing, which is continuously evaluated, has the great advantage that the campaigns reach the right target group and are very effective. Performance-based marketing is now used in all kinds of digital channels. Of course, it requires know-how, resources for content creation and also a media budget, but thanks to the evaluations, the resources used are used more and more efficiently. More importantly, the success rate of performance marketing campaigns is generally higher, as all campaigns are highly targeted and marketers make data-driven decisions and continuously optimise their campaigns based on the results.
Performance marketing is affiliated with brand and product marketing and has become an innovative and performance-based strategy that has become a driving force for additional sales, new customer acquisition, market expansion, customer segment targeting and high ROI campaigns. Performance marketing as a strategy leads to companies gaining more brand and product exposure very cost effectively, and causes the potential customer to be more engaged and a higher or more qualitative conversion rate.
Four groups are involved in the creation and execution of successful performance marketing campaigns, and ideally they all work together, or at least cooperate to some extent, to achieve the desired results.
They promote their offer with the help of affiliate partners or "publishers" in order to achieve certain goals, e.g. generate more sales or leads. Companies from industries such as fashion, food and beverages, health and beauty, and in general B2C industries can profit very well from performance marketing. But performance marketing is also taking on an increasingly central position in B2B.
This refers to the companies that own and operate media channels such as websites, blogs or social media accounts on which digital ads are placed. The affiliates and publishers use different strategies (such as display banners or search ads) to promote the brand, products and services.
Third-party platforms or affiliate networks bring brands and publishers together and provide a one-stop shop for resources and tools such as banners, text links, campaign performance tracking and payment management. They serve to keep merchants and affiliates on the same page when it comes to tracking leads, clicks, conversion and other key performance indicators (KPIs).
These are companies and agencies that provide full-time performance marketing services to companies that do not have the staff to do it in-house. These service providers help companies develop a marketing strategy, recruit publishers, design campaigns and comply with regulations to ensure that each campaign runs smoothly. These agencies can also optimise campaign performance for maximum results through other online marketing best practices, such as landing page optimisation, search engine optimisation (SEO) and content marketing.
Before we look at the different channels for performance marketing, we should first clarify the difference between performance marketing platforms and performance marketing agencies.
Affiliates or publishers earn based on the number of clicks, leads or sales they generate. Performance marketing platforms make this process seamless and more orderly for them. These affiliate networks have built-in analytics and tracking tools that monitor these actions and enable automatic payments to websites that install links to sell third-party products.
Performance marketing agencies, on the other hand, focus and specialise in pay-per-action strategies for digital marketing that lead to a conversion, i.e. a lead generation request or a sale. Companies then work closely with an agency to get recommendations, optimisations and solutions for their specific goals. The agencies use analytics and tracking tools to evaluate the results and optimise accordingly. In many cases, companies lack the know-how to increase performance using the analysis and tracking tools.
The following section lists and describes the different channels used in a performance marketing campaign.
Just about all businesses can find and engage their target audience through social media channels such as Instagram, Facebook, Twitter, LinkedIn and TikTok. If these platforms are used for performance marketing campaigns, this usually involves either influencer marketing or paid advertising strategies. Of course, it must first be determined where the majority of the target group is located. LinkedIn is primarily aimed at professionals; Pinterest serves as a discovery platform for shoppers with specific interests; TikTok usually attracts younger user groups, while Facebook and Instagram have a diverse and large user base. The KPIs that are usually monitored in social media marketing are likes, shares, comments, clicks and registrations.
Native advertising is a type of advertising content that is designed to fit and blend with the medium in which it is published - in other words, it does not look like an advertisement. Based on the content the user is reading, native ads appear as contextually relevant content.Performance marketers use this primarily for retargeting opportunities. They can provide potential customers with useful and valuable information to pique their interest and get them to take a specific action.
This performance marketing channel involves working with influencers, celebrities and content curation sites. They publish a post or article that promotes a brand, goods or services. Payment can be in the form of free products, services, experiences, cost-per-click (CPC), cost-per-mile (CPM) or cost-per-action (CPA)-based compensation.
Affiliate marketing a form of performance marketing. The most common example of affiliate marketing is placing advertising banners on other websites related to their product or service (e.g. Google Adsense). This means that their brand is introduced to a whole new audience and has the chance to bring them to their website.
This type of digital marketing is also known as pay-per-click (PPC) or paid search advertising and uses digital ads in sponsored search results to combine with other types of marketing. SEM or paid search marketing means that an advertiser bids on keywords and pays for clicks on ads in search engines such as Google, Yahoo and Bing. Keywords are the be-all and end-all of SEM, and the selection of these keywords requires thorough research. Both the organic and paid keywords in a campaign can be analysed to understand how they complement each other and work.
Because performance marketing focuses on driving performance for specific business objectives such as clicks, impressions, leads and sales, these metrics can be directly analysed and measured. Modern marketing management tools and technologies make it easy to track ad performance and monitor and adjust campaigns based on the insights gained. When a user signs up to a mailing list, clicks on an ad or performs another conversion that meets the set goals, you get direct feedback, can collect and evaluate the data and optimise the targeting efforts.
Performance marketing focuses on achieving a good return on investment. It does not carry the same risk as other marketing strategies such as traditional advertising. In addition, it can monitor results in real time, adjust or reallocate budget as needed and even stop campaigns altogether to avoid high costs for campaigns that do not achieve the desired effect. In this way, one ensures that the goals or performance-related measures one wants to achieve produce positive results.
Performance marketing is a versatile marketing approach. If one channel is not working, it is possible to quickly switch to another channel that produces better results. This means that the advertising budget is not spent further on ineffective measures.
An effective performance marketing plan can help reach a larger and more diverse audience that would not be possible with traditional advertising. This is especially true when using affiliate marketing to target a larger audience, develop highly targeted traffic and generate more sales. New markets are opened up because the ads and measures are placed on different channels and in different content channels.
Good marketers know the importance of continuous analysis, measurement and evaluation in optimising marketing strategies. Performance marketing requires trying a number of different tactics to optimise revenue-generating metrics to gain experiential insights into what works and what does not. Experimentation helps to understand what is missing in the campaigns and how to make adjustments to achieve the desired goals.