Before we delve into performance marketing, let us look at advertising and digital advertising to understand how performance marketing fits into the funnel of sales. Traditional advertising where brands and businesses paid to get the word out via newspaper, print ads, radio, or television could be a little vague – the brands spent big bucks on spreading the message without having a clear targeting or revenue measurement in place. This made it a slightly problematic situation, more so if your brand catered to a segment of the audience (which if we are being honest, every brand does). With digital advertising, the audience could be a little more defined, and ads were placed as per their audience interest, demographics, etc. However, the average person is bombarded with ads during their screen time, which can make it difficult for brands to make immediate conversions. The ads may work for brand recall and engagement, but if a person sees an ad today and buys your service or product a month later, it is hard to put a finger on what exactly influenced them. As a new business or even an established brand, wouldn’t it be great if you could advertise but only pay for it when it actually leads to an action – like signing up or sales?
What is performance marketing?
In performance marketing, you strategize to pay advertising publishers, agencies, or affiliates based on previously stipulated terms of conversion instead of a flat rate. Also known as online performance marketing or performance media marketing, it combines brand marketing initiatives with advertising to produce measurable, trackable, and attribution-oriented results. With performance marketing, you can attribute the exact amount spent to get the desired result.
How does it work?
With the advancement of digital advertising, you now have access to goal-based objectives, precise audience targeting and thus you can convey your message to the right people at the right time. And when they do take action (sign up for a newsletter, download a brochure, make a purchase, etc.), you pay the value of the ad!
When understanding performance marketing, it is important to get to know the terminology involved in the entire process. If you are a brand or a business that’s looking for opportunities to sell a service or product, you are the advertiser. Any web page or social media page that caters to your target audience can be your publisher or the place where you place your desired ad content. Affiliate partners are third-party platforms that connect a brand to appropriate publishers. In this context, it is also helpful to know that it is possible to outsource your entire advertising efforts to a digital marketing agency that offers this service. Let’s take a look at some of the ways you can use performance marketing, to better understand why you should use it.
Why should you do it?