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Overview of Performance Marketing – Why it’s a Good Bet for Your Business?

Overview-of-Performance-Marketing-Australia

What is Performance Marketing and why it’s “the New Marketing”

What is Performance Marketing?

The pain of seeing marketing dollars go down the drain because of campaigns that don’t show any significant results, is something that most business owners have felt at some time or other.

Performance marketing provides a real solution to this predicament, and it ensures that your budget is spent wisely, and your business continues to flourish. It gives businesses the ability to measure everything from brand reach, to conversion rate, down to a single ad.

Read on for a short overview of performance marketing, why it’s a good bet for your business, and steps to get started ….

As the name suggests, performance marketing is a type of digital marketing where businesses pay for their marketing campaigns, not in advance, but based on the performance of their campaigns. It’s an umbrella term that refers to online marketing and advertising programs or campaigns in which there are two main players –  the business owner wanting to promote a business, product or service – and the performance marketing professional or a service digital platform like Google Ads – who only gets paid when a specific action or goal is completed; such as a sale, a lead, a click or a subscription.

These two main entities work together to set specific goals and build a plan and a set of agreements for accomplishing them. Tracking is set up, to enable monitoring, and also to be 100 percent clear when those goals are met. When all this is completed based on the agreed terms, and the goals have been met, the business owner pays the marketing specialist or in the case of a digital platform, money is deducted periodically.

Job well done!

Several types of digital marketing can fall under the performance marketing umbrella, as long as they operate on performance-based terms.

  • Affiliate marketing (Instagram influencer, for example)
  • Social media marketing
  • Sponsored content and native advertising
  • Paid advertising (in certain cases)

The new marketing

Performance marketing is not a new concept, but recent events have made it more vital now than ever. COVID-19 has taken a toll on a number of businesses and industries. Companies worldwide are still figuring out the best way to recover and to move forward with their 2020/2021 experiences fresh in mind. Many small to medium size businesses in Australia have been particularly affected, and owners remain cautious.  Many will have a lower budget and will want to ensure that every dollar counts. Performance marketing allows you to see exactly how each dollar you direct to advertising/marketing is used.

Modern marketing has become virtually a science. The digital age has brought constant advances in technology and connectivity to the marketing world. Artificial intelligence (AI) and machine learning have been used for years in internet searching, in marketing, to enable virtual assistants, and in countless other ways.  AI is continuing to transform digital marketing in all its forms and is one of the underlying reasons why performance marketing is “the new marketing”.

AI has meant that it is possible to capture, process, and analyse unprecedented quantities of user data. Most of us, as consumers, understand that every time we click on a web page, watch a video or read an article online, buy a product, or use social media (at home, work, or wherever) we leave a trail of “data”, which transforms into “information” when expertly analyzed and reported on. This data trail can be put together like a puzzle. The data points making up the trail expose our digital behaviour patterns and tell an important story to marketers and analysers, which can be leveraged to inform your performance marketing campaign.

3 simple reasons why performance marketing is a good bet for your business.

  1. It’s easy to track performance!  As we said above, performance marketing campaigns are set up with the express purpose of tracking and measuring. Data analytics tools enable easy monitoring, and making adjustments is also easy.
  2. It’s less risky: with performance marketing, business owners know exactly what is going on with their marketing campaigns at every stage – where the campaigns are placed, what the budget is, how the performance is tracking. If you’re not satisfied with the performance outcomes at any stage you can always re-jig, re-strategize. This gives you flexibility. And because performance marketing has many channels or types, by choosing the appropriate forms for your target group, you can broaden your reach substantially.
  3. ROI-focused: The basic logic behind performance marketing is to ensure that you get the best return on the amount you invest in marketing.

What sets performance marketing apart from more traditional forms of marketing?

As we’ve been outlining above, today business owners along with their marketing professionals have the option to gather marketing campaign data 24/7 and to measure the results as they happen. In contrast with the more traditional marketing campaigns, an advertiser pays an upfront fee for ad space, independent of the performance or outcome of the campaign. It’s always been difficult to really know exactly what worked and what didn’t, when reviewing your success or lack of it.  It could be a bit of guesswork in fact, to attribute the outcome to a specific aspect of a promotion or campaign.

The data transparency that is so achievable today with new marketing strategies has changed everything. Unlike traditional marketing and organic marketing (any form of digital marketing that does not involve paid ads), performance marketing is based on metrics, and is specifically used to drive actions, track and measure those actions, all while being able to assign the ROI of each campaign or activity, to the specific intervention being measured.

Very large corporations may be able to spend millions of dollars on brand marketing, but most businesses or startups need to focus on the bottom line to stay profitable. Having said that, it is not an either/or situation with performance marketing and brand marketing. After all, people buy brands – it’s what distinguishes you from your competitors. Branding and performance marketing go hand-in-hand to achieve different goals in your overall marketing strategy, for example via social media marketing.

How to get started with performance marketing?

If you are interested in getting started with performance marketing but feeling a bit overwhelmed, feel free to book a no-cost zoom meeting with our Webyroo strategy and marketing expert, Tony Jose. He’ll talk with you about the goals you have in mind for your business and your priorities and answer any questions you have about performance marketing and how it works.  https://webyroo.com.au/book-a-call/

Building successful performance marketing campaigns starts with asking hard questions about your business and what you hope to achieve.

Ask yourself or your team:

  • what is it you want your business to achieve with marketing?
  • how do you see it benefiting the business in the short and longer term?
  • what audience are you trying to reach with your efforts?
  • how much ROI do you want to see for the marketing efforts?
  • what are your strengths and limitations; and those of your team?
  • who’s going to be responsible for designing your ads, writing your content, making your videos, for example? Who will manage the digital/technical side of things?
  • how much of a commitment is your business willing to make?

A quick overview of the performance marketing process could include:

Step 1 campaign planning – set clear actionable goals

The whole point of performance-based marketing is to be able to connect actions and results. If you’re new to this, start small, with one or two goals for a campaign.

Example: a goal related to Website Traffic could be “1000 unique visitors to the business’s website during the campaign period”; a goal for Sales might be “50 new customers during the campaign period”.

Your campaign goals determine where your ads are shown, who they’re shown to and other factors vital to success. Goals commonly established are those around

  • brand awareness
  • website traffic
  • consumer engagement
  • lead generation
  • sales

Step 2: Consider using a third-party

It’s entirely possible to run your own campaign and see awesome results. But it’ll take some work – and time. Including a lot of learning time if you are starting from a low base. In many cases, it’s definitely more efficient use of your time and money to use a performance marketing professional to get you going.

Contact Webyroo here for free advice about how this could work.

Step 3.: Choose your digital channel(s)

In performance marketing, it is sensible to diversify the channels you use, rather than focusing exclusively on one channel. This helps spread campaign exposure and reach, as well as building brand recognition. Whether it’s affiliate marketing, native advertising, or social media platforms, look for channels where you are most likely to find your target audience. 

Step 4: Choose a performance marketing platform

If you’re running this campaign on your own you will need to decide on a performance marketing platform which will help you manage your campaign on your website and across channels, and perform the required data analytics. These platforms have built-in analytics and tracking tools that can keep track of leads, clicks, conversions, etc.

Step 5:  Create and launch the campaign

Only you know your target audience and how your product or service appeals to them.

This understanding makes it possible for you create the best content and copy, the best design features, and so on.

You may or may not need help with the technical aspects related to different channels such as ad sizes, copy character limits, acceptable images,  alt text for images, length of videos, and other parameters and requirements.

Step 6: Measure and optimize your campaign

Post-launch.

Performance campaigns start generating data the moment they are up and running. It’s up to you and/or your marketing professional to optimize individual campaigns for performance, across all the channels you’re using (which may be only one or two in the beginning). You must keep track of your analytics and metrics to determine which sources of traffic are performing best, then allocate ad funds accordingly. You may need to re-strategize at some point as you see results. Performance marketing campaigns are used not just to grow sales, but also to identify your best channels, audiences, and campaign objectives to increase your ROI

A few key metrics commonly used in setting goals

CPM stands for Cost Per Mille, (= Cost Per Thousand). It is the price for every 1000 times an ad is shown to viewers.

CPC is Cost Per Click, and indicates the price paid for each time a viewer clicks on an ad. It’s a better indicator of engagement than CPM, because the viewer has actually taken action and clicked on the ad.

CPA stands for Cost Per Action. This is one (or several) that you will come up with to meet the needs of your business at a particular point in time….  it can measure campaign performance according to a specific desired action you want the target audience to take, such as signing up for a newsletter, downloading an eBook, subscribing, purchasing an item, or some other action. In performance marketing, the action taken by potential customers is considered the most important tangible and measurable result, so CPA is one of the most important and popular metrics.

SEM, or search engine marketing, is an important part of performance marketing and definitely worth the time and investment. SEM is the placement of paid ads on search engine results pages (SERPs). It is very effective as it exposes the user to highly targeted ads related to the product or service they are searching for, in the moment when intent is high and there is a strong chance of capturing their attention and interest.

LTV This metric refers to the predicted Lifetime Value of an individual customer during their entire relationship with the brand or company. It estimates the expected spend of loyal customers based on their ongoing activity, using predictive analytics, and is becoming a popular metric for marketers planning longer term strategies around ROI.

To Wrap up…

Knowing where your money goes is critical when you have a tight budget. One of the biggest advantages of performance marketing is the ability to easily measure your ROI. By analysing your marketing data, you can quickly see if your ad is working effectively and optimize your spend accordingly.

The friendly marketing, digital and technical professionals at Webyroo give individual attention to understand the nature of their clients’ business, the target audience, and their business objectives. Please book a free, no-obligation zoom call with us today.  

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