We all want proof instead of theories and results rather than cheap talk. At the end of the day, as a marketing manager or business owner, you want a return on investment from your marketing spend.
This is where performance marketing comes into play. This style of marketing has drastically changed the way we advertise and with the advancement of data-driven marketing models; we now have information at our fingertips that has the ability to bring in a higher return across all digital marketing channels.
Performance marketing is a growing buzz word in the digital industry and globally is a massive part of any digital campaign, however in South Africa, this field is still developing. It’s crucial to ensure that your agency is on the right track with this evolving marketing approach.
What is Performance Marketing?
When Performance Marketing was first introduced, defining its term was easy. It came down to a “pay-for-performance” method. The main goal was to push a specific consumer action such as a click, lead or sale and when the goal had been completed, you paid.
This method has become a rising favourite amongst advertisers and for good reason. Rather than feeling like you’re playing a game of Russian roulette and throwing money around like you’re in a casino hoping for the best, with Performance Marketing, the target is clear and ROI results are ensured.
So instead of creating campaigns based on vague brief or subjective data, performance marketing agencies focus on creating data backed marketing campaigns focused on the achievement of specific results or actions, such as clicks, conversions, or sales.
The “NEW” Performance Marketing
The definition of Performance Marketing has shifted. Although there is a global debate about what this method entails. In its simplest terms; it still retains its original intention: the ability to measure performance.
The future of Performance Marketing has branched out and now encompasses any marketing approach that will improve your brand. However, the main areas of focus include: email marketing, search marketing (SEO and PPC), conversion rate optimisation, content marketing and many more. Performance Marketing allows for greater opportunities to track real-time measurement and optimisation through readily available digital technology.
When all is said and done, Performance Marketing still revolves around managing campaigns through data, once an action has been completed, whether it’s from email to search or mobile & social platforms.
The requirements for a Performance Marketing campaign come down to four areas. First is to drive consumer action rather than favouring awareness. The second is the cause and effect between the advertising and consumer action that can be clearly measured. Third, its that the campaign can be can optimised in real-time or near real-time based on the measurement and data.
For even more on Performance marketing, check out our big Performance Marketing FAQ page
Crucial Metrics in Performance Marketing
In the realm of performance marketing, several key metrics are vital. Cost per Click (CPC) and Cost per Action (CPA) are critical indicators of campaign engagement and effectiveness. These metrics help advertisers understand the value of each conversion, whether it’s a click, a download, a sign-up, or a sale. Additionally, Lifetime Value (LTV) of customers is becoming increasingly important, offering predictive insights into the long-term value of customer relationships.
Building a Performance Marketing Strategy
Performance marketing is growing exponentially and will continue to reshape the digital marketing landscape. By focusing on data-backed strategies and measurable outcomes, performance marketing ensures that every dollar spent is an investment towards measurable, tangible results.
Building an effective performance marketing strategy involves several key steps:
- Establish your campaign goal: Clearly defining what you aim to achieve, whether it’s brand awareness, lead generation, or sales, is fundamental.
- Choose your digital channels wisely: Diversify your approach by using various channels that best fit your conversion goals and target audience.
- Create and launch targeted campaigns: Focus on identifying your audience, understanding their needs, and crafting messages that resonate with them.
- Measure and optimize: Post-launch, it’s essential to track performance data and optimize your campaigns for better results.
Benefits of Online Performance Marketing
- Performance Marketing is growing at an exponential rate and will continue to make its mark. From big name brands to smaller enterprises, everyone is taking notice and making it a key component to their marketing strategy. In an independent survey done by Rakuten Affiliate Network, it was estimated to become a $6.8 billion dollar industry by 2020.
- The opportunities for advertisers have expanded across a range of different channels such as mobile, social, display, search and email to name a few. Because of this, you are able to broaden your opportunities for a higher return.
- Say goodbye to investing budget without knowing the results. This method of marketing is a low investment and low risk approach, that gives you a clearer ROI over time.
- With this method, you are able to measure and track your action down “to a T” in real-time. You receive information immediately, which allows you to determine, if you need to make adjustments to your campaign to ensure a positive ROI.
Disadvantages of Performance Marketing
- Performance Marketing can be quite complex. To see a high return, it is imperative that you chose your performance marketing agency wisely. Find an agency who understands the complexities and will provide optimal results. Payment on results may not be the best model, especially if it incentivises the wrong metric or behaviour.
What Does the Future Hold For Performance Marketing?
It is without a doubt that the majority of business measure their success based upon their ROI and with Performance Marketing booming, evidence is in place that it is here to stay – changing the way we view digital marketing. Digital marketing agencies have long used the measurability of digital as a sales tool, but very few actually follow through. As clients, you should demand full transparency on your data as well as understand what you are measuring your agency on and how they are performing. They should be able to tell you exactly how much a lead is costing, or what your cost per sale is across all channels. They should be advising you on which channels to pursue based on data, if things are working, open the taps and if the results are not there, move your hard-earned budget into something that is performing.
Over time, with technology advancements, we will find that all campaigns will result in Performance Marketing strategies, where we will be able to easily and effectively measure performance and track returns in every “nook and cranny” related to a consumer action.
In short, make sure that your digital campaign is being run with a Performance Marketing strategy and mindset, you can’t afford not to.
