In 2012, Dr. Philip Kotler defined marketing as “the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit.” This goes to say that in order to motivate people to buy your product or service or to consider your business superior to your competitors, you need to create meaningful benefits and value for your market.
However, achieving this can be quite difficult for most business owners. That is why, today, we will be talking about performance-based marketing and why it’s an extremely important recipe for a successful business.
What Do Brands Want from Any Marketing Campaign?
The answer is pretty simple — successful results. But what kind of results are we talking about here? These can be app installs, ad views, page clicks, demo downloads, ad clicks, social media engagement, or sales. Knowing the efficacy of your marketing strategies helps determine if changing a marketing strategy, adjusting keywords, or experimenting with new ad formats will be profitable for your business.
Now, the question is, how do you achieve effective results? This part can be tricky. Hence, Proweaver created this guide to help small business owners tread the marketing world with ease and understand how to develop an effective marketing strategy.
The Crucial Role of Performance-Based Marketing
Performance-based marketing is a marketing strategy that focuses on the measurable results of a company’s marketing campaigns. For example, performance-based marketing can involve targeting a specific geographic area with a specific marketing message. Planning a marketing strategy focused on performance can also involve measuring the success of a campaign by evaluating how many sales, how much revenue, or how many leads it generates.
Basically, it’s the kind of marketing where you can say, “Here’s exactly what we did, and here are the results.” In addition, it can involve measuring the satisfaction of customers with the quality of the company’s products or services. Essentially, performance-based marketing is based on quantifiable data that provides insight into the success of a company’s marketing campaigns.
Today, businesses are pressured to focus on how to effectively market their product or service since most consumers buy from other people rather than from brands directly. To be competitive in this environment, businesses must excel at meeting their customer’s needs and keeping them happy. In turn, maintaining customer loyalty leads to increased sales and revenue for the business.
Since performance is key in this current market, it is important that marketers understand performance metrics and data analysis techniques. Hence the reason why performance-based marketing focuses on what a company can do to improve businesses; this is in contrast to product development which focuses on developing new products to sell.
What Are the Benefits of Performance-Based Marketing?
It allows you to focus on campaigns that bring more ROI.
Among the many benefits of performance-based marketing is that it allows businesses to focus on what matters most, and not waste time on the things that don’t. Rather than spending a lot of time and money on ineffective marketing campaigns, you can focus your resources on strategies that will bring your brand the most return on investment.
It is a very direct marketing strategy and helps plan out your marketing spend.
With performance-based marketing, you can track every expenditure and result of your marketing spend. It is easy to monitor clicks, views, and overall time spent by customers or clients on a website. You may track campaign interactions and learn details like customer acquisition costs, costs per lead, and costs per sale. This makes it easier to decide where to focus your future marketing spending as your business grows.
It leaves no room for ambiguous or unclear expectations.
Business marketing managers or business owners themselves are clear about the results they want to see. With clear goals and expectations, advertisers can accurately deliver the campaign the brand wants while also backed by the data gathered during the planning process.
It is measurable.
Performance-based marketing tracks your business progress and objectives. Therefore, it’s easier to determine your campaign goals since the data you need is readily available in your hands. For instance, if your type of business relies a lot on leads, you can analyze and track lead generation to determine what marketing strategies account for the most successful or unsuccessful leads. Through this, getting consistent best results is much easier.
It offers far better insights into your market.
Knowing what campaigns give you the most profit, what part of your strategies need more work, or what your market engages with gives the business a firmer grasp of the market. Data-driven business decisions are key to determining what strategies work better for your brand. As the popular saying goes, knowledge is power.
It lowers your business’s financial risk.
Performance-based marketing means making decisions based on accurate data. Hence, there’s a lesser financial risk since you have better chances of running successful marketing campaigns. Moreover, having a data dashboard allows businesses to plan down their budget to a tee, so it’s easier to ensure that your campaigns are set to provide a positive return on investment.
How Do I Determine If Performance-Based Marketing Is Right for My Brand?
Not quite sure if performance-based marketing will be good for your business? Let us help you. Not all strategies will fit the needs of every business, but we have compiled here some ways to tell if performance-based marketing will align with your business goals.
Let’s go over each of them below.
You already have a strong digital presence.
If your goal is to build an online presence for your brand, then this strategy may not be for you. The aim of performance-based marketing is centered on driving customer actions. So this strategy will revolve around the data from your already optimized website or online assets.
You have more than enough budget for performance-based marketing.
Consider your marketing budget limitations before diving head-first into performance-based marketing. Financial risks are still present, especially if you are a new company.
You know enough about the technicalities.
How familiar are you with monitoring traffic data, affiliate programs, or online ads? If you do not understand how to interpret these data or the methods and strategies used to arrive at your desired results, then you need to brush up first about the technicalities involved. Doing so will help you avoid incurring technical debt (prioritizing delivery over performance) or falling foul of black hat methods.
You want quick and direct results.
As we have previously stated, performance-based marketing is a very direct marketing strategy. So, if you are looking for quick, measurable results fast, then hop in and get accurate, real-time data for efficient business decisions and an effective marketing strategy plan.
What Are the Common Challenges Encountered in This Strategy?
Beware of ad fraud.
Sometimes, performance-based marketing can result in questionable methods that appear to provide results quickly. In other words, there is a likelihood of “ad fraud.” For instance, some unethical marketing firms may employ bots. These bots click on ads, which results in fake traffic or impressions.
Ad fraud like this can harm your marketing efforts. Not to mention, it can be difficult to detect these kinds of fraud most of the time. In the end, you’re forced to pay for false “successful” marketing campaigns that don’t actually help you get any closer to achieving your marketing objectives.
Losing sight of bigger priorities.
The focus of performance marketing is on quick results. It’s easy to lose sight of your bigger business goals if you’re overly preoccupied with short-term objectives like gaining more ad impressions or clicks.
If you successfully manage a performance-based campaign, you might see some early return on investment. However, unless you maintain focus on your bigger objectives, it might not translate into long-term business profitability.
When results are delayed, problems may arise.
Performance-based marketing’s main objective is to deliver results. Your overall marketing plan will suffer if you are unable to obtain the data you need on time. You might end up spending money on outcomes that aren’t delivered within the anticipated timeline, which results in financial loss.
The execution of performance-based marketing can prove to be challenging and may stray from ethical standards for online advertising. So, choose your desired marketing strategies wisely and ensure that they will align with your brand goals, not just in the short-term but for your future success as well.
What Are the Most Common Types of Performance Marketing?
Performance marketing is a broad term that can refer to many different types of online activities. There are several common types of performance marketing, including the following:
When an advertiser pays someone else (an affiliate) to promote their product or service on their behalf. The affiliate earns money when people click on and purchase the advertiser’s products or services. This type of marketing is often referred to as “referral” marketing because it relies on other people recommending the advertiser’s products or services.
This uses the platform or content to promote an advertiser’s brand. It can be used as a persuasive tactic, but it’s not always intended to sell products and services. The objective is often to gain exposure for brands by creating content that people will want to share with their friends and family. This type of advertising typically appears on websites with large audiences, such as news sites, blogs, social media platforms, and travel destinations.
A form of affiliate marketing in which advertisers pay the website owner to have their advertisements displayed on the site. Sponsored content can be in the form of a video, image, or text. The ads are typically monetized through advertising networks, such as Google Adsense and Amazon Associates. It’s also known as native advertising, sponsored posts, and branded content. And while it might seem like a new thing to some marketers, this type of marketing has been around since the dawn of time – it was just called “advertising” back then.
Social Media Marketing
A form of marketing that utilizes social media platforms to promote a business. Social media marketing is also known as SMM, and it can be used for both professional and personal purposes. The most common social media platforms are Facebook, Twitter, YouTube, LinkedIn, Pinterest, and Instagram. However, you can use other platforms if they are relevant to your industry or niche market.
Paid Search Marketing
PSM involves paying for the placement of keywords or ads on websites. The paid ad appears above, below, or beside the organic search results and usually has an icon to indicate it is an advertisement. The goal of PSM is to drive traffic to your website through paid advertisements placed on popular sites like Google, Bing, Yahoo!, AOL Search Network, Ask Network, and others. You can also use this to promote your site via social media platforms such as Facebook and Twitter.
Search Engine Optimization
SEO is a process that improves a website’s visibility in search engines. The goal of SEO is to improve your rankings on Google, Yahoo, and Bing by making sure that people who are searching for what you provide will find you. This means that you need to have a good keyword strategy and use keywords in appropriate places on your site so that when someone does a search, they will be directed toward your website. There are several ways to accomplish this: some businesses choose to pay an outside company to do it for them, while others hire SEO specialists.
While all of these different types of performance-based marketing exist, the best one for your brand is one that provides an efficient, measurable result specific to your needs. That might sound like a lot to ask for from your marketing team, but it really isn’t. After all, if you’re not measuring something, then how do you know whether or not it’s working? And if it’s not working, then why are you doing it?
Some Tips You Should Keep in Mind
Be clear on your business goals.
Before you start measuring and analyzing data, make sure that your team has a solid goal in mind. Align your plan to that goal and set the desired timeline to achieve the results. Remember that your short-term results should help move you closer to your long-term goals.
Track your results.
Why is it important to monitor your results? Simply because tracking your metrics consistently will help you identify your strengths and weaknesses, know what works best for you and your market, and be able to turn around a failing campaign.
Choose the right partner.
The right marketing partner can turn your goals into a reality. But how do you pick the right partner? Here’s what you should do:
- Review your goals and marketing plans. Check if they align with yours.
- Make sure you have all the details you need. Do not hesitate to ask them questions.
- Check their customer reviews!
Don’t be hasty when choosing the right marketing partner because this can make or break your future goals too.
A Quick Summary of What We Covered
Performance marketing is promising for business owners trying to engage customers at scale and at a lesser cost, especially as marketing trends show increased investment in all things digital marketing. Working with publishers and affiliate networks gives you access to a wider audience than you might have with more traditional marketing strategies.
What is the first step to performance-based marketing? It’s easy. Establish a precise marketing objective, choose your target market, and start your campaign. Always keep an eye on your data, test new ad features frequently, and be aware of potential problems like ad fraud. And of course, always keep your long-term goals in mind as it’s easy to lose sight of it with the many short-term wins in your marketing ventures.
There is always an opportunity for growth and improvement, no matter where you and your brand now stand in the performance market. Learn what strategies work for you and how to effectively meet the demands of both your affiliate partners and your brand. Once you have understood the importance of marketing strategy and determined your precise marketing goals, you can then start creating meaningful benefits and value for your market.
Proweaver Is Here to Help You!
Digital marketing is a way to get the word out about your business and build an audience. In today’s consumer market, technology plays a crucial role when buying, availing services, or finding out more about a company or brand. Hence the reason why digital marketing techniques are the best way to go if you want to increase brand visibility and awareness.
At Proweaver, we have helped thousands of clients achieve this feat and more with our cost-effective solutions. We help small businesses attract and retain customers by using different digital marketing strategies, such as social media marketing, search engine optimization (SEO), custom web design, web maintenance, graphic design, and many more!