Any business that is tired of overpaying for marketing or advertising strategies without receiving the promised results will quickly fall in love with performance based marketing. For those wondering, “What is performance marketing?”, it is a tactic that allows businesses to pay for the results they desire as they receive them from their marketing or advertising agency.
All too often, marketing agencies and advertising professionals promise results and charge businesses an upfront cost in order to enact the strategies that will achieve these results. Should those results not be achieved for any reason, the business still has to pay for the time and effort the ad experts put into the project. With performance advertising, the entire game changes.
Rather than businesses paying an upfront cost for a project, advertisers are now required to produce results before they are paid. Advertising agencies are no longer paid for their time; they are paid for the results they deliver.
The business and the agency will determine what results are the best for a campaign. These can be clicks, sales, form submissions, leads, app installations, or whatever metric the business needs to grow. What matters is when the agency delivers the agreed-upon number of clicks, sales, form submissions, leads, app installations, or another metric it said it could deliver to the business.
There are numerous benefits of performance marketing for business owners. Performance marketing is a direct response marketing strategy, instead of being solely based on branding. This ensures the business is placed directly in front of the consumer on the right marketing channel and at the right time of time. These drive the highest conversions.
Performance based marketing is designed to utilize specific targeting options that provide specific site metrics. Whether a business desires a lower CPV (cost per view) or CPA (cost per action), or even a higher ROAS (return on advertising spend), specific results can be achieved with the right performance advertising strategy.
Over the years, performance marketing has evolved from vanity metrics to in-depth metrics that can be used to understand how each ad dollar is being used. In the beginning, CPM (Cost-Per-Impression) was a good metric. However, it doesn’t speak on what the ad is actually doing in terms of revenue generation. CPC (Cost-Per-Click) was released soon after, which provided a mid-level look at the ROAS (Return-On-Ad-Spend) for campaigns.
However, a click is still not enough to understand the retention of revenue. Thus, CPA (Cost-Per-Acquisition) was born and redefined how advertisers can calculate ROAS. With each registration, app download, purchase, or other action, advertisers can understand the cost of acquiring a customer.
Several types of performance marketing tactics are available for advertisers to use to promote a business. Some performance marketing channels can be combined to create a more cohesive campaign, while others may need to be focused on a separate campaign to yield the highest metrics for the business.
However, before getting into the marketing channels, it’s important to first touch on performance marketing vs digital marketing. The difference between these two strategies is the approach. Digital marketing focuses on impressions or likes, which are only vanity metrics. These metrics are useful for understanding engagement and awareness on other campaigns, but they cannot be used to understand how retention or revenue. On the other hand, performance marketing is based on long-term revenue-driving tactics. Using short or long-term campaigns, businesses can expect strategic key performance indicators (KPIs) to be met. These KPIs drive revenue and retention.
Social media is a popular digital marketing and performance marketing channel because it’s easy to reach a wide number of individuals in general and niche audiences. Each platform can have posts and ads modified to speak directly to the customer types using that platform.
Some of the metric performance marketing examples one can expect from social media include sales, checkouts, clicks, and completed forms. Vanity metrics, like likes, comments, and shares, are still commonly measured in CPM. However, these vanity metrics are no longer a major indicator of success. Social media ads have greatly evolved over the years to help advertisers better understand how their ad spend is being put to use. Rather than simply understanding the reach of ads, advertisers can provide complete reports to their clients that speak on the CPC, CPA, and ROAS.
Programmatic display advertising is another popular performance marketing strategy. With programmatic ads, advertisers can place a business’s banners and ads on specific websites. These websites align with the business’s target audience, niche, and industry. Rather than being placed randomly across the web, this strategic placement ensures the highest ROAS possible.
The beauty of programmatic advertising is the same audience that sees the banner on one website can be targeted again, wherever they go online. They can read an online magazine, online news, and then visit an accounting website. Whatever sites they visit, they can be targeted and shown the same ad again. The more they see the ad, the more likely they are to remember the company and/or convert it into a customer.
With programmatic advertising, businesses typically measure the success of their ads by CPA and ROAS. While CPM and CPC are beneficial for understanding how many individuals have seen the banners or ads, CPA and ROAS can help advertisers understand if the cost for acquiring the customer through this method is worth it for the client.
In addition to the aforementioned channels, Connected TV (CTV) has skyrocketed over the past few years. This form of advertising is only possible due to the rise in streaming shows and movies. It allows advertisers to create targeted video ads that can play in certain regions during specific shows. This hyper-targeting creates higher levels of engagement than traditional advertising efforts.
Since Connected TV works through Internet-enabled devices, cross device technologies make the connection between the device and the user to serve an ad to the correct consumer. Some CTV ads can even be personalized to play different ads on different TVs in the same household. With this form of advertising, businesses can expect better metrics and higher ROAS. CTV is truly driving performance based marketing and raising the bar for what can be achieved through targeted advertising.
During a Connected TV ad, advertisers can encourage viewers to complete certain actions on another internet-enabled device. Most often, viewers use their smartphones to visit the advertiser’s website. From special offers only available to those who see CTV ads to specific landing pages, viewers can receive incentives that are only available by completing an action prompted by the CTV ad.
Each time viewers complete the promoted action, advertisers can calculate the CPA. For businesses that use CTV ads to sell products or services, it is possible to understand the exact cost of acquisition that leads to revenue for the business. CTV ads can also be used to nurture leads. Rather than selling a product or service, the ad can direct viewers to visit the advertiser’s website and sign up for promotions, offers, etc. This leads to increased nurturing and retention of qualified leads.
Now that the performance marketing strategy has been explained, it’s time to go over what a performance based marketing agency can do for a business owner. While businesses can run their own ads, they often cannot achieve the same results as a performance agency. The results an agency can achieve far exceed the investment in their results-based fee.
All performance marketing companies continue to keep up with the industry trends and keep up with the newest advertising capabilities. Since their fees are paid only by results, businesses can expect these agencies to be on their A-game and ready to provide results as quickly and efficiently as possible.
When working with a digital performance marketing agency, a business owner can expect a proposal based on the best performance an agency can drive for the advertiser. This includes budgets, site metrics, audiences, and other important factors in the campaign.
At Keynes Digital, we make sure we penetrate every person in the market that can possibly be your customer. Our extensive network of providers ensures your ads are seen by your target audience.
As a performance based advertising agency, here is a performance marketing case study collection where we have helped businesses reach their ideal target audience and achieve stronger metrics.