Performance Marketing Continues to Grow

When it comes to business management, key performance indicators (KPIs) are your measuring stick for success. From broad metrics such as overall profit, to specific analytics including but not limited to lead generation, sales, conversions, ad click-throughs, prospect engagement and customer retention, KPIs reflect the effectiveness of all company initiatives.

This is where performance marketing enters the fray. Performance marketing is a practice in which advertisers or marketers are only paid for results. In the past, this often meant clicks or impressions; increasingly it means more tangible KPIs like leads, acquisitions or conversions.

A 2016 prediction by Forrester that the performance marketing industry would be worth $6.8 billion by 2020 was still on track last year, representing a 10 percent year on year growth since 2015.

It’s a Win-Win

One of the most common complaints of entrepreneurs and executives is that they encounter difficulty in determining ROAS — how well their ad spend is working for them. 

Performance marketing largely eliminates this concern, because you are only paying for already accomplished goals. Rather than offering a monthly stipend or hourly rate, companies pay affiliates or publishers for actual results, measured against pre-determined KPIs. Because they only get paid for goal achievement, performance marketers exhaust all channels and resources to get results. In addition to the higher brand visibility and low risk, companies enjoy benefits such as trackability and transparency. (Note, affiliate marketing, where third parties promote your products and services, is just one type of performance marketing.)

A performance marketing setup is advantageous for the affiliate or publisher as well. Because the hiring party is only paying for achieved results (and therefore not wasting money on hit-or-miss initiatives), commissions are generally set much higher than hourly, monthly or flat rates would be for the same job.

Performance Marketing Channels

To implement effective campaigns, performance marketers utilize a variety of channels and platforms to advertise a brand, company, product or service. These often include:

Social Media

Social media marketing enables promotion through likes, comments, shares, interactions and clicks. This can lead to brand awareness, prospect/customer engagement, more widespread outreach and improvement of industry reputation.

Native Advertising

Native ads are advertisements that match a publisher’s website and branding. This enables the ad to blend in with the rest of a site’s content, meaning visitors may not be as deterred as they might be from obvious marketing copy.

Affiliate Marketing

Often used synonymously with performance marketing, affiliate marketing is only a piece of the puzzle. Affiliate marketers are paid a commission for referral traffic. This frequently comes from affiliate blogs or websites.

SEM

Like search engine optimization (SEO), search engine marketing (SEM) utilizes search results to garner clicks, website traffic, conversions and sales. While SEO is a cost-free method of using keywords, website content layout and content quality to place highly in search engines – SEM is a paid-for service whereby brands and retailers employ software that selects keywords and creates search engine ads.

Other performance marketing channel include blogging, YouTube video production, banner/pay-per-click ads, product reviews and email marketing.

How to Avoid Potential Pitfalls

One common pitfall for performance marketing efforts (and virtually all other marketing campaigns) is click fraud. This is when an unscrupulous advertiser employs bots or some other type of malicious non-human means to create clicks – when in actuality, no new visitors are clicking on your ads. To combat this, many companies work closely with affiliates or publishers, and require a high degree of transparency about traffic sources. Most marketers will also want to see detailed and transparent reporting from any agency or individual with whom you partner.

How to Get Started

When embarking on a new performance marketing endeavor, you need to create a plan through which you will set, achieve and measure goals. A few simple steps to follow are:

  • Identify your demographic: engage the right kinds of traffic for your brand by determining your target audience and creating buyer personas and content that addresses their needs, wants and pain points
  • Create good landing pages and offers: before encouraging more traffic to your site, make sure the targeted landing page and any offers are of top quality to avoid click-away
  • Set goals and payment structure: before you can achieve goals, you need to set them
  • Establish testing metrics: A/B split testing of content can help you determine which efforts are working, and which ones aren’t 
  • Identify your demographic: engage the right kinds of traffic for your brand by determining your target audience and creating buyer personas and content that addresses their needs, wants and pain points

By utilizing performance marketing tactics, you can maximize your budget, launch more successful advertising campaigns and boost ROAS. Every ad dollar spent will pay for actual results.

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