Performance marketing – what does it involve?

Performance marketing – what does it involve?
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Performance marketing is all about getting the consumer to respond in a certain way. That is why it is said to be the most “specific” branch of marketing.

What is it all about?

In performance marketing it does not matter how many people see a banner ad. What is important is whether they take the next step – e.g. complete the form, click the ad, download the application, register for the event or finally: buy the product.

Its popularity has been greatly influenced by the development of the whole “AdTech & MarTech”, i.e. a system that collects data and information about users’ daily behavior. It has more than doubled in the last few years.

Badania dot. marketingu efektywnościowego
(Source: https://chiefmartec.com/2018/04/marketing-technology-landscape-supergraphic-2018/)

Already, according to the IAB, performance marketing spend is 67% of all interactive advertising spend in the US. This is not happening without reason.

Benefits of performance marketing

Choosing this tool opens up a number of potential benefits, both purely financial and informational. Both large corporations and smaller local businesses will benefit. What can you expect from a well executed campaign of this type?

  • Cost optimization

Performance marketing assumes that you only pay for specific results, not per ad click. This allows you, as the business owner, to get the most out of your efforts and reach the maximum potential.

  • Keeping your finger on the pulse

Thanks to the Marketing Automation system, you know where you stand and how your actions translate into results on an ongoing basis. Knowing these results, you can better direct your campaign and estimate exactly how much it costs you to acquire a specific number of customers.

  • Gathering valuable information

E.g. on all stages of the sales funnel, which will indicate the strategic moments, i.e. when the consumer has doubts and resigns from further actions.

  • Flexibility

The information you have at your disposal allows for considerable flexibility in planning the further strategy. Thanks to it, you can quickly react to changes, current events and latest trends.

  • Quick effects

That is something we all like. The results of performance marketing activities may be visible even a few hours after the campaign launch.

Methods of accounting for performance marketing

Ekran komputera ze statystyką
(photo: Agence Olloweb, source: unsplash.com)

There are several methods on the basis of which the costs of running such a campaign are calculated. The choice is dictated primarily by the goals we want to achieve (that is, the action we want to induce the customer to take). The most common methods of settlement are:

  • CPA (Cost Per Action) – the client pays for a predetermined action taken by the user,
  • CPL (Cost Per Lead) – the principal pays for leads (e.g. when someone signs up for a newsletter or registers on the website),
  • CPC (Cost Per Click) – the principal pays per click on an advertisement. The most frequently used unit here is uCPC (unique click),
  • CPO (Cost Per Order) and CPS (Cost Per Sale) – the principal pays only for orders placed or paid by the consumer.

The most popular PM tools

Responsiveness is key in choosing the right tool. Consumers today use desktop and mobile devices equally, so you need to consider each of these options and incorporate them into your strategy

It will probably come as no surprise to anyone that the most powerful tool at the moment is Google and the capabilities offered by this search engine. If you want good optimization and contextual advertising, it is best to bet on Google Ads.

Social media(Facebook, Instagram or TikTok) are becoming more and more important as they offer many tools for advertising and monitoring its effects. In addition, the tools that we find in social media are relatively cheap and easy to use – most of us use them very intuitively, so even new functionalities should not surprise anyone

The situation is similar with native advertising (that is, subtle advertising that tries to pretend that it is not) and influencers, who have an increasing influence on consumer decisions of their observers.

Invest in the sure thing

It promises that performance marketing will be one of the stronger growing branches of marketing that will not lose its power for a long time. It also seems to address a problem defined by sales pioneer John Wanamaker:

Half the money I spend on advertising is wasted. The problem is, I don’t know which half.

Efficiency marketing, on the other hand, allows you to determine exactly which part of the expenditure is unnecessary, and which part is worth further investment, and that’s a huge advantage.

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