What is performance marketing and why everyone should look into it? While definitely not for everyone, most companies should be more aware of this approach to digital marketing. It might seem expensive at first, but it also brings measurable and (mostly) better results in the long run.
Setting clear goals
This is the cornerstone of performance marketing as opposed to the classical model which that tries to reach goals like reach, impressions and time spent on advertising content. 20 years ago going to media agency meant you where getting reach and impressions. Nowadays, while in some cases things like reach and impressions on media are very important, performance marketing approach focuses on just one thing – conversions (they can be sales, sign-ups, lead form completions etc.)
Clear goal – action taken by a user that has a business value that can be measured in money. You have to have at least one – doesn’t matter if you do performance marketing or don’t.
Thorough set-up of analytics
Clear goals can’t be measured without improved set up of analytics. Most businesses have Google Analytics on their websites, but that’s not enough. Performance marketing professionals “teach” Google Analytics to measure goal completions, “see” purchases on the website and even to record value of each such action.
And after that comes Facebook Pixel installation, Google Adwords audience set-up, Yandex Metrica for website heatmaps, Linkedin insight tag and other things that might be valuable in each separate case. All of these are being used in performance marketing to improve campaign effectiveness in each channel and compare them against each other.
We actually have a really nice article on analytics in form of checklist.
Real-time campaign optimisation against KPIs and CPAs
This is a big one – why performance approach is more expensive than just putting an ad on Facebook for two weeks.
Traditional approach to media buying means that advertising spots are chosen, creative materials are put up for a set period and after the campaign has ended, results of campaign are evaluated.
Performance approach means that campaign is optimised throughout the campaign starting from the day one. For example, learning that one creative works much worse than another one after the campaign can be insightful and useful. But you know what’s more useful? Taking an action based on this information on day 2 of two week campaign.
One thing is creatives, but another example – campaign has 50-50 split between Facebook ads and Google ads, but as it sometimes happens, it can turn out each $ spent on Facebook is half as effective than on Google Ads. Wouldn’t you want to know this and take an action before tens of thousands of $ are spent on Facebook? With performance approach budgets are being moved all the time to reach better results.
This is why performance marketing fees are higher – planning and executing performance campaigns takes much more work than classic media buying process. We do automatize a lot of what we do, but not everything can be automated.
The good news – usually (90% of cases) savings on inefficient ads more than make up the performance marketing fees which are higher compared to the old approach.
Performance marketing (as the name implies) is marketing that relies and executes heavily on performance and real-world results & impact.
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