Performance marketing is definitely not a brand-new concept; it has existed alongside other digital marketing strategies. However, due to recent geopolitical events and health crises, global ad budgets dropped by 36% in 2020. This compelled advertisers to make every dollar spent on ads count.
As a result, performance marketing agencies like Pyrite Technologies include it as part of their digital marketing services. It allows advertisers to measure campaign outcomes and pay only when expected results are aptly met.
Even though the low ad budget crisis is over and the market has gradually picked up, performance marketing strategy has become an integral part of enterprises’ online marketing initiatives.
What is performance marketing?
Considering the rising market competition, brand awareness has become the need of the hour. It is executed through social media campaigns, native advertising, content marketing, and others. Performance marketing covers most online campaigns that are easily measurable, and advertisers pay only when their business objectives are met.
Performance marketing as a service triggers user reactions/transactions and retains customers for longer. The approach is collaborative, fast-paced, and offers a vast scope for constant optimization, with outcomes being 100% measurable.
Significance of performance marketing in business growth strategy
Typically, a business’s growth strategy implies using data collected from various marketing campaigns to experiment with other channels, driving growth and revenue. Performance marketing allows enterprises to measure each campaign’s outcome and optimally utilize the allocated budget to serve the same purpose. The only point of difference here is that enterprises will pay only for the measurable results. Simply put, digital performance marketing brings higher returns for every penny spent on ads and others.
This approach is cost-effective, especially when there is a tight advertising budget. And it gives advertisers the absolute power to estimate campaign costs before implementing one. Hence, the risk of underperforming campaigns is addressed. So, the fewer ineffective campaigns launched and abandoned, the less expense entailed.
However, there are downsides to performance marketing strategy.
Firstly, the campaigns are leveraged as direct tools to capture massive datasets with enormous potential. Unfortunately, most marketers overlook such opportunities because they might not know how to convert the data into actionable insights or lack the necessary tools.
Secondly, performance marketing strategies can go over and above the allocated budget. For example, the typical pay-per-click and cost-per-lead campaigns provide lesser chances of conversions. Simply put, there is hardly any guarantee that the user who clicks on the ad will likely make a purchase. But as a performance marketing tactic, pay-per-clicks work because one can measure the outcome in terms of total clicks. But if enterprises have to take their campaigns a notch high for quality leads likeably convertible, they need to extend their ad spending. Here, pay-per-sale would be the likely approach to guarantee sells.
Performance marketing success depends entirely on campaign objectives and how much enterprises are willing to pay.
Service providers like Pyrite Technologies, an enterprise digital marketing agency, intelligently allocate budgets on campaigns that guarantee quantifiable outputs. Of course, by measurable outcomes, we meant brand reach, followers, clicks, leads, conversions, sales, and revenue.
Benefits of performance marketing
Performance marketing leverages both organic and paid strategies to deliver staggering turnovers. Here are some of the key benefits to consider:
Brand Awareness: Performance marketing uses digital platforms to organically increase brand awareness and user base.
Data Capture: These platforms provide valuable data on business prospects and their interactions/activities surrounding the brand.
Audience Diversification: By leveraging the data, brands can create customer profiles and audience segments. These groups are targeted and engaged with different performance marketing tactics.
Expansion of Brand Reach: With multiple audience segments targeted, the brand increases its reach with time.
Trackable Performance: Performance marketing tactics are easily measured to identify and target channels with better outputs.
ROI-Driven Approach: When advertising becomes more transparent, enterprises can step beyond branding and aim their ad spending to chase higher returns.
Less Risk: Since performance marketing is measurable, the chances of overspending are lesser.
Performance marketing is a win-win game for digital marketers – how?
Digital marketing is a blend of organic and paid activities that contribute to chasing a brand’s growth objectives. Organic marketing tactics like search engine optimization (SEO) and social media optimization (SMO) are time-intensive, meaning the outcomes are intangible and take time to feature positively in the performance metrics. But in order to gain immediate results, paid campaigns are leveraged alongside organic ones. In short, performance marketing is eventually extending the company’s digital marketing reach along two channels – organic and paid. The former builds the brand’s solid foundation, generating measurable results. It reduces the dependency of the company’s marketing efforts on a single channel. Instead, b2b performance marketing diversifies the company’s revenue streams, especially when the existing sales channels fall short of driving revenue growth during market disruptions or for other reasons. So, the organic campaigns are driving change and brand reach, while the paid channels are creating multiple sources of revenue.
Performance marketing is inherently goal-driven. But measuring the success or failure in executing business goals is possible when explicit goals are set. And that could be closing a sale, generating a lead, installing an app, registering for a webinar, subscribing to a newsletter, increasing clicks or decreasing bounce rates, or garnering positive feedback for a design.
With enough data at hand, optimum visibility of daily or weekly goals and campaign performances is achieved. This allows marketers to quickly evaluate the efficiency of their marketing efforts and the total costs incurred. Hence, the former can plan their steps accordingly. Therefore, brand performance marketing gives business owners the ultimate control to ensure their digital marketing partners meet the pre-defined metrics. Otherwise, they don’t get paid. Hence, every digital marketing strategy is directed towards chasing those goals, and all efforts put together are measured and quantified to justify why such campaigns were launched or discarded.
With restricted ad budgets and tight market competition, performance marketing is a win-win for both digital marketers and company owners. The former could improve their subsequent campaigns for better results. The latter could view and measure every step undertaken by its team.
The primary objective of digital marketers is to capture more eyeballs and gain tangible results from performance marketing initiatives. To strive for such high-end goals, digital marketing will continue to rule as a go-to strategy, and performance marketing will remain an integral part of the same.