What is Performance Marketing & How Can It Be Useful?
The concept of performance marketing can be the solution to get good results from your online promotion activity. All this because it points to a fundamental concept that responds to the win-win: the positive result becomes a meeting point for both parties.
In other words, who provides the promotion service and who, instead, receives the benefits of the various activities implemented to operate in an advantageous way . And get real benefits. But is the marketing performance rule all right? What does it mean exactly?
What is performance marketing: definition
This term summarizes the promotional approach that makes the advertiser , the figure that activates his advertising action, pay only the agreed results. And no further. This approach can be applied to different automated realities. But one can hardly speak of a real convenience for both when there are different human variables in the creative process.
What is the concrete goal of performance marketing? Make an actor do something, namely the ultimate user who completes the picture of the subjects of this practice. There is someone who activates a campaign , someone who provides a structure and finally the end user who performs an action.
Like a click, a visit or a more complex activity such as subscribing to a list . In some cases this work is also activated against online sales.
Performance marketing, virtuous cases
After giving a definition here are the examples. When am I faced with performance marketing? For example with a series of tools like Facebook Ads and Google AdWords (now Ads).
In these cases you work on a clear point: the purchase of advertising space, therefore sales opportunities , capable of yielding visibility in a systematic and measured way. Not improvised.
The common denominator of performance marketing strategies: the ability to budget everything . First the parameters to measure the progress of the campaigns. Both Facebook and Google have important posts to set. Any examples?
Metrics to measure activity and performance
When you decide to work with performance marketing you must, first of all, smooth the numbers to be observed to define the objectives to be achieved to gain the advantage over competitors . And then you will have to weld, but also turn into useful conversions for your purpose.
This is the point: the concept of performance marketing does not mean paying to earn. It doesn’t work like that, there are almost always intermediate stages to activate. The parameters:
- CPM – The value for per thousand impressions. Or views.
- CPC – The cost per click. How much a visit to the link costs you
- CPA – That is, Cost per Action / Acquisition related to an activity.
- CPL : Cost per Lead, the price of each contact generated.
- CPS – Cost for each sale that reaches its destination.
It almost seems like a scale that goes from the most generic result to the specific one. From the simple impression (the user sees the campaign) to the sale. In reality there are also other acronyms – CPO related to orders, CPE for engagement , CPV dedicated to visits – but everything becomes useless if there are no concrete actions to transform the result into something meaningful.
Pros and cons of performance marketing
The key advantage of this strategy: you can perfectly calculate the ROI , the return of investment. That is how much you actually earned from a marketing action. If you have used a certain amount of money to advertise a landing page and you have sold a number of products or services that exceed your expenses then it’s all right. The goal: increase this step.
The disadvantage? First of all, high competition: since the access to these systems is automated, based on a scaleble and reproducible strategy (therefore applicable to many with a single solution), you have to clash with competitors who activate strategies similar to yours. For example, on Facebook Ads you can advertise your web marketing course but your competitor will also do it.
This is why it becomes essential to have the right training in the field of online advertising, one of the areas that most successfully addresses the concept of performance marketing. Which cannot always be applied anyway.
Pay only for results: is it always like this?
It is convenient for everyone to have a web marketing project based only on profits and on the right payment. I only pay for what I need to get profits, like for a raw material . Reasoning, isn’t it? In reality it is vitiated by a series of flaws that it is right to list:
- Marketing has to do with human decisions that are not always linear.
- The result you get cannot always be aimed at direct monetization.
- To obtain interesting results other activities must be optimized.
- Not all activities can be paid for results, they include intermediate phases.
Can blogging be an example of performance marketing? No, because there is no useful metric to evaluate the material success of a content in the short term.
I wrote an article , do you want to pay me for the generated visits? No one can assure me that the blog works in a way that benefits the positioning of the article. The same applies to social media.
This is just one example among a thousand. When you can work on well-defined platforms with linear metrics (this is especially true with digital advertising), performance marketing gives its best. Provided that afterwards there are concrete actions to make the investment pay off.
Your performance-based marketing
Do you think this approach is winning? Are there the terms to get good results with such a dynamic? Pay only what you can get: in certain circumstances this solution is perfect for calculating the ROI and obtaining concrete numbers. But you can’t always apply the scheme to all the steps in your web marketing strategy , do you agree? How do you work?