Marketing 4 min read

What is Performance Marketing?

If you want to cut your ad spendings and only pay for successful ad campaigns, there's one marketing strategy that you must try -- performance marketing.

Image courtesy of Shutterstock

Image courtesy of Shutterstock

Are you wondering what performance marketing means and how it can work for you? Relax, you’ll soon find out.

But, before we get to that part of the topic, let’s get you comfortable with a simple introduction.

As an advertiser, tracking your ad spend can be challenging. As the twentieth-century American merchant, John Wanamaker succinctly put it:

“Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”

The marketing pioneer was right. Decades after Wanamaker made that statement; advertisers still had no way of tracking their ad money.

But that soon changed.

Instead of paying full price for ads without an indication of its connecting with the target audience, companies started looking for cheaper alternatives. That’s where performance marketing comes in.

This raises the first question:

What is Performance Marketing?

Performance marketing refers to an online marketing or advertising program in which advertisers pay marketing companies only after specific actions. So, instead of a set price, ad spends are variable based on how the audience interacted with the advertisement.

For example, publishers can charge based on how often consumers view or click an ad on a webpage. They could also calculate the cost of an advertisement by considering how often it generates a lead or results in sales.

Accordingly, payment options in performance-based marketing include:

  • Cost-per-thousand views (CPM): Price depends on how often an ad is displayed
  • Cost per action (CPA): A sale that involves credit card info
  • Cost-per-click (CPC): Price depends on how many clicks an ad gets
  • Cost per lead (CPL): Whenever a customer provides contact information

As you may have guessed, this form of marketing is all about effectiveness. Publishers have to offer highly-targeted campaigns for each advertiser, and everyone wins in the end.

Now you’re wondering:

Who is Performance-Based Marketing For?

Well, any company that uses the internet to reach a target audience.

Whether it’s a car dealership or an insurance company, this form of marketing can save you a lot of ad spendings. Performance marketing is even more attractive to small businesses with limited ad budgets.

Unlike the traditional form of advertising, your fees depend solely on how successful your ad campaigns are. That way, you can measure your ROI in real-time.

Popular publishers that offer performance-based marketing include:

  • Search engines like Google and Bing
  • Home pages e.g., Yahoo!
  • Social media networks like Facebook
  • Email Providers such as Juno

Since this form of advertising mostly promotes online sales, it’s only effective at targeting customers that are comfortable with online transactions. As such, it’s less useful for generations that grew up without mobile devices and online commerce.

Finally, we can address an essential question here: how can you develop a performance-based marketing campaign?

4 Tips to Help You Develop an Effective Performance Marketing Campaign

Here are some things to consider when developing a performance-based marketing campaign.

Create Ads that Catch Attention

Unlike other forms of advertising, performance marketing only costs money when it’s useful. However, its efficacy depends on factors that you may be familiar with in traditional advertising.

These include an attractive ad, a landing page that’s easy to understand, as well as click-through processes.

Opt For the Cost-Per-Click Option

While you may be tempted to opt for the cost-per-thousand (CPM) option, that’s a bad idea.

Compared with other performance marketing payments, CPM may be the weakest. That’s because paying according to audience size doesn’t always guarantee response or interaction.

So rather than CPM, you may want to consider CPC. With cost-per-click, companies only have to pay when customers respond to an ad.

But, can CPC lead to a purchase? Well, that depends on your landing page.

Create User-Friendly Landing Pages

CPC ads are only effective when paired with a great landing page. Along with being easy to read and use, your landing page must provide a compelling value proposition to customers.

So, get your web development team to partner up with advertising. Together, they can create effective landing pages that’ll always lead to purchases.

Post Relevant Content

Finally, you may want to boost your CPC ads by posting relevant content. It could be a blog post which discusses the industry or even a review of products you’ve sold in the past

Posting relevant content is even more effective when you’re advertising with a search engine like Google. That means your CPC ads will only appear to audience running searches on the related keyword.

Read More: How Webinar Marketing can Boost Your Business

First AI Web Content Optimization Platform Just for Writers

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