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Learn What is Performance Marketing in Holistic Marketing: Complete Guide

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With the scope of digital marketing increasing day by day, it is imperative for companies to invest time and effort in the right manner. There are various types of digital marketing and Performance Marketing is one of the most attractive of all the types. 

What is Performance Marketing, how does it work, and how does it benefit? In this blog, you will find all the answers related to Performance Marketing.

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What is Performance Marketing? 

Performance Marketing is defined as a digital marketing strategy that is dominated by the result-driven feature of paid advertising. 

In simple terms, a digital campaign where the marketer pays only when the desired action is completed is known as performance marketing. This includes generating a sale, lead, a click, form submission, etc.

Types of Performance Marketing 

While Performance Marketing has a presence in both traditional and digital media, we are going to focus on digital media since this industry is growing rapidly in India. 

In Digital Marketing, these are the following types of channels through which Performance Marketing can be conducted. 

  • Social Media Ads 

Today, Facebook earns a revenue of $32 billion yearly just through its advertising model. Hence, the scope of running successful ad campaigns with niche actions is a very lucrative type of Performance Marketing. 

Let’s have a look at Instagram Ads’ actions that you can track in Performance Marketing- 

what is performance marketing

  • Native Advertising

When a brand seamlessly integrates with another reputable brand’s website or social media, we call it Native Advertising. 

Let’s look at this example of Native Advertising where Twitter and Mumbai Indians released a hashtag with a custom emoji-

what is performance marketing

Through sponsored content, you can easily capture the attention of your target audience. This is because we give our best reaching and high-quality content an extra push to be visible to more users so that they interact with it. Collaborating with influencers also adds to your brand value. Here, metrics like impressions and leads can be used to track performance. 

  • Affiliate Marketing

Affiliate Marketing is one of the truest forms of Performance Marketing. The reason is, that you only pay commission when your Affiliate Partner helps you get a lead or makes a sale. 

Must Read: Top 4 Affiliate Marketing Strategies with Examples

Importance of Performance Marketing

Now that we know what is performance marketing and its types, let’s talk about why you should include Performance Marketing in your marketing plan. 

  • Increase Reach 

Performance Marketing will always help you increase your engagement and reach as it is directed toward one action. 

  • Conversion of Leads 

Conversion of leads in Performance Marketing is higher than other digital marketing techniques because you are directly targeting those who are interested in your content through the paid medium. 

  • Lower Costs 

Since you only pay when the user completes an action, Performance Marketing costs lower than other forms of digital marketing techniques. 

  • Higher ROI

A higher ROI is indicated by either low investment or high conversion rates. Both are possible results when you start executing Performance Marketing campaigns. 

  • Less Planning

Performance marketing campaigns are comparatively easier to plan and budget as well as it provides you with cost per action.

  • Tracking Performance

As performance marketing is more or less digital, it is easier to track performance results in real-time. These metrics include conversions, number of clicks, and impressions. 

Performance Marketing Metrics 

While setting goals and creating a Performance Marketing strategy, it is important that you decide what KPIs (Key Performance Indicators) or Metrics would you like to choose for your plan. Here are some top metrics that are often tracked during Performance Marketing Campaigns-

  • PPC (Pay Per Click)

Whenever your advertisement/content is clicked upon by a user, you pay a certain amount to that search engine, website, etc. 

FORMULA- Total Ad Spend/Total Measured Clicks

  • CPL (Cost Per Lead)

Every time a lead is generated from your ad on search engines/websites, you pay a certain amount to your advertiser. 

FORMULA- Total Ad Spend/Total Attracted Leads

  • CPA (Cost Per Action)

You pay the advertiser whenever the desired action is completed by the user- lead, click, etc. 

FORMULA- Total Ad Spend/Total Attributed Conversions

  • CPI (Cost Per Install)

If you are advertising on an app store such as Play Store and Apple App Store, every time a user installs your app after clicking on the ad, you have to pay the advertiser. 

FORMULA- Total Ad Spend/Total Measured Installs

  • ROAS (Return on Advertising Spent) 

If you paid around INR 100 in total to the advertiser and earned INR 200 as revenue, then your Return on Ad Spend is 200/100, which is INR 2. 

FORMULA- Total Campaign Revenue/Total Ad Spend

 

How to Build A Performance Marketing Strategy? 

Here’s how you can make your own performance marketing strategy for your company- 

1. Set Campaign Objectives

Before starting out, ask yourself what is it that you’re trying to achieve. This requires a detailed list of goals such as brand awareness, increase in website traffic, engagement, etc. 

2. Understand Your Existing Marketing Presence

Understand what your online presence is like and which area really needs improvement. Work accordingly. 

3. Identify Your Target Audience

Who is your target audience? Sketch a buyer persona and tailor your communication towards them. Target these groups of customers.

4. Choose your Digital Channels

Once you’ve identified your buyer persona, choose your digital marketing channels. Which channels is your target audience most likely to be on? 

5. Create a Plan

Having a plan in place will allow for you to have traceable goals and also a proper plan in place so you don’t miss out on any important date.

6. Launch the Campaign

Launch the campaign by crafting ads, and messages that grab the attention of your target audience that enables them to make a conversion. 

7. Analyze

Analyzing is your strategy is working in your favor or not is crucial. Once you’ve analyzed the results, apply these findings to your performance marketing framework. You can also maintain a performance marketing pdf with all your findings for future reference. 

How to Measure a Performance Marketing Strategy?

Here’s how you can measure a performance marketing strategy – 

  • Revenue and Sales

The first and most obvious way to measure the effectiveness of a performance marketing strategy is how much revenue or sales has it generated.

  • Leads

Tracking each stage of a customer journey and understanding where you got most leads from and track them. 

  • Customer Loyalty

Customer retention and loyalty are metrics that say a lot about your performance marketing strategy. It translates to how well your customer liked your user experience. 

  • Brand Awareness 

Another important metric is brand awareness. How well do people recall your brand? This is a major goal for any performance marketing strategy. 

There are many performance marketing tools that can even help you out with this.

Examples of Performance Marketing

We’ve listed a few examples of performance marketing – 

  • Avon

What is Performance Marketing - Avon Example

The beauty brand produced a video on women empowerment in Brazil that covered women’s issues such as gender inequality and breast cancer. Avon was able to track the ad’s performance using Outbrain’s technology.

  • Outbrain Search Campaign

What is Performance Marketing - Outbrain Example

Recently, Outbrain carried out paid search ads for users that searched ‘Outbrain’ on search engines. The campaign performance was received well – CTR – 19% and the ROI was a staggering 2000% For every $1 spent, the return was $20.

Performance Marketing Trends To Look Out For

Here are the top performance marketing trends to look out for in 2021 – 

  • User Experience

A positive user experience should not be underestimated for better conversions and leads. 

  • Conversion Rate Optimization

CRO marketing goes beyond A/B testing or split testing. It is imperative to understand that brands today invest heavily in conversion rate optimization for increased ROU (returns on investment). Read more on CRO marketing here.  

  • Artificial Intelligence is the Future

Brands, big and small are using artificial intelligence for performance marketing. This includes using audience creation, audience segmentation, ad placement, conversion rate optimization and also improved personalization techniques.

  • Email Marketing

Make sure your newsletters have personalized content for a richer user experience and for them to feel valued. 

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FAQs

Q. How is performance marketing used?

Performance marketing is used to help scale engagement, reach, and also conversions at lower costs, risks, and higher ROI (returns on investment) than other channels. 

Q. What is the difference between performance marketing and digital marketing?

Digital marketing uses online channels to send out any communication to the right audience at the right time. Performance marketing is a kind of digital marketing that involves a payment model with which you make a payment for a certain action. 

Q. What is the difference between performance marketing and affiliate marketing?

Affiliate marketing is a subset or type of performance marketing. 

Conclusion

We hope you enjoyed reading this article on performance marketing. Let us know in the comments below how you plan on using it for your business. 

If you’re looking for an in-depth course that covers all the digital marketing modules along with practical offerings such as resume building, check out this MBA Level Post Graduation Programme in Digital Marketing.

But if you feel this is too much of a commitment of time, check out this online comprehensive digital marketing course.

Founder and CEO at IIDE

He is a passionate public speaker and teacher for over 10 years. He has trained over 60,000+ students and 25+ corporates in Digital Marketing via online and offline channels. He is a Harvard alumnus specialising in E-commerce......[Read full bio]

Karan Shah

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