What is Digital Marketing- Performance Marketing?

What is Digital Marketing- Performance Marketing?

Digital Marketing and Performance marketing is the use of Digital campaigns where advertisers pay the platforms only for results achieved, such as clicks or conversions. It has generated a lot of interest and marketing spend for all types of businesses globally and has generated highly effective results. On the other hand, it has also driven some businesses into the ground if not managed properly. Some click fraud scams brought these campaigns into a bad light in the past but all that is history now.

Unlike traditional and organic marketing, performance marketing is linked to an action taken by a prospect with the return on investment being generated and data being used to optimize and control the campaign.

Some key examples are:

• Facebook, the leading social media channel for performance marketing for SME’s
• Taboola offers the ability to reach the readers of leading publications on the Internet
• Google displays your text ads in search results pages and its network based on the matching of keywords that you bid for and the search queries on the search engine. It also provides native advertising on relevant sites.

You should use Performance Marketing:

• If you can afford a campaign for at least a few months to get any results
• Your business has a sound digital presence with followers on the prominent channels for your space
• You should have a basic understanding of how the process works on the chosen channel or you will get lost in the technicalities or be taken for a ride by the implementing partner with poor results
• If you need to get result as soon as possible and have no time for building a brand awareness or are already established

Top performance marketing channels

• Native advertising: This kind of outreach targets ad placement on relevant websites where your target market spend time. Typical examples of options would be Google Display Ads and Taboola as the most prominent.
• Sponsored content: Sponsored articles on relevant platforms by influencers can create a magnified reach and engagement for all types of businesses apart from micro level businesses and solopreneurs. YouTube has emerged as a path breaking option for sponsored content with influencers that could be affordable for SMEs too.
• Social media advertising: are a great way to reach your prospects with the kings being Facebook for B2C, LinkedIn for B2B. The good part about these platforms is that they offer a wide range of metrics to track your campaigns in real time with the ability of complete control.
• Search engine marketing: is the ability to use search interests to place your ad in front of a prospect. Google being the most prominent search engine globally allows you to do that based on your bid and the ad design. It is considered as the quickest and most effective form of performance marketing by many though mainly favoured in competitive markets and by those with deep pockets. A well-designed strategy however can help a firm of any scale with healthy margins in its product grow substantially.
• Affiliate marketing: is a good way to market your product and many platforms offer the opportunity of creating account management capability for affiliate marketing. You get partner affiliates to sell your product and you pay them a commission. This again would suit a firm with the bandwidth to manage affiliate accounts. Since affiliate pay outs eat into margins, a margin cushion is a must to be profitable.

How to Build a Performance Marketing Strategy

• Define campaign goals: It is important to define realistic goals based on accurate data
• Choose the right channels: It is then important to choose the right channels based on the nature of your business, budgets and your marketing objectives
• Start small and scale slowly: Since the cost of running such campaigns is high, it makes sense to test and run campaigns and slowly scale. The nature of behaviour on digital platforms is sometimes unpredictable, haste could make waste with you losing your hard-earned savings if you don’t tread with caution. Make decisions based on sound data and analysis only. As some would say keep on doing small experiments and testing the waters before you decide to swim. It is not advisable to start and stop campaigns repeatedly in their lifetimes as the platforms use machine learning algorithms that will have issues in optimizing it. Keep it running but you can reduce budgets if there are issues that need to be address.
• Build a design and launch but keep optimizing it as you go along. Define your critical metrics and monitor them daily. The Demings Cycle-Plan, Do, Check, Act is a good way to conduct any process including this one

Performance Measurement Metrics:

• CPM: CPM stands for Cost Per Thousand, and it is the cost you pay for 1000 impressions of your ad. This metric is use in Facebook Display ads and other display ads including Google Display Ads.
• CPC: Cost Per Click is a cost that you pay when someone clicks on your ad and it is dynamically set base on traffic and competition for that keyword in Google Ads.
• CPA: CPA stands for Cost Per Action is based on a certain action being complete like filling a lead generation form, signing up for a newsletter etc.
• Cost Per Sales (CPS): It is the cost debit from an advertiser when there is a sale due to the ad.
• Cost Per Leads (CPL): It is the cost debit from an advertiser when a prospect signs up as a lead for further actions like a product demo, requesting a meeting to know more etc.

It would make the best sense to go with an agency to run an effective performance marketing campaign but before you do that you must a working level of understanding of how the platform works. It could help in bringing your insights about your business to optimize your performance marketing campaign with the agency in the best manner possible.