What is Performance Marketing?
What is Performance Marketing? A Traktion 101
You may have heard that performance marketing is the best option for boosting new user acquisition for your product or service. It’s a quick fire results-driven approach, and perfect for startups and scaleups who need to make fast progress in a competitive market.
But what is performance marketing exactly? How does it differ from other marketing approaches, and what are some real-life examples of effective performance marketing campaigns to follow?
In this article, we'll explain everything you need to know about performance marketing — the benefits, and what to keep in mind when building a performance marketing strategy.
What is performance marketing, and how does it work?
Performance marketing is a data driven approach to marketing that uses digital signals to optimise performance across all channels. Optimisation is channel and platform agnostic, and is usually focused on outcomes for example a sale, lead or other identifiable action.
One of most commonly-used performance marketing channels is pay-per-click (PPC). But there are many more.
Common channels used in performance marketing
Some popular performance marketing channels, beyond Google Search PPC, include:
- Native advertising: Ads that match the look and feel of the platform — for example, delivering content recommendations on a blog using a platform such as Taboola.
- Social advertising: Think Facebook, LinkedIn, or Twitter ads in the feed of social channels. You’ll usually pay for reach, clicks, or conversions.
- Display advertising: Advertising using video, images, audio, and other rich formats (often with text) on a network of websites that allow third-party ads.
- Affiliate marketing: Having third-parties promote your product or service in exchange for a commission when a customer signs up.
This list above certainly isn’t exhaustive (and there is some overlap), but it provides a decent guide to the main performance marketing channels that most companies will use.
What all performance marketing channels have in common is that the brand or advertiser will use the data to optimise investment to an outcome.
The benefits of performance marketing
Data-driven companies love performance marketing, because it enables them to quickly measure their hypotheses with rapid agile marketing tests — without breaking the bank.
1. Easily compare different channels
Performance marketing allows marketers to accurately compare their marketing channels, in terms of the spend and results. For example, if a company wanted to test ads on Facebook and Google to see which paid channel gets most signups, it’s fairly simple to get that baseline data.
You’ll define your goals and budgets, and create any campaign assets. Then choose targeting, set campaigns live, and track results to gauge metrics such as:
- Which platform costs more to reach your desired audience
- Which platform has the higher conversion rates
- Which platform offers the best return on investment
Naturally, getting this basic data is just the start, and needs more investigation — for example, a channel might have a higher cost per click, but those people are more likely to buy a higher-ticket item or have a longer lifetime value (LTV). Try to look at the whole journey.
2. Quickly and easily run experiments
If you want to figure out which value propositions, creatives, or call-to-actions resonate with your customers, performance marketing lets you measure that with quick fire A/B tests.
On marketing channels that aren’t typically performance-based (physical advertising, event marketing, content/SEO), it’s harder to run these types of experiments and quickly get results.
With performance marketing, you can come up with an idea and start testing it within hours. You can then use those immediate learnings to inform your performance marketing strategy, develop your understanding of your audiences, and improve other areas of your marketing.
3. Scale up scale down
Most channels used in performance marketing are flexible. Performance marketers are used to increasing or decreasing budgets in line with business performance. If your ads are working in terms of delivery you can scale up and if they are not you can scale down.
This is managed inside the platforms by setting budget and the timeframe. The ability to scale up and down is important as it gives you more control and enables you to react to external influences e.g the weather as well as your own internal performance.
How to approach performance marketing with the right mindset
If you’re testing out performance marketing channels for your business, remember:
- Set each new campaign out as an experiment, rather than throwing your eggs in one basket. Focus on learning, iteratively improving, and finding efficiencies by tweaking variables in your creatives, targeting, or budget. You don’t fail if you can get useful data.
- Don’t be afraid to test out new ideas. These channels are made for flexibility and agility — meaning you don’t have to commit to big-budget creatives or media placements. If something doesn’t resonate or attracts the wrong crowd, you can cut it.
- Try to keep brand consistency across different channels, while adapting creatives for each platform. While you want to cater to different audiences, you don’t want wildly varying value propositions, phrasing, or brand identities between channels.
- It’s okay to hypothesise about your channels based on industry knowledge, instinct, and prior experience. For example, if you’re selling a high-ticket B2B software, it’s unlikely that affiliate marketing will be your first port of call. And social ads might only be useful in the context of long-term nurturing. If you’re looking to acquire customers quickly, Google Search Ads (for example) give you access to an audience in an acute need state.
- Bring in a performance marketing expert to help you set your campaigns up effectively, including attribution and goal tracking. Don’t miss out on opportunities just because you’re not nailing your tactical setup. These channels can be challenging to manage, especially when you’re running simultaneous campaigns. An expert will help.
A few key takeaways from our introduction to performance marketing
Performance marketing offers an opportunity for data-driven companies to learn what type of ad formats, creatives, and value propositions resonate with their audience — without taking on a huge amount of risk. Tests on these channels can be scaled up or down at any time.
When running performance marketing campaigns, marketers should always look at each one as an experiment — using the data to optimise performance on a continuous basis. And if you take the time to understand why a specific campaign works or doesn’t, you’ll be able to use your insights to build a deeper understanding of your audience for the long-term.
If you need help setting up, executing, and reporting on your performance marketing campaigns, Traktion’s on-demand network of marketing talent will help. Start building your agile marketing team today. All hirers can use our platform for free.