Performance marketing

What is performance marketing?

Performance marketing or results marketing is one in which the advertiser only pays when the user performs a specific action: a click, a purchase, a registration, or a subscription, for example. It is, therefore, an online advertising strategy focused on results, which offers a great capacity to measure the ROAS of the investment carried out to achieve each conversion or acquisition in real time. These marketing actions are aimed at motivating the user to carry out a specific action that translates into a measurable result for the advertiser: visits, subscriptions, sales, leads, etc. These are beneficial agreements especially for advertisers, since they only pay based on the objectives achieved. One of the reasons why it is an increasingly popular trend are the analytical tools that allow these results to be measured in real time and, in this way, being able to calculate the cost that a company is willing to pay to achieve these results. . There is an association called Performance Marketing Association of which large companies such as Google, Yahoo or Amazon are part.  

Characteristics of performance marketing

Performance marketing is characterized by the fact that the advertiser only pays for specific results, not for time or impressions of the ad or campaign.

Most common payment methods in performance marketing:

  • CPL (Cost per lead):   Paid for achieving each lead generated from the campaign.

  • CPA (Cost per Acquisition):  Paid for each conversion carried out as a result of a certain campaign.

  • CPC (Cost Per Click):  You pay for each click a user makes on the ad.

Most common objectives in performance marketing 

  • Qualified traffic

  • Recurring visits

  • Lead generation

  • Records

  • Subscriptions

  • Sales

Advantages of performance marketing

Results-oriented marketing is a growing market due to the multiple advantages it offers:

  • Ease of measuring return on investment (ROI) 

  • Conversion-based goals

  • Great optimization capacity

  • Opportunity cost is eliminated

  • Efficient management of the online marketing budget

  • Prior knowledge of the cost of the campaign

  • Alignment of interests between advertising companies and advertising companies (win to win) 

  • Very high levels of efficiency  when combined with data science 

Keys to creating successful performance marketing campaigns

Regardless of the marketing channel that is being used, in results marketing the advertiser only pays, pardon the redundancy, if the objectives previously established in the agreement are met. Therefore, it is essential to obtain them. Below we list some of the key points that a properly optimized performance campaign must meet to achieve its objectives:

  1. Establish  clear, achievable and measurable KPIs

  2. Previously define the payment model of the campaign:  It can be CPA (Cost per acquisition), CPL (Cost per lead) – these two are the most common in performance marketing -, but we can also find CPC (Cost per click), CPM (Cost per thousand impressions) , etc.    

  3. Optimize destination pages or landing pages  : Key point in any online marketing campaign, refer users to optimized landing pages to convert as much as possible, that is, achieve the highest conversion rate possible.  

  4. Monitor campaigns and results:  It is essential to know the results in real time to make immediate decisions that improve the return on investment. 

  5. Efficient management of the online marketing budget

  6. Maintain communication between the agency and the advertiser:  Both pursue the same results, so fluid communication is very important to obtain them.

Attribution models:  It is a key factor to be able to attribute the results to one or more points of the customer journey map to be able to verify that the conversion comes from the publisher who must be paid for it.  

  1. Employ omnichannel strategies:  The user must be impacted regardless of the channel they are using.

  2. Innovation and technology:  You must be up to date with new technologies that allow you to serve advertising and measure interaction and results in order to optimize campaigns.

Barriers for companies when adopting performance marketing

Although performance marketing is increasingly common and more companies implement it in their online advertising strategy , it is no less true that there are some entry barriers that mean that there are still a significant number of them that do not use it. These are the main ones pointed out by the companies themselves in various studies carried out: 

  • Uncertain ROI

  • Insufficient budget

  • Internal bureaucracy

  • High costs when implementing certain technologies:

  • Lack of knowledge of advertising and measurement technology platforms on the part of the company’s marketing managers

  • Possible security risks

  • Lack of skills and resources

Phases of a performance marketing or results marketing campaign  

Capture the user’s attention

The first thing we need to obtain a result is to capture the attention of users, otherwise we will hardly get them to visit our website. In online marketing we have various channels for this, and several strategies can be followed: from dedicating resources to branding or brand recall or attracting traffic through advertising on the search network, social networks, etc.  

Generate interest

Once we have captured the attention of users, we must generate interest in them. To do this, the brand must establish some type of conversation and must try to respond to the concerns and needs that they have.

Cause an action from the user

Finally, the action carried out by the user is searched: a registration, a purchase, a lead, etc. Once you carry it out, the result sought by the campaign will have been obtained.

Performance marketing channels

Some of the advertising channels most used in so-called performance marketing are the following:

PPC (Pay Per Click): Social Ads, Google Ads, Display, video advertising, etc.   

  1. Affiliate Marketing

  2. SEO

  3. SEM

  4. Email Marketing

  5. SMS Marketing

Performance marketing vs Branding: main differences

While performance marketing is defined as those actions focused mainly on obtaining measurable results, branding is defined as the “process of making and building a brand and having it remain in people’s memories.” The main difference is, therefore, that in the first case the objective is short-term and with a clearly defined objective (sales, registrations, leads, etc.), in the case of branding it is that, in the long term, In the long term, users and potential customers remember the brand, identify with it and this represents a differential value when making purchasing decisions. With branding -oriented actions, the objective is for the brand to achieve reputation and notoriety among consumers, and in performance marketing it is to motivate the user to carry out a specific action in which the brand is in the background, since it is It tries to offer the user something they need.