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What is performance marketing?

Performance marketing is a form of marketing in which the advertiser pays only when certain goals are met. Here’s how it works.

Imagine a world where you only have to pay for your groceries if the meal you cooked was a hit with the kids. How about if you only have to pay for a haircut if you got asked out on the weekend? Or if you only had to pay for your train travel if you had a successful day at the office the train was taking you to.

It would be awesome – you’d only have to pay for the things in your life that worked out exactly how you wanted them to.

Of course, this world doesn’t exist… except in the marketing world where performance marketing is actually a thing.

What is performance marketing?

Performance marketing is a form of marketing in which the advertiser pays only when certain goals are met. This differs from traditional marketing campaigns, in which the advertiser pays for the marketing campaign regardless of its outcome.

Performance marketing has a lot going for it, specifically that it is a low-risk marketing option. There’s a guaranteed return on investment (ROI) and companies have more control over their spending.

What are the different types of performance marketing channels?

Performance marketing can take many forms:

Social media

Performance marketing can take the form of sponsored posts or paid ads on social media platforms such as Facebook and Instagram, and can include regular posts, carousel posts, stories posts and even direct messages.

Display advertising

Display ads are banners and tiles that show up in every corner of the internet, including social media, third-party websites, and apps, and commonly use videos, images, and copy.

Content marketing

Content marketing channels are platforms that allow you to publish content, and include YouTube, podcasts, Instagram, Tik Tok, Facebook, and websites, as well as print collateral, all of which offer performance marketing options.

Native advertising

Native advertising channels are like chameleons – they run performance marketing campaigns that fit into the look and feel of the site on which they appear, and often don’t immediately seem like ads.

Search engine marketing

Most people conducting internet searches will click on one of the first three websites that show up in the results, making search engine marketing (SEM), a particularly effective form of performance marketing.

Affiliate marketing and sponsored content

Sponsored and affiliate content involves a payment being made between company and a content creator. Sponsored content is when companies pay to hitch their brand to an event or influencer activity, and affiliated content is when businesses, influencers and individuals market your product or service for no initial outlay and receive a percentage of commission.

What are the measures of performance marketing?

There are a number of performance marketing options available, including:

Cost per click

Cost per click is when your company pays each time a certain number of prospective customers click on links leading to your website or landing page. Links can be on search pages, websites or social media.

Cost per impression

Cost per impression is when a company pays according to how many times an ad is viewed, and is a popular way for companies to also determine how effective a particular platform has been.

Cost per acquisition

This is when a brand is paid when a business acquisition is made. A common example is payment per form submitted or ticket booked.

Cost per lead

Cost per lead is when a company only pays when leads are provided. This is determined using a marketing funnel, which provides specific data about the activities of the customers.

Cost per sale

Every time a sale is made, the brand pays the marketer. This is a very popular form of performance marketing with small or new businesses, because payment is only made when money has come in.

Why performance marketing should be part of your marketing mix

The biggest draw of performance marketing is that no payment is made until a successful transaction has occurred, which is why it’s so popular with brands just starting out.

Another benefit of performance marketing is the fact that it provides specific and useful data, which can be used to further target audiences or inform future marketing.

There’s also a school of thought that given they are only paid when they’re successful, marketers have their success tied in with yours.

It’s important to remember that like every marketing tactic, performance marketing is most effective when it works in conjunction with other marketing efforts, such as those that promote brand awareness and those that build brand loyalty.

Speak to the marketing experts

Assemblo is a full-service marketing agency based in Melbourne, that knows how to incorporate performance marketing into your marketing mix for maximum results.

To find out how we can help your business, give us a call on (03) 9079 2555 or send us a note via the contact form below.

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