Performance Marketing
How does performance marketing work? How does performance marketing work?
As the digital marketing industry grows year on year, performance marketing has huge potential to scale your business if you use its full functionality.
Here are the top three reasons why your business should invest in performance marketing:
Brand awareness: Through affiliates and agencies with their own established target groups, you can reach new target groups and increase traffic to your website.
Trackable Performance: Performance marketing is measurable and transparent. In fact, brands can now see the entire click-to-consumption path of each shopper and identify where and in which partners to invest, which channels and get better results.
Lower risk: Because affiliates are only paid after a desired action has taken place, the CPA (Cost Per Acquisition) is often lower and the ROI higher. This leaves more room in the budget for other performance marketing strategies to be expanded and tested so you can grow and compete.
Also referred to as advertisers, these are the companies that want to promote their products and services through affiliate partners or "publishers". A retailer looks for an affiliate partner, outlines their campaign goals and pays the affiliate once those goals are met.
Considering that 49% of consumers rely on influencer purchase recommendations, retailers investing in performance marketing have huge potential to drive sales, new customer acquisition and real-time ROI campaigns.
Often the retailers who perform best in performance marketing are those who already have an online presence in multiple performance marketing channels, and their website has a proven conversion rate that can help them. These retailers have affiliate partners who can provide a positive return on investment in exchange for marketing efforts, traffic generation and exposure.
Affiliates or publishers are the "marketing partners" of performance marketing and can come in many forms: Coupon websites, product review sites, blogs, mobile apps and more.
In essence, affiliates act as an extension of the brand, using their website, social media and influence to improve the retailer's performance - but in return, retailers should also have a strategy and understanding of what these partners need from the retailer to be successful.
Influencers, for example, are publishers who promote brands and products through their blogposts, social groups and social channels. Their focus is to drive traffic and sales for the retailer while building trust with their fan base through personal experiences and product reviews. This partnership is very valuable as it goes beyond sales and builds loyalty for both the influencer and the brand.
Affiliate networks or third-party tracking platforms provide a one-stop shop for information and tools such as banners, text links, product feeds, promotions and payouts (similar to a bank). In these networks and platforms, merchants and affiliate managers also create strategic commission structures, issue bonuses, send newsletters and handle returns.
For both the merchant and the affiliate marketer, this is a way to track leads, user clicks, conversions and overall campaign performance.
Affiliate managers or OPMs are the main driver between the merchant and the affiliate.
While affiliate managers can be internal, brands can also work with agencies to either manage the entire programme or support the internal team based on their expertise and an existing network of affiliate partners.
With existing proven processes and robust partner databases, marketing agencies can benefit from in-house teams that may have limited resources and expertise by filling the gaps and achieving faster results.
Before you decide to work with a marketing agency, make sure you set your marketing budget, specific goals, timeframe and brand direction.
-Digital Marketing vs. Performance Marketing-
What are the advantages of performance marketing? What are the advantages of performance marketing?
As the digital marketing industry grows year on year, performance marketing has huge potential to scale your business if you use its full functionality.
Here are the top three reasons why your business should invest in performance marketing.
Through affiliates and agencies with their own established target groups, you can reach new target groups and increase traffic to your website.
Performance marketing is measurable and transparent. In fact, brands can now see the entire click-to-consumption path of each shopper and identify where and in which partners to invest, which channels and get better results.
Since affiliates are only paid after a desired action has taken place, the CPA (Cost Per Acquisition) is often lower and the ROI higher. This leaves more room in the budget for other performance marketing strategies that can be expanded and tested to help you grow and keep up with your competitors.
How do you measure performance marketing? How do you measure performance marketing?
ROIs are at the heart of performance marketing, as every action can be tracked and measured against key performance indicators (KPIs). Whether it's the number of clicks, page views or sales, these key metrics are critical to measuring and improving performance.
Below we have highlighted some of the most commonly used metrics and KPIs to help you understand performance marketing pricing.
This is the amount a retailer or merchant pays when consumers complete a desired action, such as a sale, click or form.
In e-commerce, this is the most common payment model that merchants can set up.
A "lead" is usually a completed registration or sign-up form with customer information such as a customer's name, email address or phone number so that the merchant can contact the customer and increase sales.
This is the price a retailer pays an affiliate for all ad clicks it directs to a desired landing page.
In this payment model, the "X" can represent what the merchant defines as the desired action outside of a lead, click or sale.
Downloads, upsells within apps and reward programme sign-ups are just a few examples.
This metric measures the predicted lifetime value of a customer during their relationship with the retailer. Using predictive analytics, CLV estimates how much a customer will spend based on their activities and actions with the brand.
What are the most common types of performance marketing? What are the most common types of performance marketing?
As mentioned above, performance marketing encompasses several different types of marketing.
While one retailer may decide that only one area is appropriate for their performance marketing strategy, others may use multiple areas within the larger performance marketing umbrella to achieve their business goals.
Below we have described the different types of performance marketing and how each can benefit your e-commerce business.
As explained above, affiliate marketing is any type of digital marketing that is linked to the advertiser and paid out after the desired action. In many cases this includes working with voucher, loyalty, review and incentive websites or working with an influencer, YouTuber or blogger.
This is a form of paid media that, unlike display ads or banner ads, doesn't really look like ads.
Native ads tend to follow the natural form and function of the website they are placed on - like news or social sites. Instead, they fit "natively" on the page and can be fed dynamically based on each user viewing the content.
The most common payment models for native advertising are CPM (pay per impression) and CPC (cost per click).
A form of native advertising and content marketing, sponsored content involves the inclusion of a dedicated post or video on a website that publishes similar content. In this way, the sponsored content blends in with the rest of the content, but includes an indication that it is sponsored.
Sometimes the compensation is in the form of a free product or experience, while in other cases it is a CPA, CPM or CPC-based payout.
This form of performance marketing uses social media networks to gain traffic and brand awareness, such as digital content presented on Facebook, LinkedIn or Instagram.
With different ad formats and targeting options, merchants can reach potential customers while measuring KPIs such as engagement, click-through rate (CTR), CCP and ROI.
Paid search marketing is when an advertiser pays for clicks on sponsored ads in search engines such as Google Ads, Bing and Yahoo. Or, more rarely, an advertiser may pay each time their ad is displayed (CPM).
The opposite of paid search marketing, organic search uses unpaid methods such as search engine optimisation (SEO) and relies on the search engine algorithm to rank at the top.
Some companies may measure their search marketing results on a performance basis, while others may partner and pay out commissions to SEM companies and campaigns based on results.
Tips for successful performance marketing Tips for successful performance marketing
Now that we've covered the basics, let's jump into our top tips on how to succeed in the performance marketing world.
Focus on a good landing page and a good offer.
When it comes to performance marketing, a bad landing page can prevent visitors from converting and a bad offer can prevent them from clicking through. It can also discourage affiliates from working with you and promoting your brand.
As an advertiser, make sure you have an enticing offer for your affiliates and check your website for any problems a visitor might encounter.
Test the entire user experience from landing page to shopping cart. Review links and offers and regularly update content and landing pages that are underperforming.
As many good performance marketers know, testing and measuring are essential to make a digital marketing strategy work.
When it comes to performance marketing, try different techniques and strategies to optimise click-through rates, conversion rates, AOVs and traffic by conducting A / B tests to get a clearer picture of what is working and what is not.
Making sure your traffic comes from reputable sources is extremely important in performance marketing. If less reputable sources promote you, consumers may think twice about trusting you as a brand and may be deterred from visiting again.
Instead of generating a lot of low-quality traffic, work with affiliates who bring meaningful traffic to your website.
Attribution, mobile vs. desktop, bounce rates, etc. provide important campaign data points for better insights into what works and what doesn't.
Just as testing and monitoring your wins and losses is equally important to get the most out of your performance marketing campaign.
Performance marketing is about building relationships between brands and publishers to reach, engage and convert audiences to build your brand.
To do this successfully, both brands and publishers need to follow the rules.
Take a detailed look at each of the guidelines to make sure your business is compliant, or work with a professional affiliate management company to help.
As marketing trends show continued investment in all things digital marketing, performance marketing holds promise for business owners who want to engage and convert new buyers at scale and at lower cost. Working with publishers and affiliate networks allows for additional reach that you may never have with more traditional marketing approaches.
No matter where you and your brand are in the performance marketing space, there is always room for improvement and growth.
Find out which approaches work for you and how you can meet the needs of not only your brand but also your affiliates. Once you have defined your specific goals, jump in and start building those connections.
Digital marketing, also known as online marketing, is any form of marketing that exists online. Thus, digital marketing includes everything from social media marketing to email marketing to performance marketing.
Performance marketing is a subset of digital marketing that refers to advertising programmes in which affiliates and marketers are paid only when a desired action is completed, such as a completed lead, sale, booking or download.
You can do performance marketing yourself as long as you have the size of the internal marketing team, the expertise, the budget and the bandwidth to do it.
Otherwise, you may want to hire an affiliate manager.
While affiliate managers can be internal, brands can work with external agencies to either manage the entire programme or support the internal team due to their years of experience and high-quality network of affiliates.
