Welcome to the world of performance marketing! If you’re looking to drive your business forward, you’ve come to the right place.
Performance marketing is all about maximizing ROI (return on investment) and getting the most out of your marketing efforts.
In this article, we’re going to dive into how performance marketing works, the different channels you can use, and how to measure your success.
By the end, you’ll have a better understanding of how performance marketing can help your business grow. Let’s get started!
What Is Performance Marketing?
Performance marketing is a digital marketing strategy that’s driven by results. It’s ideal for companies that are looking to reach their audience at scale, because payment is based on how users interact with the content.
Performance Marketing Works
Now that you understand the basic concept of performance marketing, let’s dive into the different ways advertisers pay for their ads.
As mentioned earlier, advertisers put their ads on a given channel and then pay based on how well the ad performs.
But how exactly is that performance measured and what are the different payment options available?
There are a few different ways to pay for performance marketing, including:
- Pay-per-click (PPC)
- Cost-per-acquisition (CPA)
- Cost-per-action (CPA)
- Cost-per-impression (CPI)
- Cost-per-mil (CPM)
Each of these payment options has its own advantages and disadvantages, and the one that’s right for you will depend on your business goals and marketing strategy.
We’ll go over each of these options in more detail below.
1. Pay-per-click
Pay-per-click (PPC) is a type of performance-based advertising where advertisers pay each time someone clicks on one of their ads.
This is a popular method for businesses looking to drive more traffic to their website. The most common platform for PPC is Google Ads, which is used to place ads on Google search results pages.
With PPC, advertisers can target specific keywords, demographics, and locations to ensure their ads reach the right audience.
The cost per click varies based on the competition for a specific keyword, the relevance of the ad, and the quality score of the ad.
PPC can be an effective way to generate leads and sales, but it requires a well-structured campaign, constant monitoring, and optimization to ensure a positive return on investment.
2. Cost-per-impression
Cost-per-impression (CPI) is a model of performance marketing where advertisers pay for each impression or view of their ad.
This is a common model for display and native advertising, where the cost is based on the number of times the ad is shown to users.
CPI is also known as “cost-per-thousand-impressions” (CPM), as the cost is calculated per thousand views.
This model is often used for brand awareness campaigns, where the goal is to increase visibility and reach for the advertiser’s brand.
3. Cost-per-Acquisition
Cost-per-acquisition (CPA) is a model of performance marketing where advertisers pay for a specific action taken by the user, such as making a purchase, submitting a form, or signing up for a newsletter.
CPA is also referred to as “cost-per-conversion” or “pay-per-acquisition”, as the advertiser only pays when a conversion occurs.
This model aligns the interests of the advertiser and the publisher, as both parties only benefit when a conversion takes place.
CPA is often used in lead generation and e-commerce campaigns, and it’s a popular choice for businesses that want to focus on driving specific actions from their target audience.
Advertisers usually bid on a CPA basis in affiliate marketing, where the affiliate is paid for each lead or sale generated from their website.
4. Cost-per-action
Cost-per-action (CPA) is a model of performance marketing where advertisers pay for a specific action taken by the user, such as making a purchase, submitting a form, or signing up for a newsletter.
Advertisers only pay when the desired action is taken by the user. CPA is a popular choice for businesses that want to focus on driving specific actions from their target audience. It’s often used in lead generation and e-commerce campaigns.
This model aligns the interests of the advertiser and the publisher, as both parties only benefit when a conversion takes place. It also referred to as “cost-per-conversion” or “pay-per-acquisition”.
5. Cost-per-mil (CPM)
This model is often used for brand awareness campaigns, where the goal is to increase visibility and reach for the advertiser’s brand.
The cost is calculated based on the number of times the ad is shown to users, regardless of whether the user clicks on the ad or not.
CPM is often used in display and native advertising, as well as video advertising. It’s a good option for businesses that want to reach a large audience but have a low conversion rate.
Performance Marketing Career Demand
Performance marketing is a rapidly growing field with a high demand for professionals. According to a recent study by the Interactive Advertising Bureau (IAB), the performance marketing industry is expected to grow at a compound annual growth rate (CAGR) of 12% between 2018 and 2023.
Additionally, a report by Forrester Research predicts that by 2022, performance-based digital advertising will account for 30% of all digital ad spend.
The high growth rate of the industry and the increasing ad spend on performance marketing suggest a high demand for professionals in this field. The skills needed for performance marketing are in high demand, and the job market for this field is likely to remain strong in the coming years.
Top Performance Marketing Channel
There are many different channels available for performance marketing, but some of the most popular include:
1. Social Media
Social media give a chance for business to widen up their brand awareness through reach, followers, or viewers.
Users can also share content sponsor, extending the market beyond the original post. Face book has the most extensive list of services for performance marketing.
Other platforms, like LinkedIn, Instagram, and Twitter also can be the space to widen up your business.
2. Banner Ads
This kind of ads appear on everyside of your computer screen, like Facebook feeds, or news page you were just visiting.
Banner ads are slowy lost their appeal while increasing popularity of ad blockers and what experts call banner blindness.
Many companies are still finding success with display ads that utilize interactive content, videos, and engaging graphic design.
3. Content Marketing
Content marketing give a closer steps in creating marketing strategy by focusing on making and distributing a worthy content, relevant, and consistent.
According to Pulizzi (2009), content marketing is a technique to create and distribute content that could attract, obtain, and involve targeted audiences. It’s clearly understandable objectives that push action of potential customers.
4. Native Advertising
This term of Native Advertising starts to get popular on 2013, when the app called ad blocked has increased interests. People got interrupted with the pop ads.
It makes marketers and publishers worried with their job, because they’ve been so much relyin on this pop up ads.
Native Advertising in simply form as a paid content that displayed on the media platform or any specific area. Both in terms layout, designs, even the type of font used.
For example, when you are searching something on Google, you might often see the label “Ad” or “Sponsored”, then these both are Native Advertising. The same way when you got sponsored for you content in Social Media.
5. Search Engine Marketing (SEM)
SEM is another digital marketing strategy that aims to put our page into get a higher rank on Search Engine Results Page (SERP).
Marketer will put on a list of keywords that will be a paid page, and Google will put this paid page into the number one rank on SERP fastly.