What is performance advertising?
Performance advertising is a form of advertising in which the marketer pays based on the performance of the ad. In other words, the advertiser only pays if the ad generates the desired action, such as a click or a sale. This type of advertising is almost entirely restricted to the Internet.
Performance advertising is a means of advertising in which the marketer does not pay a set price, but rather the amount that it is paid is dependent on the performance of the ad.
This type of advertising is beneficial for both marketers and publishers because it aligns incentives; marketers only pay when they get results, and publishers are motivated to generate high-quality traffic that converts.
How performance advertising works
Performance advertising is beneficial for both marketers and publishers but let’s get a bit deeper and find out how exactly performance advertising works.
Step 1. Deep research and analytics
Performance advertising is a type of online marketing that focuses on ROI while achieving specific goals, such as generating leads or sales.
The first step in performing effective performance advertising is deep research and analytics. This information will help to build up realistic goals and precise strategies.
Some of the data that should be gathered during this step include:
- – Your target audience’s demographics,
- – Their online behaviour,
- – The websites they visit,
- – The search terms they use, and
- – The ads they click on.
This data will help you to understand your target audience and what motivates them to take action. It will also help you to determine which channels and tactics are most likely to be successful in reaching them.
Step 2. Setting goals and building strategy
The second step in developing a performance advertising campaign is to set goals.
Goals should be specific, measurable, and achievable.
Some examples of specific, measurable, and achievable goals are:
- – Increase brand awareness by X%
- – Increase website traffic by X%
- – Increase leads by X%
- – Increase sales by X%
After setting goals, marketers select performance advertising tools and channels based on available information and resources.
Some common performance advertising tools and channels are:
- – Google AdWords (Google Ads)
- – Facebook Ads
- – LinkedIn Ads
- – Instagram Ads
- – Twitter Ads
After selecting a performance advertising tool, marketers choose an approach for every channel based on their performance and target audiences.
Some common approaches to performance advertising are:
- – Pay-per-click (PPC)
- – Cost-per-impression (CPM)
- – Cost-per-acquisition (CPA)
The budget should be allocated between methods and targets based on performance results.
For example, if the goal is to increase brand awareness, then more of the budget should be allocated to methods that reach a larger audience, such as CPM.
Communication channels must be defined and clear responsibilities set to avoid mistakes and misunderstandings.
Some common communication channels for performance advertising are:
- – Phone
- – Online chat
- – Social media
Step 3. Campaign creation and development
After the initial research and planning phases are complete, it’s time to create and develop your performance advertising campaign.
The campaign is closely monitored and the budget is analyzed to view how much profit is generated from each point of the campaign. This allows you to make adjustments to ensure that you’re getting the most return on investment (ROI) possible.
Channels and creatives are constantly adjusted to create an integrated customer journey. Every touchpoint from first impressions to an actual sale should be analyzed and optimized to create a solid brand image.
This is an important step in the performance advertising process because it sets the foundation for all future campaigns.
How does performance marketing, in general, compare to other advertising options?
Performance marketing vs brand marketing
Performance marketing is results-driven, and the goal is to drive return on advertising spend (ROAS). Brand marketing is about building awareness and favorability for a company or product.
Performance marketing is different from native advertising because the goal of native advertising is to blend in with the overall content of the website or social media platform.
Performance marketing is different from content marketing because the goal of content marketing is to create valuable and relevant information for a specific audience.
Performance marketing is different from social media campaigns because social media campaigns are designed to generate awareness for a company or product.
Performance marketing vs affiliate marketing
Performance marketing is a type of affiliate marketing where affiliates are paid based on the performance of their marketing efforts.
Performance marketing includes a wider range of activities, such as influencer marketing, email marketing, search marketing, and any other form of marketing where the marketing partner exchanges sales (or defined performance metrics) for commission payouts.
Tracking and monitoring your gains and losses is equally important to get the most out of your performance marketing campaign.
Affiliate marketing is the process by which an affiliate earns a commission for marketing another person’s or company’s products. In short, performance marketing is affiliate marketing at scale, with new technologies and partnerships being enjoyed as part of the performance marketing mix.
Programmatic marketing vs performance marketing
Programmatic marketing is a type of automated marketing that uses software to buy and sell advertising space at a much faster pace than traditional methods.
Programmatic marketing is used in many areas, including performance-based ads, which are ads that are bought and sold based on the performance of the ad, such as how many people click on it or view it for a certain amount of time.
Programmatic marketing is also used in direct-response marketing, which is a type of advertising that aims to get people to take an action.
Direct-response marketing is used in a wide variety of situations, such as when you see an ad on TV or online that tells you to “call now” and gives you a phone number.
Programmatic marketing is becoming an essential ingredient of performance marketing, as it enables advertisers to buy better placements at scale and maximize their ROI.
A huge benefit of programmatic is the in-depth reporting and analysis, which means that advertisers can explore the performance of programmatic ads and optimize in a highly focused way. This data-driven approach to marketing is essential for small businesses that want to compete with larger businesses.
The 5 steps to data-driven digital marketing are:
- Define your goals
- Collect data
- Analyze data
- Test and optimize
- Measure results
What are the different types of performance advertising?
Search advertising is a type of advertising that uses search engines to find potential customers. Search ads are shown to users who are searching for specific terms.
The Growth Marketing team at Outbrain used a wide range of performance tactics to boost awareness and generate leads for the Outbrain recommendation platform. The campaign performance was extraordinary: CTR 1.8%, CPL $0.48, CPC $0.27.
Some of the tactics that were used in the campaign included:
- – Search ads
- – Display ads
- – Video ads
- – Social media ads
The Outbrain team was able to achieve such great results because they have a deep understanding of how performance advertising works. They know how to target the right audience and how to create effective ad copy.
Social media advertising
Social media advertising can be classified into four different types: paid, organic, paid-for-performance, and earned. The average cost per click on an online Facebook ad is $1.72. CPM for Facebook ads is closer to $10. On Instagram however, CPM is closer to $5.
Facebook has the most extensive list of services for performance marketers. This includes Facebook Ads, which allow you to target specific demographics with your ads. Other platforms like LinkedIn, Instagram, and Twitter also offer many opportunities to reach new customers.
Affiliate marketing is the process by which an affiliate earns a commission for marketing another person’s or company’s products.
In order for an affiliate to be successful in this type of marketing, they must drive sales or defined performance metrics to the merchant in exchange for commission payouts.
Affiliate marketing is a subset of the larger “performance marketing” umbrella, which includes influencer marketing, email marketing, search marketing and any other form of marketing where the marketing partner exchanges sales (or defined performance metrics) for commission payouts.
Performance marketing, however, more broadly aims to improve the performance of the company.
In short, performance marketing is affiliate marketing at scale, with new technologies and partnerships being enjoyed as part of the performance marketing mix.
Referral marketing is a type of performance advertising in which a commission is earned for the online promotion of the product or service of another company. Referral marketing can be done by a blogger in your industry who partners with companies, or by influencers to discount sites.
In referral marketing, a company rewards its customers for referring new business to them. The most common type of referral marketing program is a points-based system, where the customer earns points for each new customer they refer.
Referral marketing can be an effective way to generate leads and sales for a business, as it allows customers to promote your products or services to their friends and followers.
When done correctly, referral marketing can be a cost-effective way to acquire new customers and grow your business.
What are some common performance advertising strategies?
There are many different types of performance advertising, but some common strategies include digital ads, television ads, and print ads. Performance advertising can be used to remind people of what they already know. It can also be used to improve brand awareness and favorability. Additionally, performance advertising can be used to increase sales or customer loyalty. Ultimately, the goal of performance advertising is to increase profits.
Who are the typical stakeholders in performance advertising?
The typical stakeholders in performance advertising are marketers, advertisers, and agencies. Performance advertising typically focuses on driving ROAS (Return on Advertising Spend).
Performance advertising is more efficient than brand advertising. It is most effective when it targets heavy and medium users. Creative and brand narrative matter most in performance advertising.
What are the benefits of performance advertising?
Performance advertising is transparent and measurable. You can see exactly how much you’re spending on each click, and you can track your conversions to see which ads are performing the best.
Performance advertising is low risk. You only pay when someone clicks on your ad, so you’re not wasting money on ads that no one sees. This leaves more room in the budget for other performance marketing strategies to expand.
Performance advertising offers better insights that can help you make data-driven business decisions. You can see which keywords are driving the most traffic, and you can adjust your bids accordingly.
How to Build a Performance Marketing Strategy
Step 1: Establish your campaign goal
The first step in creating a successful performance marketing campaign is to establish your goal.
Some popular digital marketing goals are:
- – Brand awareness,
- – Website traffic,
- – Remarketing or retargeting,
- – Engagement, and
- – Lead generation.
For example, if you’re looking to increase website traffic, you would want to create a campaign that targets people who are searching for keywords related to your product or service.
If you’re looking to generate leads, you might want to consider using TrueView for Action. TrueView for Action is a video campaign type available on Google Ads that aims to boost conversions and leads via action-driving features.
Step 2: Choose your digital channel(s)
There are many digital channels available to advertise on, and it can be overwhelming to try and choose the right one. It is important to remember that not all channels will be a good fit for every business. You will need to research and analyze your target audience and conversion type to find the best channel for your performance marketing campaign.
Here are a few factors to consider when choosing your digital channels:
- – What type of conversion do you want? (e.g. leads, sales, etc.)
- – Where is your target audience most likely to be found?
- – What is your budget?
- – What are your goals?
Once you have chosen your digital channels, it is important to set goals and build a strategy for success. Without a goal, you will not be able to measure the success of your performance marketing campaign. Once you have set a goal, you can begin to build a strategy that will help you achieve it.
Step 3: Create and launch the campaign
The third step in building a performance marketing strategy is to create and launch the campaign. In order to create and launch the campaign, you need to establish your goals.
The most popular digital marketing goals are Brand Awareness, Website Traffic, Remarketing or Retargeting, Engagement, and Lead Generation. Once you have established your goals, you can use ad platforms to create campaigns that target those specific goals.
For example, if your goal is to increase brand awareness, you would create a campaign that targets people who are not familiar with your brand. If your goal is to increase website traffic, you would create a campaign that targets people who are interested in what you have to offer.
Once you have created your campaign, you will need to launch it. The best way to launch a campaign is to use a tool like Google AdWords. Google AdWords will allow you to track your results and make changes to your campaign as needed.
Step 4: Measure and optimize your campaign
After you’ve launched your performance marketing campaign, it’s important to measure and optimize it to ensure you’re getting the most return on investment.
There are a number of metrics you can track to see how your campaign is performing. Some important ones to look at include:
- – Sales: This is the most obvious metric to track. How many sales did your campaign generate?
- – ROI: This is a more complex metric, but it’s important to track nonetheless. What was your return on investment for the campaign?
- – Channels: Which channels performed the best? Which ones generated the most sales?
- – Audiences: Which audiences were the most responsive to your campaign?
- – objectives: What objectives did you set for the campaign, and how well did you achieve them?
By tracking these metrics, you’ll be able to see which aspects of your campaign are performing well and which could use some improvement. From there, you can optimize your campaign to get the most return on investment.
Step 5: Handle potential pitfalls
There are a few potential pitfalls that you need to be aware of when you’re building your performance marketing strategy.
Compliance-related issues can be avoided by focusing on high-quality advertising platforms and networks. Privacy regulations can be avoided by focusing on data-driven digital marketing.
Click frauds and bot traffic can be avoided by focusing on high-quality advertising networks and platforms. Publisher fraud and placement transparency can be avoided by focusing on data-driven digital marketing.
What are the challenges of performance advertising?
There are potential challenges that come with performance marketing, such as brand safety, data privacy, and compliance-related issues. To reduce these challenges, focus your resources on high-quality advertising networks and platforms.
How can performance advertising be measured?
Performance advertising can be measured in a number of ways, including clicks, views, and leads. Performance advertising is effective at highlighting the benefits of service over its competitors. Additionally, performance advertising is driving brand awareness. Although brand awareness is lower than the competition, it is increasing.
The ideal target for performance advertising is customers who are likely to make a purchase based on the advertisement.
What are some best practices for performance advertising?
Performance advertising should be used to promote the discoverability of new products. You can do this by targeting shoppers who have shown an interest in similar products or who have visited your website in the past.
Performance advertising should be used to drive incremental sales from your brand catalogue. You can do this by targeting shoppers who have already purchased from you in the past or who have shown an interest in your products.
Finally, performance advertising should be used to remarket to shoppers who have not yet converted. You can do this by targeting shoppers who have visited your website but have not made a purchase.
How do you know if performance-based marketing strategies are right for your business?
1. Your business has a digital presence
If you want to use performance-based marketing strategies, the first thing you need is a digital presence. That means having a website and online assets that your target market can patronize.
Your performance marketing strategy will revolve around your website and online assets. So, if you want to achieve desired results, they must be well-optimized.
Some of the things you need to do to optimize your website and online assets include:
- – Conducting keyword research,
- – Optimizing your website for search engines,
- – Creating high-quality content, and
- – Building backlinks.
2. You need quick, direct marketing results
Performance-based marketing can give you the quick, direct results that you need to reach your marketing goals. This type of marketing is focused on generating leads and sales, so you can see a return on your investment (ROI) more quickly.
However, there is an increased risk of “ad fraud” when using performance-based marketing strategies. This is because businesses are only paying for results, so there is an incentive for unscrupulous marketers to create fake leads or clicks. To protect your business, it’s important to work with a reputable performance-based marketing firm.
3. You have the technical expertise
To understand the technical aspects of performance marketing, you need to have marketing performance management skills. This includes being familiar with how to set up tracking, data feeds, online ads, and an affiliate program. Depending on your type of performance marketing, you might also need to know how to use other tools and platforms.
If you don’t have the necessary technical expertise, you might want to consider hiring a performance marketer or someone who specializes in your type of performance marketing. This will ensure that your performance marketing campaigns are set up correctly and run smoothly.
Case study: Performance advertising at Google
Performance advertising is a strategy designed to achieve specific and measurable financial results within a short amount of time. Performance advertising makes all of your channels work together and allows you to get the most out of your marketing budget.
Performance advertising is different from brand-based advertising which is aimed at building relationships between brands and their customers through building a recognizable brand image. Large brands, such as Coca-Cola or McDonald’s are usually applying this strategy. However, as it is hard to directly measure the success of such efforts, performance advertising cannot be used for these goals.
Google has been using performance-based advertising since the early days of AdWords. Our machine learning models make optimizing your campaigns easier by helping you with bidding and budgeting, all while giving you the transparency and controls to grow your business.
Further reading on performance advertising
Joel Rubinson’s GreenBook article, “ Framework for Managing Brand vs Performance Advertising ” provides a definition and overview of performance advertising. The article discusses the different stages of the product life cycle and how marketers should focus on performance advertising in each stage.
The article also discusses how a marketer would know when to shift money between brand and performance marketing.
Finally, the article discusses how a marketer would benefit from an ad guidance system that tracks performance in two areas: brand intender score (a composite measure of digital upstream behaviours and survey-based brand favorability measures) and return on advertising spend (ROAS) performance score.
The Future of Performance Marketing
Driven by cross-channel insights
Performance marketing reports are generated within the platform in which they are executed. This means that marketers have to be aware of how each platform works in order to generate the most accurate reports.
By referencing cross-channel data, performance marketers learn important lessons about their customer’s journey. For example, understanding how Facebook campaigns influence Google search behaviour is one way that performance marketers can optimize their campaigns.
Referencing search data to inspire display ad messages is another example of a lesson performance marketers learn by referencing cross-channel data.
Is one-way performance marketers can increase the impact of their marketing campaigns. This involves optimizing each channel for its specific strengths and weaknesses.
Provides insights into how consumers interact with different platforms and content. This helps performance marketers understand what type of content is most effective on each platform.
Helps performance marketers understand how data can be used to improve their marketing strategies. This includes understanding how to track and interpret data from multiple channels.
Performance Marketing in Display Will Popularize
As we move into the future, display advertising will be seen more and more as a performance marketing channel. This is because advertisers are starting to see better results when they focus on this type of digital marketing.
One popular trend that will continue to rise in popularity this year is contextual targeting. This is when ads are targeted to specific websites based on the content that is being displayed.
if you were selling dog food, your ad would be more likely to show up on a website about pets than on a website about cars.
This is where demand jumps display analytics come in. They use competitive data to uncover which websites will drive performance with display ads.
Display advertising is a type of digital marketing that comes in several forms and relies heavily on images, audio, video, and text to communicate its message.
While clickthrough rates in programmatic display advertising are relatively low, this does not mean that it is not an effective form of marketing. In fact, many people believe that it is one of the most efficient ways to reach a target audience.
There are two typical pricing models for CPC & CPM:
- – Cost per click (CPC): You pay each time someone clicks on your ad.
- – Cost per thousand impressions (CPM): You pay each time your ad is shown 1,000 times.
Search Marketing Will Become A Conversation
In the future, search marketing will become a conversation. This is because people are becoming more accustomed to talking to chatbots and digital assistants. As a result, they will expect the same level of service from businesses when they are searching for products or services online.
To keep up with this trend, businesses need to ensure that their search marketing campaigns are designed to be conversational. This means using natural language processing and machine learning to create ads that can engage in two-way conversations with consumers.
Chatbots designed to handle customer queries
Additionally, businesses need to make sure that their chatbots are designed to handle customer queries in a way that is helpful and satisfying. If a chatbot is unable to answer a question or does not provide a satisfactory response, it will reflect poorly on the business.
Future of search marketing
The future of search marketing is that it will become more sophisticated. This is because the technology that powers it is becoming more sophisticated. For example, Google’s RankBrain is a machine learning system that is used to help sort and rank search results.
As machine learning systems become more advanced, they will be able to better understand the intent of searchers and provide more relevant results. This will make search marketing more effective and allow businesses to better target their audiences.
The future of search marketing is that it will become more dynamic. This is because the landscape of the internet is constantly changing. New platforms, such as social media and mobile, are constantly emerging and gaining popularity. This means that businesses need to be agile and adapt their search marketing campaigns to these new platforms.
Finally, it will become more expensive.
This is because the competition for top positions in the search results is becoming more intense. As a result, businesses will need to invest more money in their search marketing campaigns to stay ahead of the competition.
Leveraging holistic attribution models
Marketing analytics have evolved to better quantify the value of marketing touch points than last-touch attribution allows.
Last-click attribution gives all the credit for a conversion to the last site or source a customer was on before arriving at your site. However, this attribution model doesn’t take into account all the other interactions and touchpoints a customer has had with your brand.
Without a platform like DemandJump that offers a holistic view of your buyer’s journey, you might be led astray by the last click-attribution.
A holistic attribution model takes into account all the interactions a customer has had with your brand, not just the last one. This gives you a more accurate picture of which marketing touchpoints are actually driving conversions.
With a holistic attribution model, you can see the full value of your marketing efforts and make more informed decisions about where to allocate your resources.