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What is Performance Marketing?
Performance Marketing is a highly effective digital marketing method that focuses on achieving specific results that can be measured and evaluated. It is a data-driven marketing strategy.
Unlike traditional advertising methods, which charge upfront, Performance Marketing only charges when a desired action is achieved (e.g. click, sale, sign-up).
This is perhaps one of the most significant advantages of performance marketing, especially for smaller companies that cannot afford to spend large amounts on advertising like larger companies. Now, the marketing manager decides on actions based on the data available to them and spends only what is necessary to achieve the desired results.
How does Performance Marketing work?
1.Setting campaign goals
To implement performance marketing campaigns, you need to define clear and measurable goals.
Indicative Performance Marketing Objectives
Some of the most common measurable objectives (key performance indicators) are the following:
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Increase in ROI (Return on Investment)
That is, the number of sales or transactions relative to the amount spent on an advertising campaign.
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Increase in total revenue
That is, the increase in the total number of sales or transactions.
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Decrease in Cost per Acquisition (CPA)
That is, the reduction of costs for the acquisition of each new customer.
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Increase in Click-Through Rate (CTR)
That is, the increase in the percentage of people who click on the ad in relation to the total number of views.
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Increased participation in contests and promotional activities
That is, the increase in the number of people participating in promotions or contests and consequently the increase in brand awareness.
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Decrease in Bounce Rate
That is, the reduction of the percentage of people who visit the company's website or eshop and leave without taking any action.
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Increase in Customer Lifetime Value (CLTV)
That is, increasing the total value of the customer to the business through increased sales.
2. Choice of distribution channels
A performance marketer is not limited to a single channel! Using different channels allows for greater exposure and a better chance of success. Of course, this does not mean that you should overdo it.
Carefully choose the digital marketing channels that meet your goals and the audience you are targeting. Consider social media platforms, affiliate marketing, native advertising or content marketing. This way, you can get your message across to a wider audience and achieve your goals faster.
3. Campaign Creation
At this stage the campaign is created to promote the product or service.
In creating the campaign, the performance of the previous campaigns, the given metrics and the best practices in the field of performance marketing should be taken into account. Next, ad messages, images, videos, and landing pages must be created that will engage the audience and help achieve the campaign's goals.
Advertising messages should be short and clear, with a clear and well-defined objective. Images and videos should be attractive and engaging, while landing pages should be based on the user experience and have a well-defined and prominent call to action. The purpose is to make the product or service accessible and attractive to customers, as well as to improve the experience of visitors to the website.
4. Campaign monitoring and evaluation
Measure the effectiveness of your campaign. This stage is important as only then you will be able to make changes that will improve performance and bring better results in the future.
5. Campaign optimization
The purpose is the development towards the best performance. After analyzing the data you have from the campaign so far, you need to make changes. These may include: changing content, either in the text or in the visual part, but also changing objectives.
The evolution of Performance Marketing in the future
Performance Marketing has evolved a lot in recent years and with the digital transformation taking place in more and more businesses, it is expected to see further growth in the coming years. Performance marketers are already informed about the trends that exist and will dominate in the future, so that they are prepared to meet the demands of the market.
More specifically, the top trends for the future of performance marketing are:
The Evolving Role of Artificial Intelligence (AI) and Machine Learning (ML)
The use of AI and ML will continue to grow in the field of Performance Marketing, enabling process automation, campaign optimization and real-time strategy adjustment. This will lead to even more effective and personalized marketing campaigns.
Omnichannel integration
Performance Marketing will increasingly integrate various communication channels, such as social media, email, video and more, in order to provide a complete experience to consumers and increase the effectiveness of campaigns.
Data Protection and GDPR
As GDPR legislation becomes increasingly stringent, Performance Marketing should focus on ensuring consumer data protection, increasing transparency and trust.
Development of Influencer Marketing
Working with influencers will play an increasingly important role in Performance Marketing as businesses look for new ways to attract and engage their audiences. Influencers can help build trust while driving campaign performance.
Innovation in Analytics measurement
In the future, data analysis and understanding the effectiveness of Performance Marketing campaigns will become even more advanced. GA4 is already here to bring a large advancement in data. Businesses will use new tools and methodologies to measure and improve their performance, ultimately offering a more integrated and effective strategy.
To conclude
Performance Marketing is a powerful and effective tool for businesses looking to increase their customer base and sales. As digital marketing continues to evolve, Performance Marketing will deliver even more effective and personalized solutions for businesses, becoming a key factor in business success in the digital landscape.
If you're a business looking to tap into the power of Performance Marketing, get in touch with us and we'll help you take advantage of the potential that is out there. The road to the success of your performance marketing campaign goes through WIZARD.
