Why we care about performance marketing – MarTech

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Performance marketing refers to a variety of online advertising programs where parties are paid when a specific action  is completed. It’s often associated with pay-per-click (PPC) models on search engines (where advertisers pay for clicks versus impressions). However, it isn’t limited to that, encompassing any marketing approach that’s tied to a specific action. 
In addition to the traditional affiliate relationships with publishers, performance marketing opportunities now include influencers on social media, e-commerce-focused web destinations and creators all across the digital landscape. Tech platforms help broker these relationships by setting and measuring specific goals and compensation that help deliver results from the third-party publisher, creator or influencer back to the brand.
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It can be a powerful tool for marketers since it allows you to track and optimize campaigns in real-time based on measurable actions. It can help with the ROI of your marketing budget by providing data and insight about how, when, and where to allocate your spend. 
Even so, performance marketing remains vulnerable to fraud from bots and other malicious actors. Marketers need to be vigilant and skeptical about the data they’re seeing to avoid paying for actions that aren’t real. 
There are many tools and software solutions that facilitate the planning, launch, tracking and optimization of performance marketing campaigns. These tools range from simple website tracking tools to more sophisticated platforms that offer a complete suite of performance marketing capabilities. In this post we’ll cover:
Estimated reading time: 10 minutes
Performance marketing is any online marketing activity that can be tracked and attributed to a specific action or result. 
It encompasses any digital marketing tactic that can be tied to a measurable action – influencer, video, affiliate, search, and content marketing are all fair game in the performance marketing ecosystem.
There are three main types of performance marketing payment models:
There are also hybrid performance marketing models that encompass multiple payment types. For example, an advertiser might pay a lead generation fee plus a percent of sale commission to their performance marketing partner.
It’s important to note that performance-based marketing tactics like paid search, where advertisers only pay when a user clicks on an ad, is not performance marketing. While PPC/CPC campaigns focus on an action (the ad click), they don’t necessarily lead to a performance-based outcome like a sale or sign-up. 
Performance marketing opportunities have opened up beyond traditional affiliate relationships with publishers to include influencers on social media, e-commerce focused web destinations and creators all across the digital landscape.
Tech platforms help broker these relationships by setting and measuring specific goals and compensation that help deliver results from the third-party publisher, creator or influencer back to the brand.
It’s impossible to talk about digital advertising (the machine that drives performance marketing) without addressing the $68 billion dollar elephant in the room—ad fraud.
 Globally, digital ad fraud will cost companies nearly $70 billion this year, with $23 billion lost by U.S. companies alone. That will amount to about $100 million per day by 2024.
A (short) list of why ad fraud happens:
Since performance marketing campaigns look at actions (sales, conversions, leads) rather than superficial metrics (views, clicks, impressions) it’s theoretically a better approach.
Even so, the scale of click fraud is so massive it inevitably impacts the amount you’ll pay for your desired action. The cost of digital ads is increasing – up 11% in the first quarter of 2022 versus the previous year with no noticeable improvement in performance.
That makes it more expensive for your affiliates and partners to buy digital ads and increases the cost per action (CPA) for you.
Another issue: while faking sales is difficult, faking certain actions isn’t, particularly on mobile devices. Bots can simulate real user downloads and app installs, click on links and fake in-app events.
The best way to ensure that your performance marketing campaign is, in fact, performing is to monitor the quality (and validity) of the actions you’re paying for.  For example, you can use a lead verification tool like LetsVerify to ensure that the leads you’re paying for are real people who have been contacted and are interested in what you’re selling.
Read next: Gannett ad mishap highlights concerns about programmatic advertising
It’s also worthwhile to monitor your CPA along with lead quality and/or sales volume. If your CPA is going up (or suddenly spikes), this can be a sign that you’re being targeted by fraudsters.
Performance marketing is a very specific and data-driven — and digital — approach to generating results, so it tends to fall within the purview of digital marketing teams. 
That said, regardless of where performance marketing sits within an organization’s marketing ecosystem, many people/departments use its tools and strategies.
Here are some ways different groups use performance marketing technologies:
Tech tools in the performance marketing space span from tracking and attribution to influencer and affiliate management. They also include features for identifying and reaching out to influencers, publishers, and partners.
The types of performance marketing tools include:
There’s a lot of crossover with features and functionality among these types of tools. So it’s important to choose a performance marketing platform that offers features specific to your needs and easily integrates with your tech stack.
Performance marketing can be a very effective way for marketers to drive results and grow their business. Instead of paying upfront for advertising programs and inventory that may not produce results, performance-based campaigns are a low-risk way to test and measure what’s working (and what’s not.) 
In addition, performance marketing allows you to effectively allocate your marketing budget by only paying for results. This can help stretch the marketing budget further and ensure that every dollar is working as hard as possible to drive ROI. 
Key benefits include:
There are several digital marketing trends converging right now that are impacting the efficiency and ROI of standard CPM and CPC/PPC-based digital marketing programs. 
Performance marketing, which focuses on quality over quantity, enables marketers to develop unique campaigns on emerging digital channels which tend to resonate more with digital audiences. Since they’re tied to actual results (e.g., sales, revenue and leads), they also deliver a higher ROI. 
These campaigns can also garner a wide reach in terms of impressions, clicks, and views since performance marketing partners use a variety of tactics, including reaching out to their existing networks. 
As a result, performance marketing is poised to continue growing in popularity among marketers looking to drive real results from their digital marketing programs. 
Want to learn more about performance marketing’s capabilities and applications across the digital landscape? Here are some resources to help you improve your practices:
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