While traditional marketing practices such as advertising on TV, print, radio, and promotional banners on websites and social media are still very much in play, performance marketing is fast becoming a common online business marketing strategy for many businesses, including brick-and-mortar establishments, online retailers, and e-commerce enterprises.
Performance marketing is proving to be effective that major retailers in the US are spending so much on it. In a list of affiliate marketing statistics compiled in 2017, major US brands are expected to shell out $6.8 billions by 2020.
With performance marketing, the focus shifts from what pro marketers call as vanity metrics. Sites and pages with large numbers of views, clicks, and subscribers may seem impressive. But performance marketing software focuses on performance metrics like conversions and actual sales, which far tell a deeper story; a story that helps you understand what empowers people to perform your desired actions and buy whatever you are selling.
The thing with traditional marketing strategies is that you pay publishers/affiliates (like TV networks, radio stations, bloggers, and websites) upfront and hope that their subscriber base, extensive reach, influence, and brand drive enormous online traffic to your online business. You expect that the traffic you get converts into sales.
While it does work in most cases, it is certainly not 100% effective. A number of advertisers have lost substantial money in traditional advertising campaigns. In this modern age, your online business marketing plan should be based on what sells and what saves you money. Performance marketing helps you achieve just that.
With performance marketing, you don’t pay your publishers money upfront. Instead, they get a commission whenever a specific action is completed, such as an online purchase, subscription, or app installation. No money lost from your end.
Identify High-Performing Strategies
Performance marketing tools help you gauge the effectiveness of your marketing strategies and measure your ROI in real-time. This helps identify your most effective campaigns as well as non-performing efforts. It allows you to gain valuable insights and use them to fuel your future online business marketing campaigns.
Another upside is that you recognize publishers that bring revenue to your business as well as publishers that make little to no contribution. It helps you become more discerning with your publishers and choose those that add value to your business.
Rakuten commissioned a global survey on influencer marketing this year and discovered that of 3,600 consumers from all over the world, 80% said that they purchased a product upon the recommendation of the influencer. This shows how influencers can be effective promoters of your product. However, not all influencers are able to convert their followers into your customers. Again, be discerning.
Performance marketing software helps you discover potential revenue streams that can further boost your sales.
For instance, the bulk of your revenue comes mostly from mobile ads, social media ads, and email marketing automation campaigns. Then an affiliate who also happens to be a YouTuber promotes your product in his video, sparking interest among his subscribers and generating a few sales. Soon after, you subsequently included YouTube as part of your online marketing strategies.
Adding revenue streams can be quite tricky but with a performance marketing software, you are able to spot sources and channels that have the potential to bring in revenue for your business.
Optimize Your Marketing Budget
While it is a clear indication that marketing spend will increase, it is imperative that your marketing expenses translate to your target or a positive ROI. As performance marketing software provides you with a detailed and thorough measurement of your most effective campaigns and gives you a list of publishers that generate huge returns, you are able to optimize your marketing spending.
You ditch marketing materials, ads, content, and tools for web marketers that performed poorly in the past and refrain from engaging with publishers who failed to meet your expectations. Instead, you spend your money on campaigns that yielded the biggest rewards and use your high-performing publishers to guarantee impressive revenue.
4. Monitor Marketing Performance in Real-Time
Performance marketing software lets you track the performance of your marketing campaigns in real-time. This helps you understand the motivations of your target audience and discover the triggers that compel or empower them to complete your specific actions.
On top of that, you can quickly spot underperforming campaigns and quickly identify the factors that lead to its poor performance. You can either make the necessary adjustments to ensure success or do a 180-degree pivot and abort the campaign to prevent further losses.
Making crucial business decisions on the fly can be disastrous if you are doing so blindly. Fortunately, performance marketing solutions supply you with reliable information, allowing you to make strategic responses and reactions based on real-time data.
Extend Your Reach To A New Audience
Conventional marketing wisdom dictates that it’s better and more productive if you market your product to people who can relate and are very likely to purchase it. That said, it wouldn’t hurt if your products, services, and brand are introduced to people who are well outside your normal circle of target consumers. Especially if you are not spending money on it.
When you have a good product and a highly effective marketing content, your publishers and affiliates will promote your product (and your business) to their subscribers, readers, visitors, and email lists. Commission for every successful sale will be their motivation, empowering them to be creative and compelling with their promotion and generating sales for your product.
Bear in mind that these are people you don’t have access to and probably not the consumers you are targeting. But you are not lifting any finger or spending thousands of dollars on marketing. Your affiliates are doing the promotions for you and they only get paid after a successful sale. Definitely a big win for your business.
Is Performance Marketing For You?
Performance marketing undeniably brings a lot of benefits to any business type. Almost every advertiser can capitalize and make huge gains from performance marketing. From companies that sell electronics to fashion retailers that peddle the latest trends and even travel agencies that offer Europe tour packages, performance marketing can definitely give nearly every business an edge.
The keyword here is “nearly.” Performance marketing requires investment and commitment.
It works best for businesses that are already established in their respective industries and are selling to a national audience. Affiliates tend to work with advertisers that are already active online for at least a year, have a shopping cart, return/refund policy, and guarantee. If your online business is lacking in the aforementioned departments, you will find it hard to start a performance program.
The Performance Marketing Association (PMA) has created a set of criteria for performance marketing readiness. It is designed to help online businesses gauge if they are indeed ready to take their marketing strategies to the next level. Be sure to check it out.