You may have heard the term ‘performance marketing’ being thrown around over the past couple of years. What is it exactly?
Well, it’s marketing based on performance. Duh.
It’s basically the scientific method, but for digital advertising.
Success in performance marketing is purely measured by a tangible result, often one with a direct contribution to the bottom line. Purchases, leads, subscriptions, downloads. Essentially, it draws a direct line between an ad and one of the desired actions (or conversions) we just mentioned.
So an advertiser can see exactly what led to the conversion, and exactly how much it cost. This way, they can calculate a fairly accurate ROI on performance marketing. This is one of the main reasons for its popularity. It allows marketers to show off their success with stone-cold numbers instead of vague statistics.
Just like we did when we discussed the way we brought one of our client’s Facebook Ads ROI up by 3,300% in a month and a half.
If you didn’t click that link, you might want to. We spilled the beans on the exact method we used to reach that astronomical number. I suggest bookmarking it for later at the very least.
So, why doesn’t everybody use it?
The issue is that not every marketing effort can be tracked so neatly. Let’s say your goal is to sell more packets of cookies at supermarkets. You’re obviously running lots of ads about those cookies and the brand they’re part of. Unfortunately, you can’t draw that line between the ads and the desired action (cookies purchased from the supermarket) so clearly because the purchase isn’t a digital one.
With that said, the meteoric rise of eCommerce solutions introduced to the market over the past year has changed things. People buy things online that they never used to in the past. Such as cookies.
And spending online overall has never been higher.
How can you get in on the performance marketing action?
If your business is reliant on purchases that are completed online, then congratulations, you’re ready to go.
Well, not really. But it does help.
The next step is to make sure your technical setup is watertight. Every time someone performs a desired action (purchase, form submission, subscription, download), you need to know where that purchase is coming from. Without that information, you’re pretty much toast when it comes to performance marketing.
The process of creating that technical setup is normally a bit of a lengthy process, and depends on a number of factors. So if you don’t have it, and want to get into performance marketing in 2022, you’d better get started yesterday.
Alright, I’m all set up. Now what?
You could just start running some ads at this point and see the numbers trickle in. You’ll likely see some conversions, run your report at the end of the month, and show it to your boss. You might even be able to calculate your ROI!
High fives all around. Right?
Here’s where I channel my inner Max Lord.
First of all, are you looking at all the right numbers? If you’re running ads promoting high-value purchases, like consumer electronics, ROI is a pretty good metric. That is, if all you’re doing is running basic ads and running a monthly report. But what about at ad level? How do you know which ads are actually performing well vs others?
This is where metrics like click-through-rate, cost-per-view, bounce rate, conversion rate, cost-per-lead, and an endless amount of other metrics come into play. These can help you identify which of your ads are actually bringing home the bacon.
More on KPIs and goals here.
Remember when this article was about planning?
Neither do I, but this is where planning becomes important.
For performance marketing to work, you need to constantly be interpreting marketing metrics like the ones we just mentioned into tangible learnings that you can trust.
For example, you want to know whether still images or video work better for your audience. Maybe YouTube delivers better results than Facebook Video using the same video. Or a particular tone of voice generates a higher click-through-rate, even if the visual remains the same.
All these questions can be answered. And the more you have of these learnings, the more efficient your advertising can be, and the higher your ROI will be at the end of the month.
But getting all this done requires a proper test calendar.
Each time you communicate, you’ll want to be testing out a theory. This means manipulating your overall communication calendar into a system that improves itself. With each test, your content gets better, your budget distribution gets better, and your knowledge of your audience’s tendencies gets better.
A few extra suggestions
Get a head start
Running this method of advertising requires plenty of thought, content creation, boss approvals, budget proposals, ad spend plans, etc. And we all know that getting things like that together can take weeks, if not months. Especially if your technical setup isn’t up to the task and needs work.
So start building your performance marketing plan as early as possible.
Manage expectations
This sort of process doesn’t always show results instantly, and requires plenty of buy-in from both a time and financial perspective. But, if executed correctly, the knowledge generated from the tests can make future marketing communications a lot easier to generate, and a lot more efficient.
Never stop testing
If after the first few weeks of this method you start to see that cost per conversion metric shrinking and your ROI skyrocketing, take a minute to congratulate yourself.
Good job, buddy.
Now, go back to testing.
The thing is, what is true today is likely going to change in a few months. Human behaviour shifts quicker than Vin Diesel in a muscle car. So those learnings that you used to build your great ROI need to be retested regularly. If all this sounds great, but a little daunting, get in touch with us and let us know how we can help tell your story.
