5 Benefits of Performance Marketing

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by Vanessa King on September 25, 2017 - 3 minute read

performance marketing

Most advertising campaigns have a goal attached to them such as increasing website traffic, getting leads, or growing conversions.

Performance marketing makes it easy for marketers to optimize campaigns for outcomes like these. Unlike traditional marketing, advertisers only pay for specific actions that contribute to their goals.

Including performance marketing in your overall advertising strategy is a smart move in today's digital world. Let’s break down the difference between traditional and performance marketing approaches and the five reasons marketers should consider using this format.

Performance marketing vs. traditional advertising

Many traditional advertising formats work by charging specific ad rates regardless of results. For example, when a marketer buys a print ad, they pay a bulk sum based on past readership. The cost of the placement is related to past averages instead of actual advertising performance.

On the other hand, performance marketing campaigns charge advertisers once a placement has delivered on results. This type of marketing is mostly reserved for digital campaigns that are easily measured. For example, a marketer running an ad campaign to increase web traffic would only pay for the clicks that brought users to the website.

Common types of performance marketing campaigns include cost per click (CPC) and cost per acquisition (CPA). These goals are set at the beginning of the campaign along with a target action cost.

Why performance marketing is so valuable

As advertising has gotten more advanced over the years, so have the performance tracking methods. The rise of digital marketing through display, email, and social media channels makes it easier for marketers to track and optimize for desired campaign results.

Here are five key benefits to consider that performance marketing provides over traditional approaches:

Better planning

Performance marketing campaigns are easy to budget for because marketers have to identify goals and an ideal cost per action at the beginning of planning.

This makes it easy to determine the proper budget for a campaign. For example, a $5,000 budget is appropriate if a marketer expects to pay $0.50 per click and has a goal of 10,000 website visits.

Another perk is that goals are prioritized throughout performance marketing campaigns. Meaning that ads are optimized according to the campaign's goal—whether it’s viewable impressions, clicks, leads, or whatever else.

Pay for results

The most obvious benefit of performance marketing campaigns is being able to pay for results without undefined overhead. This is especially key for lower-funnel campaigns that are driven by specific conversion metrics.

In performance marketing, it’s important that marketers set a goal and stick with it. Media campaigns that optimize for conversions and then switch to clicks might underperform in both categories.

It’s worth noting that some performance marketing channels might charge more than what marketers set as a target cost. For example, if a marketer provides a $5 cost-per-conversion for an email sign-up but has a very low conversion rate or a super defined audience, the platform will likely raise the costs to meet demand for the impressions it took to get the conversion.

Track performance

Since performance marketing is overwhelmingly digital, marketers benefit from near-instant results and insight into performance. This includes the spend and number of impressions, clicks, and conversions.

With these metrics, marketers can track performance throughout a campaign to determine return on investment. If a campaign isn’t meeting expectations, it can be paused and the budget can be moved elsewhere.

Pivot in real time

Most platforms break down performance by individual advertisement. Knowing how each creative performs with a target audience is a huge asset, allowing marketers to adapt and react to feedback throughout the campaign.

If an ad with a certain headline delivers a higher click-through rate than others, smart marketers will use that headline with other media to see if the conversion rate can be further optimized. Reacting to this performance over the life of a campaign can lead to more positive results within the original campaign budget.

Discover new formats

Performance marketing can be done through single placement channels such as Twitter, but marketers can also partner with performance marketing networks to expand their reach. These networks offer unique ad opportunities, which can provide new insights into valuable placements based on audiences.

Performance marketing networks are especially helpful for marketers targeting hard-to-reach audiences like developers, which avoid display ads and can be hard to find on social media. Rollbar for example, earned two times the amount of clicks among developer audiences through a native performance campaign.

Performance marketing for your brand

Marketers looking to level-up advertising efforts and boost results should be intrigued by performance marketing and all it has to offer. Unlike traditional methods, performance marketing gives advertisers the opportunity to plan better, pay only for results, track performance, react to feedback, and discover new placement opportunities.

With all of these perks, it’s no surprise that performance marketing is becoming the new standard for advertising.