What is Performance Marketing and How Does it Work?
Performance marketing is a promotion strategy that aims to achieve measurable financial results (KPI) in a short time. This is an approach that should be mastered by anyone who wants to avoid wasteful spending and determine the most effective areas of their budget. Performance marketing differs from other approaches in that it does not work with abstract metrics, but is focused on specific sales. It is especially useful during periods of declining profits and crises. In addition, this approach is effective when there is already demand from your audience.
Performance marketing requires significant investment. It is justified for companies that have a marketing budget of 200 thousand rubles per month or more. However, even if your budget is limited, you can use the basic principles of performance marketing. Track the costs of each advertising channel. If the effectiveness of one tool decreases, redistribute funds to more effective areas.
Features of Performance Marketing:
Measurability of the effectiveness of the channels used.
Evaluate business metrics such as cost per acquisition (CPA) and return on investment (ROI).
The ability to influence indicators and adjust strategy in real time.
Synchronization of various marketing tools such as SEO, SMM, email marketing and media advertising to achieve maximum results.
Performance marketing campaigns are measured and tracked using referral links, coupon codes, and individual phone numbers. This approach requires setup and testing, as well as developing an effective strategy and using a user-friendly and fast platform. However, all the effort pays off with a high return on investment (ROI) and the ability to easily determine the success of a campaign.
How to Use Performance Marketing Effectively?
To understand the work of performance marketing, it is important to understand its main components. One of the key components is deep data analytics. At the initial stage, it is necessary to analyze the company's business indicators, study competitors and the market, and consider the advantages and disadvantages of goods or services. It is also important to study the target audience, top queries in the selected niche, the semantic core and the effectiveness of all traffic sources. Deep analytics should be present at every stage of work, since it allows you to control the effectiveness of advertising costs.
Another important step is setting goals. Defining a specific, measurable and time-bound goal is the starting point for developing a campaign. The goal determines the strategy, implementation timeframe, budget and choice of advertising tools.
Next comes the development of a comprehensive strategy, including the selection of the most effective advertising tools and channels in accordance with the set goals. Regular audit allows you to adjust effective techniques and replace unprofitable tools with new ones with predictable results.
An important aspect of working with Performance Marketing is managing advertising channels. It is necessary not only to track the number of requests, but also to determine to what extent these requests are related to specific advertising channels and to what extent they are of high quality. End-to-end analytics allows you to identify the budget spent on channel development and the income received by the company. Efficiency analysis helps track the path of consumers through the sales funnel, determine the average check for each channel and profitability for the reporting period.
Performance marketing uses various tools, such as contextual advertising, targeted advertising in social media, marketplaces, email marketing, native advertising, mobile marketing, remarketing and affiliate programs. All these tools work together to achieve the main goals of the business.
Using Performance Marketing allows you to effectively increase the volume of applications for your business by analyzing data, setting specific goals, building a comprehensive strategy and managing advertising channels. Selecting the best advertising tools and constant analytics will help you achieve success in your marketing activities and improve the performance of your business.
An example of performance marketing at work.
Let's say your company is a website development company and you want to increase your sales by driving more targeted traffic to your site.
Stage 1. Depending on the specifics of your business, we select and coordinate media tools and platforms that potential clients visit.
Stage 2. Using contextual and targeted advertising in social networks, we attract visitors to your site, and they return through regular advertising channels, which leads to an increase in the number of applications. The previously attracted audience also returns to the site for branded SEO queries. In addition, visitors actively subscribe to email newsletters. With the help of email newsletters, we increase their loyalty and increase sales.
Step 3: We use dynamic retargeting and offer promotions to those users who have already left your site.
Stage 4. We focus on repeat sales. Once attracted users can become regular customers, and we motivate them to make repeat orders using push notifications, social media targeting, and trigger emails. We combine all advertising tools into a single system and build interaction with users to improve conversion.
Thus, using effective marketing allows you to increase the volume of applications for your business by attracting targeted traffic to your website and retaining visitors, which ultimately helps in increasing sales and growing your business.
5 Metrics for Assessing Performance Marketing Effectiveness
Unique visitors
One of the key performance indicators for performance marketing is the number of unique visitors that visit your platform or website. Unique visitors indicate how successful your marketing efforts are in attracting new audiences. This metric can be measured using analytics tools and compared to previous periods or to your competitors.
Qualified Leads
An important performance marketing metric is the number of qualified leads generated by your marketing campaigns. Qualified leads are potential customers who have shown interest in your products or services and who match your target audience. This metric helps you evaluate the effectiveness of your customer acquisition and conversion strategies.
SQL (Sales Qualified Leads)
SQL are qualified leads that are ready to make a deal and collaborate with your company. They have passed certain stages of the sales funnel and are at the stage of being ready to make a purchase decision. This metric helps measure the effectiveness of your marketing strategy in attracting quality potential customers, who are then followed by the sales department.
Closing Rate
The deal closing rate is a metric that reflects the success of your business and the ability to convert leads into real deals. It is calculated taking into account various factors, such as lead qualification, offer quality, company reputation, and competitive pricing policy. A high deal closing rate indicates the attractiveness of your offer to customers and the skills of your sales team in effective selling.
MRR (Managed Recurring Revenue)
MRR is a recurring revenue that can be attributed to an average monthly value. It includes several factors, such as new MRR (additional revenue from new customers), expanded MRR (additional revenue from existing customers, such as upgrading to a higher plan), and lost MRR (revenue lost due to customer churn). This metric helps you assess the stability and growth of your business.
Analyzing these metrics allows you to evaluate the effectiveness of your performance marketing efforts and take steps to improve results. Regular monitoring and analysis will help you optimize your marketing strategy and increase the volume of applications for your business.
Modern trends
With the development of technology, the range of opportunities for influencing potential consumers is expanding. Future communication with customers will directly depend on innovative proposals. New ways of delivering information to users will probably appear in the near future, complementing existing channels.
Today the main ones are:
- Voice search.
- Integrated products in social networks.
- Video marketing.
- VR and AR.
- Interactive content.
- Chatbots and messengers.
- Artificial intelligence, automation of advertising purchases.
- Personalized marketing.
- Influencers.
- Geomarketing.
- UGC content.
- Loading acceleration: PWA, AMP, Turbo.
Advantages
However, no one suggests using all existing technologies simultaneously. Such an approach will not be justified in terms of efficient budget spending and optimal impact on the target audience. It is important to choose the most effective channels in order to achieve the set promotion goals with minimal costs.
Any enterprise faces the task of increasing sales and making a profit. To do this, marketing plays a role in preparing potential customers to make a purchase. It informs about a product or service, convinces of the need to purchase and thus prepares the ground for the activities of the company's sales structures. The advantage of performance marketing is its focus on specific actions of future buyers and the corresponding simplification of the work of the sales department.
It is important to track the effectiveness of promotional activities at each stage of the funnel in order to promptly adjust and correct problematic issues that may lead to difficulties in sales. Performance marketing successfully copes with this task better than other promotion strategies, since it allows you to track accurate indicators of key promotion metrics.
Tools
Important performance marketing tools are SEO and contextual advertising. They effectively convey information to the target audience, but there are also many other technologies that need to be taken into account.
Mobile marketing is becoming increasingly popular as more people use smartphones to access information and shop. It is important to make your website mobile-friendly to avoid missing out on potential customers.
Email marketing is still an effective promotion tool that allows you to send targeted offers to customers and analyze their response to emails, the number of clicks, conversions, and sales. New features, such as triggered mailings, allow you not to miss potential buyers who have shown interest in a product or service.
Native advertising requires skill and tact, but it allows you to organically integrate product information into the content without causing rejection among users.
Social media marketing has become an integral part of many companies' marketing strategies. It allows not only to disseminate information to the target audience, but also to interact with customers, respond to reviews, receive feedback, and improve the product.
Remarketing allows you to give a second chance to website visitors who left without making a purchase. Retargeting technologies allow you to show ads to these users on other platforms.
Listing your items on marketplaces and trading platforms can generate a significant share of sales.
Using a variety of tools and channels in combination with performance marketing, you can achieve high promotion efficiency. It allows you to determine the most effective communication methods and focus on the most profitable ones, which helps use the advertising budget to increase sales and achieve success.
Conclusion
Performance marketing is an effective tool for increasing sales and generating profits. It is focused on specific actions of potential customers, which simplifies the work of the company's sales structures. By tracking key promotion metrics at each stage of the funnel, you can promptly adjust and improve promotion activities. Various tools, such as SEO, contextual advertising, mobile marketing, e-mail marketing, native advertising, social networks, remarketing and marketplaces, help achieve high promotion efficiency and increase the volume of applications for business. Performance marketing makes advertising more profitable, allows you to make forecasts for the future and successfully develop your business.
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