Performance Marketing

The term Performance Marketing describes the use of online marketing tools with the intention of achieving a measurable result or a transaction of the user. The term is made up of the two designations Performance and Marketing.

Performance is directly related to the method of rewarding this marketing. The remuneration takes place exclusively on a performance basis and is based on success-based marketing models. These include pay-per-click, pay-per-sale and pay-per-lead. These models are particularly limited by billing methods based on a reach. In particular, these methods compete with the commonly used TCP (thousand contact price).

From a marketing perspective, performance marketing is unambiguously attributable to direct marketing. It belongs to the group of below-the-line communication and needs to be treated accordingly. In principle, performance marketing represents an equivalent modification of direct marketing related to interactive media. Furthermore, it is an integral part of the Mediamix and should be used by companies with the goal of customer acquisition and customer loyalty.

Features of performance marketing

Each performance marketing is characterized by the following features:

  • Measurability
  • Optimization
  • Modularity and networking.

The measurability is particularly important in performance marking. Using various tools and additional programs, all reactions of the target group are clearly recorded and observed continuously. Of particular interest here are reactions which represent an economic value for the company. This can be for example the purchase of a product, subscribing to a newsletter or similar actions. Only when all the user behavior can be observed during the stay at the company’s website, the performance marketing is possible.

Furthermore, every performance marketing is characterized by the fact that it can be completely optimized. The various parameters of the marketing activities must remain adaptable at any time. The efficiency of the campaigns can be influenced even during the runtime by a constant adaptation and optimization of displayed texts, the design of the advertising material, the environments, the clicks and much more and be thereby improved.

For the management of the marketing department it is essential to build the performance marketing modularly. The campaigns are subdivided into many small budget modules, each of which can be individually assessed and analyzed, in order to make a sound decision about whether the investment in the module is financially worthwhile for the company. This basic structure is an important step to ensure the tunability of the campaign. A direct comparison of the individual modules can provide information about which modules are particularly lucrative and which have a lower efficiency in a direct comparison.

Ultimately, a performance marketing is fully networked with other elements of marketing. For example, there is an intensive interaction between the popularity of the advertising platform and the respective click-through rate. This form of marketing is not only heavily dependent on major interaction elements, but also fits perfectly as a separate element of interaction in many campaigns. Accordingly, the performance marketing can be integrated into virtually any classic marketing campaign.

The instruments of the performance marketing:

In order to achieve the above-mentioned goals, performance marketing uses the following important tools:

Example of a performance campaign

A typical performance campaign starts with the company’s website. As an integral part of online marketing, the company’s website shall be brought to a current status. Clarity, responsiveness and especially monitorability must be ensured at the site, so that the main conditions for a successful performance campaign are given.

After optimizing the design and functionality of the website, the next step is the search engine optimization. Within the framework of this, the website is optimized for the search in search engines on the one hand in the source code (on-page optimization) and on the other hand in the general presence on the Internet (off-page optimization), to achieve the best possible ranking in the major search engines.

Only then can the advanced instruments of performance marking be used. The so-called “Influencer Marketing” is becoming increasingly important in today’s world. It tries to convince influential users of social media to make advertising for their own company and their own website.

Affiliate marketing uses different billing models CPC, CPL and CPO. While the cost-per-click billing model used to be primarily used, one nowadays usually goes to cost-per-lead. Here, the costs arise only with so-called leads. While the company has to pay the cost-per-click for each call to the website via the marketing partner, the cost-per-lead billing method is only charged when a customer actually contacts the company and wants a consultation These contacts, so-called leads, are particularly advantageous in the case of complex products or services which are not purchased or booked thoughtless. Accordingly, when selling simple goods, it is best to settle for orders (purchases) and for complex products for leads (contact recordings).

The conclusion of a performance marketing represents a comprehensive analysis and evaluation of advertising materials and results of the campaign used in each case. Thus, important information for the future can be obtained, so that future campaigns can take place more effectively. It also provides an overview of the costs at which positive results can be achieved.

Why an agency makes sense?

The online marketing and, accordingly, performance marketing is a separate market which is constantly changing. Since this form of marketing takes place exclusively on the Internet, it is subject to every major trend and any major change.

The effectiveness of individual instruments and advertising platforms is highly variable and changes from day to day. The methods of search engine optimization alone must be constantly revised, since the operation of search engines is continuously changing. Accordingly, not only a huge know-how is needed to plan and carry out a performance marketing campaign efficiently, but this knowledge must be constantly updated and questioned. This big task usually can not be done by a marketing department of a company that is not fully specialized in online marketing.

Especially in the novel Influencer Marketing , a profound knowledge of the market and its operation is required to make an advertising campaign effectively. An ad agency that works for a particular company does not necessarily have to work for another company. Here, an agency can usually help. It can usually name advertising-relevant well-known influencers or, on behalf of the company, look for a lucrative and less competitive Influencer.