Performance Marketing

What is performance marketing?

In online marketing, performance marketing refers to a strategy in which marketing measures lead to measurable results. Performance marketing is used in the acquisition and retention of new customers and clients.
Reactions in performance marketing can be, for example:

• Clicks on advertising banners,
• the registration to a newsletter
• the purchase of a product in an online store

Performance marketing success is measured by means of web controlling. This can be done via the company’s own web analysis tool and/or via statistics from the provider with whom the measures were carried out.

Why should you use performance marketing?

• Measurable results: Unlike other marketing strategies, performance marketing offers the ability to measure the success of a campaign based on measurable results such as clicks, conversions or sales. This allows the ROI (return on investment) of the campaign to be accurately determined and optimized.
• Targeted approach: Performance marketing enables companies to address potential customers in a targeted manner and provide them with relevant offers. By analyzing data and using tools such as retargeting, campaigns can be tailored to the needs and interests of the target group.
• Flexibility: Performance marketing campaigns are often more flexible than traditional marketing campaigns because they can respond quickly to changes in the market and customer landscape. If a campaign is not performing as desired, changes can be made quickly to improve results.
• Cost efficiency: because performance marketing campaigns are based on measurable results, advertisers can better control and optimize costs. Companies can target campaign budget and focus on channels and tactics that deliver the desired results.

Overall, performance marketing offers a data-driven, targeted, and cost-effective way to target customers and measure and optimize the success of marketing campaigns.

How does performance marketing work?

In digital marketing, performance marketing is particularly interesting for advertisers because the advertising measures can be evaluated on the basis of key figures. This ensures the highest possible efficiency of the individual advertising measures, which can be optimized if necessary. 4 steps form the basis of performance marketing:

1. Formulate marketing goals
2. Select suitable marketing tools
3. Monitor campaigns
4. Optimize measures if necessary

Achieving general marketing goals, attracting new customers, improving customer loyalty, reaching a new target group segment or increasing the conversion rate – you can set a variety of goals with this marketing strategy. The only important thing is that your goals must be measurable. Next, you select the appropriate tools to achieve these goals. After the individual advertising measures have been launched with the help of various marketing instruments, the monitoring phase begins. Based on set goals and determined KPI’s, the implemented measures are continuously monitored. Tools such as Google Analytics or the Google Search Console give you an initial overview of your successes during the live phase. If you have started a campaign in the social networks, they offer you a range of evaluation options for your campaign. The close observation of all measures leads you to the final step: optimization. If, for example, a particular advertising campaign does not achieve the desired impressions, you can end it after a short time, optimize it and replace it with a revised campaign.

What are the channels in performance marketing?

Especially in online marketing, you have a wide range of different marketing channels at your disposal. This allows you to carry out several campaigns and advertising measures at the same time. For your performance marketing, however, the measurability of your measures is paramount. Possible channels for performance marketing can be:

• Search Engine Optimization (SEO)
• Search engine advertising (SEA)
• Social media campaigns
• Email marketing
• Display advertising
• Banner advertising
• Content marketing
• Affiliate marketing

When does performance marketing come into play?

Performance marketing is mainly used for customer acquisition and retention. In other words, performance marketing is primarily about getting more users to visit your website and interact with your products and services. Performance marketing helps your business by allowing you to draw conclusions, such as at what point users stop interacting with the website or why an offer no longer seems attractive enough. Within this framework, it is also possible to test optimization approaches and measure the direct effect on user behavior. In this way, findings about immediate changes are directly linked to long-term successes and insights.

What are the billing methods in performance marketing?

There are different billing methods in performance marketing. Here are some examples:

• Cost per Click (CPC): The advertiser only pays when someone clicks on the ad.
• Cost per Action (CPA): The advertiser only pays when a specific action is performed, such as a sale or registration.
• Cost per Lead (CPL): The advertiser only pays when a prospect leaves their contact details (e.g. email address).
• Cost per View (CPV): The advertiser only pays if the video has been viewed in full.

The choice of billing method depends on the type of product or service being advertised, as well as the advertiser’s goals and strategy.

How can success in performance marketing be measured?

Performance marketing campaigns should nevertheless be carefully planned by you. Simply getting started will not get you anywhere, but rather cost you a lot of money. For this, you need to clearly define your goals with performance marketing and the time frame within which these goals should be achieved. Before launching a performance marketing campaign, it is advisable to determine what metrics will be used to evaluate the success of the campaign. For example, if the goal is to increase sales, conversion rate may be an appropriate metric. However, if the goal is simply to improve customer satisfaction, the number of complaints received may be a better indicator. Tracking should begin immediately after the campaign is launched so that data can be collected throughout the campaign. Helpful for the evaluation can be a check of your KPIs via Google Analytics. The analysis tools of the individual social media platforms also offer you a wide range of evaluation options.