The Truth About Performance Marketing: What Many Companies Get Wrong
Over the last few years, performance marketing has become one of the most popular forms of digital advertising. Like any great thing, performance marketing has its fair share of detractors, though. Several companies, including some big names in the retail industry, have claimed that performance marketing simply did not work for them.
With multi-million-dollar advertising budgets, there is little chance that one of these companies got it wrong. Performance marketing very well may not have worked for them.
But this does not mean that performance marketing should be cast aside for the next great advertising trend. The problem is not the tool, but rather the ways that these companies were using it.
The innovators at Insights ABM, a digital performance marketing agency, wanted to set the record straight on this effective advertising method. Let’s dive into the truth about performance marketing and reveal what many companies have gotten wrong.
Why Use Performance Marketing?
Before we go on the hunt for the truth about performance marketing, let’s look at why companies use this method in the first place.
While there are many benefits to performance-based marketing, the biggest appeal is that it allows a company to track its key metrics. Advertisers get to set performance metrics and they are only billed when goals are met.
For instance, if your campaign is focused on clicks, then you would get charged every time a user interacts with your ad by clicking on it.
Performance marketing offers superior flexibility. You can set up a campaign in minutes and even set custom budget constraints. If your budget increases, you can adjust your max bid accordingly.
This flexibility makes performance marketing a great choice for upstart entrepreneurs and growing businesses.
The Goals of Performance Marketing
Generally speaking, performance marketing can help business owners to accomplish one of three main goals. These include:
Performance marketing can help businesses retain more customers. By exposing past clients to your ads on a regular basis, you may prompt them to reorder their favorite products. Performance-based marketing can also keep them engaged with their current monthly subscription.
Increase Exposure to Content
Impulse buys account for a very small percentage of all purchases. Consumers seldom see an ad for the first time and rush to order a particular product or subscribe to a service.
By leveraging performance marketing, you can make sure that your brand is frequently on the minds of prospective consumers. The more they are exposed to your content, the better your odds are of getting them to make a purchase.
Acquiring New Consumers
The ultimate goal of performance marketing is to acquire new clients. You need to present the right marketing content to the ideal audience. When you do, it increases your chances of drawing them deeper into the sales funnel, and hopefully, closing the deal.
What Went Wrong?
The short answer? Lots of things can go wrong. No two marketing strategies are identical. Every company that doesn’t get an optimal ROI using performance marketing has likely made a unique set of mistakes.
For small business owners, perhaps the most common mistake is failing to partner with a digital performance marketing agency.
Other potential mishaps can include:
A Lack of Balance
Your online strategy should include a healthy mix of marketing methods. Many companies that have had unsuccessful performance marketing campaigns shifted their budgets away from other advertising channels.
Performance marketing is a precise tool, but it is not the only way to connect with consumers. For instance, businesses that blog gain 55% more web traffic.
Blindly Trusting Unqualified Advisors
When performance-based marketing started to gain traction with advertisers, hundreds of “advisors” popped up overnight. These purported experts earned revenue by selling companies exclusive performance marketing solutions. These individuals had no incentive to provide their clients with a diverse array of advertising strategies.
Relying on Performance Metrics Alone
Performance-based marketing KPIs can provide valuable insights about an advertising campaign. However, they are not the only kinds of data available. Companies must also track metrics such as customer acquisition costs, engagement, satisfaction, and revenue.
Remember, performance-based marketing should be part of a comprehensive advertising strategy. When it is used properly, you can achieve unprecedented growth for your business. However, misusing this method can cost you thousands of dollars and leave your company worse off than when you began.
The best way to protect the future of your business is to partner with a talented digital performance marketing agency. Not all marketing firms are created equal, though. Do your research and review their work so that you can find the perfect fit for your business.