Performance marketing is a concept of working with the market, according to which every hryvnia spent on marketing should bring measurable results to the company. This type of marketing is also called “performance marketing.”

In other words, performance marketing aims to measure and evaluate the results of marketing efforts in real time. The basic idea is to link advertising and marketing spend to specific performance metrics and outcomes: sales, conversions, lead generation, etc.

In this article, we will talk about the advantages and main performance indicators of Performance marketing, compare it with classic marketing, consider the meaning of this marketing concept for an online store.

Advantages of performance marketing

Marketing is an integral part of the stable operation of any business. Engaging effective marketing channels helps you scale your advertising efforts to better meet your company's needs.

At the same time, it is important to find ways to use the marketing budget as rationally and economically as possible. This opportunity is provided in performance marketing.

The main task of performance marketing is to effectively work on sales, specific results. It helps here and now to achieve a target action from the consumer: completing registration, going to the site, calling the company manager, making a purchase, etc.

But the main thing is that performance marketing involves performing actions, the results of which can be measured, recorded, and compared with indicators of previous periods. And thanks to the analysis of these results, if necessary, you can quickly adjust the strategy to more effectively promote the company’s product.

Performance marketing and classical marketing: differences

Performance-marketing — a type of Internet marketing, the key goal of which is to provide businesses with transparent and tangible results.

Most often, performance marketing is aimed at performing 2 main tasks:

1. Attracting new clients (=ensuring a flow of clients, expanding the client base).
2. Retaining the company's customers (=creating a longer customer life cycle (LTV), forming a loyal audience).

Performance marketing differs from traditional advertising (such as display advertising), where the advertiser pays for impressions regardless of whether the user performs the action.

Marketers often use performance advertising to achieve more measurable results and optimize advertising costs.
Therefore, these two methods are not identical: they have different approaches to strategies, goals, measurement metrics and ways of spending the budget.

Let’s structure the information about the main differences:

Both approaches can be successful in different situations and for different business models. However, performance marketing is considered more effective for many businesses.

Features of performance marketing

Measuring Results

Measuring results provides objective and specific data on how successful a marketing campaign is. This avoids subjective assessments and is based on actual success rates.

Cost optimization

Thanks to the ability to measure and analyze specific metrics, marketers can determine which channels and strategies are most profitable and optimize the company's budget, directing it to the most effective solutions.

The target audience

Performance marketing allows you to more accurately determine the target audience and direct efforts to attract users who are the most likely customers.

Flexibility and responsiveness

The concept of work allows marketers to quickly adapt their strategies to changing market conditions and quickly respond to changes in consumer behavior.
Interaction with the audience

Outcome measurement provides data on how different audience segments interact with marketing efforts. This allows for a better understanding of customer needs and preferences, which in turn leads to more targeted and effective campaigns.

Key performance marketing indicators

To achieve specific business goals, performance marketing uses various tools: pay-per-click (PPC), analytics, social networks, content marketing, etc. It is characterized by many performance indicators that help measure the effectiveness of campaigns and strategies in real time. We list the main ones:

1. ROI (Return on Investment). The ratio of profits to expenses. Shows how effectively marketing costs generate profits.
2. CPA (Cost Per Acquisition). The cost of attracting a new client or client transaction. Used to optimize advertising efforts to reduce the cost of customer acquisition.
3. CPC (Cost Per Click). The cost of one click on an advertising banner or link. An important indicator for pay-per-click advertising is PPC (Pay-Per-Click).
4. CTR (Click-Through Rate). The percentage of users who clicked on the advertising material relative to the total number of views. Indicates the attractiveness of the advertisement.
5. Conversion Rate. A specific percentage of users from the total number of visitors who performed the required action (for example, made a purchase, filled out a form, etc.). Conversion rate measures the effectiveness of converting visitors into customers.
6. Customer Lifetime Value (CLV). Determines the amount of net profit that a client can bring during the entire period of his life cycle in the company. Important for understanding the long-term value of customers.
7. ROAS (Return on Ad Spend). The ratio of profit to advertising costs. Helps measure the effectiveness of an advertising campaign.
8. Engagement Metrics. Engagement metrics: number of preferences (likes), comments, retweets or other forms of interaction with the audience on social networks. They help determine the effectiveness of audience interaction with your brand and content, and involvement in your offers.
9. Quality Score. An indicator used by search engines to determine the quality and relevance of advertising. Determines how well an ad meets users' needs and expectations, and how it interacts with keywords and the landing page.
10. Bounce Rat. Percentage of visitors leaving at website with no interaction after viewing only one page. Bounce rate is important for measuring the effectiveness of landing pages.

These metrics allow marketers to determine how well their strategies and campaigns are turning into concrete results and how to optimize marketing efforts to achieve better performance.

Performance marketing for an online store

The concept of performance marketing is especially important for online stores, as it allows you to spend your budget effectively and maximize the effectiveness of attracting and retaining customers.

Let's list a few key strategies that can be integrated into performance marketing after creation of an online store:

Targeted Advertising

Use precise targeted advertising based on the demographic, behavioral and other characteristics of your target audience. This helps you attract exactly those users who are most likely interested in your product or service.

SEO (search engine optimization)

Optimize your online store for search engines to ensure high search result rankings. This will improve the visibility of your store to potential customers.

PPC advertising

Use pay-per-click advertising (Google Ads or Bing Ads) to attract the attention of users who are actively looking for a product similar to yours.

Social media

Use advertising and organic content on social media to engage with your audience and attract new customers. Plus, social media is a great platform to build a community around your brand once you've made a decision to create an online store.

Email Marketing

Develop personalized email campaigns and send your subscribers messages with new and special offers. Test different subject lines, content, and calls to action while analyzing open rates, click-through rates, and conversion rates to optimize campaign performance.

Retargeting

Use retargeting technologies to track visitors to your website and show them your ads on other resources.

Analytics and measurement

Monitor key performance indicators (conversions, costs and profits) using analytical tools. This helps to quickly improve your advertising campaign.

Promotions and discounts

Implement pricing and promotion strategies to capture consumer attention and increase conversions. Inform your audience about this on social networks (Facebook, Instagram, Twitter, LinkedIn). Track feedback on interactions, clicks, impressions and conversion rates.

Website optimization for mobile devices

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A/B testing

Run tests to determine which elements and strategies work best, and improve your campaigns based on the data received.

With these performance marketing strategies, an online store can make the most of its budget and attract quality traffic, thereby increasing conversions and profitability.

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Conclusion

Performance marketing is an effective tool that allows a business to more accurately assess the return on investment in marketing and advertising, pay only for specific results, and be profitable, predictable and manageable.

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