Everything You Need to Know About Performance Marketing

Back to Blog - by Jake Slattery

Performance marketing is a popular business model that is predicted to grow at a 10% rate in 2020. An average 62% of a brand’s marketing budget already goes to performance marketing and this amount is expected to raise over time. To invest more energy and attention into the understanding of this model means seeing amplified results in a more promising, lower cost environment. If your company is tired of investing millions of dollars into campaigns without seeing any results, then this form of marketing is for you. And as it breaks down barriers, it builds up confidence, all while delivering incredible results for your brand.

What is Performance Marketing?

Performance Marketing is a mode of communication that occurs when advertisers pay agencies based on how well a campaign “performs.” Opposed to just paying for an advertisement here and there, advertisers are able to define desired outcomes in advance and pay for their ad’s success on a rolling basis. Performance marketers, therefore, are focused on measurable accomplishments in the form of leads, sign-ups, or conversions. It moves the focus away from impressions and clicks, (awareness), to genuine business results, (actions). This outlook strengthens partnerships, emphasizes consumer engagement, and limits fraud’s prevalence in today’s digital landscape.

What are the Benefits of Performance Marketing for Advertisers and Agencies?

Increased Flexibility

In performance marketing, outlines are established ahead of a campaign’s launch that are transparent and concise. Advertisers discuss what they want to happen – what their goals are, what numbers they’d like to see, how they’d like to see them, etc. – and agencies adjust campaigns as necessary to generate the strongest results possible. The flexibility in performance payment plans and optimization makes these goals more accessible and attainable in the long run.

Payment Plans

This is a mode of marketing that rebels against the traditional ‘pay beforehand in confidence’ model. As aforementioned, performance calls for advertisers to pay agencies based on the quality and number of results obtained over time. Payment, as a result, is based on a pay-per-lead, pay-per-sale, or pay-per-click basis, (but other campaigns may pay based on other actions). In the case of a lead, an agency would be compensated once a consumer performs a specific lead action, such as filling out a form, signing up for a newsletter, etc. The opportunities are widespread and can be adjusted to best fit the campaign at hand.

Constant Optimization

Instead of launching a campaign in hopes of results, (without even seeing results), advertisers have constant snapshots of their ROI at any moment. This simplified access to data and trends allows brands to more efficiently monitor success and pay back agencies for their hard work. This also opens up opportunities to adjust campaigns as necessary, or to pour more energy into strategies that are working while simultaneously retreating from those that are not.

Greater Accountability

With both sides of the advertiser-agency partnership remaining vigilant of results, accountability is heightened. Everyone is paying attention and money is exchanged only when success occurs. Fraud, in this case, is reduced and the pressure to make money and remain in frequent communication with the other is on.

Less Costs, Quicker Launches: Advertisers only pay per result in performance marketing. If a certain campaign isn’t working despite adjustments, brands are able to save money and allocate funds toward profitable opportunities elsewhere. And, because the approval processes in performance marketing are less elaborate, campaigns are able to launch faster and, hopefully bring about timely results.

Why Align Performance With Programmatic?

The benefits of performance marketing are immense, and, when paired with programmatic, are strengthened. These two areas are inherently compatible due to their focus on results, collaboration, and transparency. When combined, the goal is not only focused on actionable outcomes, but also effective messaging and increased viewability. This combination emphasizes lift results with the addition of highly targeted ads that are paid on the basis of performance. It also grants the opportunity to alter programmatic campaigns based on progress; a major opportunity in today’s crowded, cluttered digital space.

To remain ahead, consider placing an emphasis on performance programmatic when launching future marketing campaigns. Rather than just accessing lackluster inventory, pursue quality placements that are backed in personalization and trust. By replacing awareness with action and dishonesty for accountability, your company becomes susceptible to greater results and a strengthened reputation.

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