There are a lot of terms thrown around when talking about marketing in the digital era, but let’s talk specifically about performance marketing. Performance marketing means a lot of things to a lot of people.
The way we describe performance marketing is creative content run through media with a clear goal or KPI that is created intentionally to drive performance.
Now that performance can be clicks to purchases and conversions. It can also be driving brand awareness, whatever that key performance indicator is, it needs to be something that’s measurable.
When we create content, we get that brief and we’re trying to drive performance. We clearly know what it is we’re trying to achieve and how we’re going to measure whether it was successful or not.
In this article, we will dive into what performance marketing is and how the solutions work and benefit your business.
What is Performance Marketing?
performance marketing is a measurable form of marketing. You need to have clear metrics and KPIs that you’re aiming for so you can measure how well things are performing.
Having measurable goals allows you to create informed hypotheses, and experiments and make decisions to further improve upon the performance of your campaigns, allowing you to have more clicks, leads, purchases, or whatever it is you want as the output from your input.
What are some KPIs and Metrics you can get started with?
If you’re the performance marketer and you’re managing the channels on a daily basis, some KPIs and metrics you can start looking at include:
- Impressions to tell you how many times your ad has appeared.
- Clicks to tell you how many times someone has clicked on one of those ads.
- Engaged sessions: You can use engage sessions here as opposed to sessions because sessions is typically pretty close to clicks, which is a pretty low barrier, whereas engage sessions require users to be on your site for longer than 10 seconds, do a conversion event, have at least two pageviews or screen views.
you can think that there is a discrepancy between clicks and engage sessions. Like does the landing page differ massively in feeling from the ad? Does it communicate differently? Is the load speed poor?
Depending on that, you can think about how to optimize to increase the conversion rate from click session to engaged session.
- Micro conversions: These are often not actually referred to as micro conversions, but simply different types of conversion events. You might have a priority conversion you want people to take, but if they don’t take that, is there other actions you think are valuable, like visiting your pricing page or searching for something on your site?
- Conversions: This speaks for itself and is likely what you want many people to take as possible. And you should always be thinking about what you can do to improve this, which could also mean improving an earlier step because both would net you more input.
- Cost per click: This feeds into the next one because people use CPCs at a more granular level, like what do their CPC’s look like for certain campaigns? your competitor keyword campaigns will likely have a higher CPC and if there are certain campaigns with sky-high CPC follow the yellow brick road little further down the funnel to see if it’s worth paying those high CPCs because it just might be.
- Costs per acquisition: Is your marketing sustainable? That’s one thing you need to be thinking about. Is your output worth what you’re putting in? What’s the ceiling there? How high can you go from an input perspective based on your output? In a low-interest, free-money era it was growth at all costs. But now it’s all about sustainable growth. Figure out what that looks like for your business.
Reporting to Management
Suppose you’re reporting to your managers or C-level. Here are some good metrics and KPIs to include;
Cost per acquisition
show them how sustainable or unsustainable your marketing is as a whole, or some breakdowns to make a case for increasing or reducing investments in certain areas.
One example might be showing that TikTok ads have a really good cost per acquisition, and you’d like to invest more in creating TikTok creatives. But to secure that investment you need to show the data and make the case.
Percentage of first-time Buyers
If you’re working in an e-commerce company, E-commerce is a wildly interesting world and if you’re doing smart performance marketing, you need to be able to do top-class analysis.
For example, ask yourself the question: How much am I willing to pay for a first-time buyer vs. a returning customer? This is, of course, a complex question, but a really fun thing to try and answer.
Another could be what is the average lifetime value of a customer who spends over $100 on the first purchase versus someone who spends $50 on their first purchase. Because you just might be willing to spend more to acquire the big spenders.
ROAS or Return on Advertising Spend
This has been a classic for a long time and is definitely still relevant when looking at each channel in a silo. A great analysis to do would be to look at the ROAS of each channel over time to see if you’re getting less for your money. You don’t want a channel to suddenly creep into that unsustainable growth.
MER or (Marketing Efficiency Ratio)
MER is the total revenue divided by the total ad spend from all marketing channels. This is how you should be looking at the overall efficiency of your marketing efforts.
Whichever KPIs you choose, make sure you select ones that are tied to overall business goals, which are typically metrics that tell you what is driving growth and contributing to new customers.
Bottom-Line
What is important about performance marketing is, you know, whether you’ve achieved success or not. Sometimes the challenge in creating big, bold, newsworthy ideas is you don’t really know what success looks like.
And while you can create something incredibly creative and interesting when you put it out into the world, if there’s not a clear way to track it, how do you know whether it was successful?
In a world of vanity metrics and impressions and 1/2 video views, it’s really hard for brands to understand what’s moving the needle in creating success. What we’ve learned is great performance marketing campaigns aren’t necessarily due to one single piece of creative.
For sure there’s a last click attribution, that static banner ad that you click on, and then you make a purchase that’s powerful, but usually it’s a combination of different tactics that lead to that optimal conversion.
Think about it like Moneyball. What is that combination of awareness ads, consideration ads and decision ads that actually drive the highest conversion?
So maybe it will be a pre-roll ad running on YouTube, followed up by a native ad that they saw on a blog, and then finally there was that banner ad that led them through to your site and finally converting.
That’s the power of performance marketing. Working at its best is not of tactics, from awareness to consideration to conversion. Working simultaneously, they create true, powerful performance.