Performance-based marketing becomes an integral part of any marketing policy. What is its difference from the tried-and-tested model, and most significantly, what are its advantages?
The trend of performance-based marketing gathers pace and changing the global digital landscape. There were agencies whose specialization was specific tools or their set, such as e-mail marketing, SEO, PPC, with unclear KPIs (key performance indicators). Customers paid for abstract symbols on a regular basis. With the performance-based marketing, a transformation has begun to the benefit of the measured performance metric. Increasingly, they began to cover performance-based marketing in the media and speak about it at profile conferences.
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The growing online trend is just beginning to gain momentum and country rate shows demand potential. Performance-marketing agencies started to appear in response to the needs of the marketing area, one of the first being PROMO. Let us begin with the beginning!
What is performance-based marketing?
There are two large blocks of Internet marketing: performance marketing (sales-oriented) and brand communications (image advertising). The first block works with a clear demand, the second with the generation of a need for the product.
A long time ago, Henry Ford said: “I know that half of my advertising budget is off, but I don’t know which one.” The goal of performance marketing is to find this half and dispose of inefficient investments by optimizing and, as a last resort, removing it.
The central principle of performance-based marketing is the rejection of the standard assessment of results by the clicks number, CTR and CPC to the benefit of business indicators, such as CPA, ROI, and profit.
Against the background of all the events of the last years, the difficult economic picture stimulates advertisers to look for new solutions to optimize advertising budgets, which contributes to the increase in demand for performance marketing.
How did performance marketing change ad products?
The parameters for evaluating advertising changes efficiency the principles for choosing advertising media. Standard channels and tools for online marketing are still used, such as SEO, display advertising, marketplace, blanket mailing, remarketing, etc. The difference is that the tools synchronize and stop living apart from one another. We are dealing with the transition from working with individual advertising tools to developing a strategy that combines and holistically takes advantage of different channels to achieve a single goal.
Effective planning during periods of economic recession not only reduces costs but also allows you to get the consumer in the face of growing competition. When forming a strategy, the customer journey goes through detailed study, and only then active channels and tools are selected for each stage of the sales funnel.
Marketers measure the effectiveness of each channel based on the calculation of the return on investment from advertising investments. This approach makes the digital sphere more transparent to advertisers.
How did the work of agencies change with the arrival of PM?
A new approach to the provision and evaluation of investments in digital marketing has involved a change in the internal workings of agencies.
At PROMO, we held a strategy session in December. We discussed the problem of optimizing business processes for complete immersion in the client’s business and revising the company’s service strategy. The standard for the market structure of the agency has ceased to meet the new requirements for the depth of expertise of the project.
The client-sided cross-functional team and the Agile methodology opened effective business solutions and insights that invisible before.
A mandatory team member is an E-commerce analyst who manages the channels and tools to achieve consistent business metrics. The role of the client in the Agile-approach requires more significant involvement in the work process and the formation of a strategy. The client ceases to be an observer who pays his bills idly and becomes an active part of the team.
In conclusion, the emergence of Performance-marketing is the result of the evolution of the digital market. This trend is already transforming the agency. However, only those who have accumulated expertise and a robust analytical base will survive.
About the author: Melisa Marzett is an author of articles on different topics. Working for Smart Essay Writers – Services at the time, she provides with magnificent pieces. Apart from writing, she loves cooking and traveling. She has been to Sri Lanka, Istanbul, Ukraine and Crimea, which is a part of Russia now by now and eager to visit some Asian countries due to her passion for exotic food and people. She learns Korean and plans on learning Finnish.