Tech entrepreneur & co-founder at AUDIENCEX with over 20 years experience developing integrated digital campaigns for brands and agencies.
Performance marketing has always been attractive to marketing leaders who are under intense pressure to justify their investment dollars and make marketing a profitability driver within their organizations.
As the name suggests, this singular media-buying strategy focuses entirely on the measurable performance or conversion key performance indicators of marketing campaigns. In the traditional sense, performance marketing is trackable and can be analyzed down to the click, and therefore it’s thought of as a cost-efficient approach where marketers only pay for user interactions based on results, ones that deliver a defined conversion in return.
The term “affiliate marketing” has frequently been used interchangeably with “performance marketing,” although in actuality it’s really just one piece or subset of the larger performance marketing umbrella. Other related tactics in this area include influencer marketing, email marketing, search marketing and any other form of marketing where the customer or performance marketer pays a commission for sales or completed user actions.
But expecting every single marketing tactic to deliver an immediate return on investment is a narrow approach that misses out on opportunities to build sustainable and scalable success for the performance marketer. At our company, we’ve run literally thousands of campaigns for performance marketers across virtually every vertical and channel; and many of the marketers we have worked with are being judged against strict KPIs for each campaign to deliver lead lift and revenue growth.
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Today’s consumers are complex, evolved and omnichannel — and they traverse a nonlinear purchase funnel. Our marketing plans need to recognize and reflect that shift. Brands must exceed customer expectations with relevant, personalized and persuasive digital interactions in order to beat out the competition and ultimately drive powerful engagements with new and existing customers. When performance marketers can achieve this more multifaceted goal, the value of their media investment can be truly meaningful.
As our media consumption habits have changed — and especially over the past few months — marketing tactics as well as much of what we considered normal life have been thrown out the window. This means now is an especially opportune time to redefine performance marketing.
A typical customer journey today consists of multiple touchpoints and multiple channels — often both online and offline — prior to an eventual conversion. To that end, performance marketing, as with all forms of marketing, should consider the full customer journey and lifetime customer value that is linked to building brand equity and customer relationships that together can drive true business success. What does this look like for performance marketers? It means a complete reassessment of the value of marketing at every phase of today’s customer pathway, and going well beyond a myopic view of conversion events only.
While it is important to measure clicks, leads and conversions to demonstrate the ROI of your efforts, oftentimes the results of those efforts aren’t always as easily measurable. Performance marketing needs to be balanced with brand awareness to build broader prospecting pools and audience strategies to be executed across the full funnel in order to drive the scale needed.
It’s not difficult to understand why allocating budget to top-of-funnel and mid-funnel marketing is a challenge for CMOs facing pressure from the top. But without these brand awareness efforts, it is almost impossible to build your prospecting pool, which is ultimately what will lead to more conversions. If most of your budget is focused on consumers who are already aware of your brand or have already made a purchase, you may be less likely to hit your revenue goals over time. Unless your brand is attracting new consumers, using tactics outside of paid media, it’s critical to take the time and allocate the resources to build brand awareness.
As performance marketing has expanded in reach and scope, it’s fair to say that it is no longer merely a type of marketing — rather it is marketing. Think about it: Every business development relationship you build is, at its core, a partnership based on performance. At the same time, every marketing plan is built with some sort of performance objective within — be it reach, acquisition, awareness or lead generation.
Rather than focusing solely on acquisition, keep in mind that there is a very complex customer journey that needs to be addressed and nurtured. Instead of counting how many conversions you are getting with each of your tactics, it’s important to remember other engagement metrics, including retention and lifetime value of each customer.
Rather than focusing on how many clicks on each ad generate how much revenue, we need to take a step back — and tie together the entire customer pathway, preferences, location and shopping habits to serve the most relevant ads possible and drive the most valuable set of conversion events.
Performance-based marketing is no longer about having a static ad delivered across the highest number of last-click digital destinations. If you’re interested in finding more of your potential customers, consider expanding your channel mix to increase audience reach in general. Try leveraging video, connected TV, social media, native ads and even audio to reach undiscovered audiences and your next best customer in contextual formats and with richer, more engaging ads.
All of these channels offer a new chance to fill the top of your funnel with potential prospects. As long as your team is equipped to support the customer journey, you should be able to avoid a leaky funnel and deliver a healthy flow of leads to your sales team. If you are focused on growing revenue and finding more customers (as we all are), consider a full-funnel strategy, along with robust measurement and attribution solutions, to ensure that the conversion results of these efforts can be quantified and measured.
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Author: Jason Wulfsohn, Forbes Councils Member