Beginner’s Guide: Importance of Performance Marketing & Revenue Growth

All marketing is supposed to perform. What then is performance marketing?

Think about the 90s for a second. The TVs were filled with a million ads from various industries. And very often, the frequency of the ads would lead people into harboring a common misconception. If a company was pumping out two ads per break, it had to be raking in money, right?

Wrong. Yes, a company that was inundating your TV time with ads could be successful, but there was no clear way of ascertaining that connection. How well an ad is performing could not be tracked before digital marketing came into play.

Unless you can track how well an ad is performing, you have no definite way of knowing that it is leading to conversions. More clicks don’t always correspond to more lead generation, and every Dallas digital marketing agency will assure you of this fact. Even if you go for a Pay Per Click (PPC) ad model, all you are doing is attracting more people to your landing page. This, of course, is necessary, but how can you guarantee that all of those people are buying what you are selling?

Before we delve into the nitty gritty of performance marketing, let us go through a few key terms:

Conversion

You may have heard of the phrase “boosting conversions” from a leading digital marketing company in Dallas. What does a conversion mean though? A conversion happens when a potential buyer/subscriber successfully performs the action that you had wanted them to. Now, this doesn’t always mean a direct sale. You might also want your audience to subscribe to your content or provide you with their email ID. Whenever someone performs the task that you mentioned in your Call To Action (CTA) button, you get a conversion. Getting conversions is the main goal of performance marketing.

Leads

Just like “boosting conversions”, “generating leads” is also a very common phrase in marketing. So, what are these leads? Leads and conversions are integrally related to one another.

Whenever a person converts (that is, signs up, subscribes to, or buys a product), they are led to a “Thank you” page. Upon going to the “Thank you” page successfully, a lead is created. A lead normally provides you with a customer’s name, phone number, and email address.

Now that you understand what conversions and leads are, I’ll get back to the topic of performance marketing. These two concepts are crucial to performance marketing because performance marketing refers to a process that measures the number of leads that are created or the number of conversions that are made from each ad.

Why Is Performance Tracking So Important?

There are multiple reasons for this. Let’s start with the most obvious one. As you know, your company has a certain Customer Acquisition Cost (CAC). CAC is the amount of money that you spend in trying to obtain customers. If your CAC is too high, your profits aren’t going to amount to much even if you bring in huge revenue. The majority of your CAC goes into marketing. This is why it’s so important to know if your marketing is working out for you.

Let’s say you hired a digital marketing agency in Dallas to take care of your marketing for you. There are two ways in which you can pay this agency. Either you can negotiate a deal where you pay the money upfront for their efforts and then wait to see how their ads perform. Or, you can have a deal where you only have to pay them when you get a certain number of leads or conversions. The first kind of deal is the traditional one because previously, there was no way of tracking the leads. You had to pay a TV ad agency upfront to convince them to make an ad for you. There was no way to make sure that the ad would perform.

However, the second process is what performance marketing has led to, in recent times. You don’t need to pay the Dallas digital marketing company upfront for their services. You can choose to pay them only when they have achieved the pre-negotiated goal of, say, ten thousand leads.

How does this help you? Well, this ensures you a high ROI. Plus, your CAC goes down because you no longer need to waste money on low-performing marketing agencies. However, keep in mind that a low Cost Per Lead (CPL) isn’t your ultimate goal. While cutting down the cost of marketing is necessary under some circumstances, this should not come at the cost of efficiency. Even if the CPL is high, you should stick to it if it’s getting you a greater number of conversions.

How Do You Track Performance?

What is it that is tracked when you track performance? As I have said before, keeping count of the likes and shares does have some value but it doesn’t track performance.

Whenever a lead is created (that is, whenever a person signs up or submits his details) he is led to a “Thank you” page. This “Thank you” page contained a 1×1 image which is called a pixel. Performance is tracked by keeping count of the number of times the pixel shows up on the screen. This gives you a count of the number of leads that have been generated and hence, the number of conversions.

How To Practice Performance Marketing?

A Dallas digital marketing agency will explain to you the various kinds of performance marketing. Most forms of digital marketing are trackable. Whether you go with Affiliate Marketing (which included influencer marketing and youtube marketing) or with a more old-school version like Paid Search Marketing, all of the results are trackable.

Currently, Youtube marketing through referral codes and sponsored content is doing marvelously. However, this can get expensive if you’re targeting the top influencers. A completely free and creative version of this is User Generated Content (UGC). Did you know that GoPro’s entire marketing strategy depends on UGCs? Basically, in UGCs, you don’t need to pay people to use your product. You just encourage them to produce content with your product if they are satisfied with its quality. This might not necessarily work for all products, but it has a stupendous ROI.

And, of course, the old-school options of Paid Search Marketing and Search Engine Optimization (SEO) are always available. These are relatively less expensive, and since you have to do SEO anyway to boost the visibility of your brand, it’s a great idea to focus on these while your marketing program is still in its nascent stage.

Native advertisements are also trackable and hence, fall under the performance marketing category as well. However, you must remember that there are laws against native advertising now, and almost all social media platforms make it compulsory for you to add a “Sponsored Content” tag whenever you have a native advertisement hidden in a video or article.

In affiliate marketing, you can negotiate a deal where the affiliate who is in charge of making content for your ad also profits from it partially. That is, they get a cut based on how well the ad performs.

This is a sure-shot way of ensuring that the ones designing your ad have a personal investment in making that ad perform well. An upfront payment before you have seen any results allows marketing agencies to distance themselves from the project. Allowing them to have a share of the profits is a boost to their productivity and efficiency.

In Conclusion

One last question remains: How to make sure that your performance marketing efforts perform well?

Here, consistency and tracking the results are crucial. You need to be consistent with your marketing efforts. Just because your Thanksgiving sale worked well, doesn’t mean your Christmas sale will. Also, even if you don’t want to spend money on an advertising agency, you need to make sure you have software that tracks your basic analytics. For example, Google Analytics might not give you a count of the leads you generated but it’s going to make sure you know where your target traffic is coming from so that you can focus on those particular platforms.

A Dallas digital marketing company emphasizes the need to perform regular A/B Testing. Without A/B Testing, everything that you track will not produce a concrete result. Your decisions need to be based on data, and performance marketing gives you the data you need. However, how you use that data to further improve your marketing efforts is completely up to you. It’s important not to be subjective when it comes to major decisions and to trust what you have tracked.