Performance marketing is the newest digital advertising that ensures that advertisers get the most out of their advertisements. Performance marketing is a specific advertising scheme where the advertisers only pay when a specific action occurs. It is an ad click, a conversion, a lead generation, or some other form of engagement.
How does performance marketing work?
Performance marketing platforms are those where paid digital adverts are displayed to customers. But no platform can show ads from all businesses to users all the time. The platform can pick and choose which user gets to see which specific ad at which specific time. This is what performance marketing schemes negotiate between the platforms and the advertisers.
The more an ad creates engagement, the more the advertiser pays the platform. The more the platform earns more from the advertiser, the more the platform promotes its ads. This is a complex cycle that involves many different elements.
Performance marketing factors
Advertisers and platforms both divide users into different segments depending on their different interests and patterns. This segmentation is used to identify the target market for an advert. Advertisers pay to display their ads to their particular target audience.
Advertisers put in a ‘bid’ to a platform for a particular advertisement. They agree to pay a specific amount to show their ad to a specific group of users at a specific time. But digital advertising is not just about the money spent on the bid. Even if the bid is high and the ad gets to show to interested customers, it may not generate enough engagement or conversion. So the platform earns less from the ad, and it eventually reduces its exposure. The better an ad performs, the better exposure it is given.
Quality of the advert is equally important as the initial bid to ensure a good digital advertising campaign that is performance and result-oriented.
Performance marketing channels
The best performance marketing channel may be native advertising. Much of digital advertising generates very low conversion rates. The only fool-proof channel with assured higher conversion rates is native advertising on websites where the target audience consumes related products.
Another performance marketing channel similar to native advertising is sponsored ads that help increase a business’s visibility.
The most common performance marketing channel in the 21st century may be social media platforms. Businesses need to find a strategy for each social media platform and then ensure a balance between their bid and their click-through rate. While conversion rates are harder to improve on social media platforms, they can be an essential marketing tool to build brand awareness and brand identity.
SEM (Search Engine Marketing) is another widespread performance marketing channel. In SEM, businesses choose to bid on specific keywords so that their webpage appears higher and more frequently in search results.
Affiliate marketing is a performance marketing channel that usually provides excellent results. Any website could be an affiliate for digital advertising and promote ads of other allied businesses.
Mo Mantra realises that digital advertising is the lifeblood of the marketing world. Performance marketing is a genre of this form of advertising that tries to assure both advertisers and digital marketing platforms of mutual benefits.