A brief introduction to Performance Marketing
Even though performance marketing has come into existence for a while, the neglected value and importance just awaken marketers’ attention currently.
What is the problem of traditional digital marketing ?
In today’s digital marketing industry, CPM campaigns are recommended for massive exposure to increase brand awareness while, on the other hand, cost-per-click (CPC) campaigns is expected to bring in more traffic for websites. Indisputably, everything seems reasonable and logical. However, the underlying crisis is emerging in a way we barely notice.
It is reported that more than 50% of the paid online display Ads over the past years have never appeared or pop out on internet users’ screen. In other words, even if there is an apparently excellent marketing performance, it actually exists a certain portion of fraudulent Ads impressions which are possibly manipulated by bot traffic or, even worse, not viewable at all.
Hence, it is urgent to stop the reliance on traditional approaches, CPM model in particular. Right now, what an e-commerce business needs is Performance Marketing.
What can Performance Marketing bring with you ?
While there are many different definitions about Performance marketing, the majority of them, in fact, talks about exactly the same concept — advertising campaigns with the objective of driving specific actions. More precisely, advertisers pay only when a specific action is completed, such as a sale, lead or even download. Therefore, however much the amount of performance marketing budget a marketer will allocate into, the marketing campaign has been proven to be both efficient and profitable.
Moreover, performance marketing can create win-win opportunities for both parties, advertisers, and publishers, if it is carried out in a right way by an experienced company. For one, the transparent pricing model and measurable performance provide a dispassionate report with trackable statistics for advertisers. Also, by boldly guaranteeing a certain number of return on investment (ROI), which is almost impossible in traditional marketing campaigns, performance marketing has successfully reversed the traditional value proposition of advertising.
What is the technique used in Performance Marketing ?
Generally speaking, the way how performance marketing achieves those incredible jobs is through the use of data-driven technology, one of them being Dynamic Personalized Ads (DPA). DPA, from my perspective, is one of the most powerful derivations from performance marketing and is pervasively applied into the marketing campaign nowadays.
More importantly, the digital banner is configured by program algorithms to automatically recommend the most relevant and heart-moved items based on several metrics, such as time spent on each page and the item selected in shopping carts. In addition to that, a great number of related products can be listed in a single banner at the same time, greatly stimulating customers desire.
Another message, a good news for social media marketers, worths mentioning is that this technique is launched by Facebook and Instagram recently. Although the way it does is slightly different from Ads networks we are familiar with, DPA also plays an important role in social media marketing and instantly intrigues potential customer to glimpse at the banner.
How does it work ?
Due to the fact that every performance marketing company has diverse approaches to fit the aforementioned criteria, the early-stage preparation in advance to start carrying out performance marketing is different as well. Nevertheless, there is a commonly critical step — place a snippet of code on your website’s page.
Take Facebook Pixel, a term of what we call snippet of code, for example. After marketers add the tracking code collecting data from mobile phones, tablets, and desktop computers on websites, all of of visitors’ footprint will be sent to carry out centralized computational analysis. The more user habits the database accumulates, the more accurate and powerful performance marketing is. Later on, Ads will only display to people who are most likely to convert and eventually brings stable revenue for your business.
In a nutshell, most e-commerce business carries high risk. Something going wrong in either inventory or fulfillment or delivery could make a competitively well-functioning company collapse in the blink of an eye. The advantages brought by performance marketing are exactly what professional marketers should consider and need.
Author: Edison Chen, Business Development Manager at Tagtoo