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Beyond the Click: The Power of Performance Marketing

Compared with Digital Marketing, Performance Marketing is a more results-oriented approach.

December 20, 2024 | Pranav Garg

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Performance marketing is a relatively new concept in Marketing that is rapidly gaining traction across businesses and marketing domains. And there is a good enough reason for this trend. Let’s explore why.

A majority of businesses in India are classified as micro, small, and medium enterprises (MSMEs). This means that access to capital resources and sales earnings for these businesses is limited and smaller than some of the well-established corporations. Apart from that, there has been a growing trend of Startups in India since the launch of the Startup India Scheme. Given this context, it is not very difficult to understand that a majority of businesses in India cannot afford to blindly pour money into advertising and marketing. Hence, they are looking for image-building avenues that ensure a decent return on investment, to expect the least.

Most advertising and marketing services are based on a model that involves a large upfront expenditure and calculates results later. There is an inherent risk involved here – if the paid promotional campaign does not yield the expected results, all that money would have to be written off as wasted.

Things would be much simpler if there were a promotion model that involved payment for the actual impact or the campaign’s performance so that a certain degree of accountability and answerability could be upheld. This is exactly what Performance Marketing offers to provide to its customers. 

What is Performance Marketing

Performance Marketing is a type of marketing that focuses on the end results of a promotional campaign and introduces corrective strategies to ensure targets are achieved. The emphasis is on the effectiveness of the campaign in creating a favourable impact on the target market, rather than simply putting content out for display. 

For bigger corporations, this function may be performed in-house. But if it is outsourced, clients are charged based on the actual impact that was created from the marketing effort. 

It is different from affiliate marketing in the sense that the scope of performance marketing is much bigger. So while your affiliate marketer will charge a commission against a particular benchmark such as achieving a sales target, a performance marketer’s job will cover that and spread to improving your brand’s visibility across all platforms, including digital channels. 

Compared with Digital Marketing, Performance Marketing is a more results-oriented approach. Both of them employ similar means, but the latter considers their work done upon meeting specific numbers, while the former’s job would be limited to setting up the website and profiles, curating a social media campaign, making regular posts, increasing online visibility, etc.

And finally, it is different from Brand Marketing, which is concerned with creating a lasting and impactful image of the business in the target market. To illustrate, since 2022 the number of AI assistants has gone up tremendously, and yet we refer to them collectively as “ChatGPT”, even though we are aware that it is just one AI tool out of thousands out there. This is what Brand Marketing tries to achieve, while Performance Marketing will focus on short-term sales/lead generation.

Why Performance Marketing

From the preceding discussion, it is clear that Performance Marketing can help your business pay only for the extent of benefit generated from your promotional campaign. Additionally, it helps you track the impact of your campaign almost readily, as the approach is all about computing the benefits gained in terms of clicks, views, acquisitions, or sales. It can help you track what works and what doesn’t with respect to every move that you make, which gives you the flexibility to change your strategy to better respond to the mood of your target market. 

Performance Marketing Methods and Metrics

Below are some of the most commonly used performance marketing approaches, followed by the key performance indicators (KPIs) used to measure the performance.

Methods

1. Search Engine Optimization (SEO) – This technique ensures that your web pages show up at the top of the search engine results page (SERPs) based on the ranking algorithm. This increases the chances of potential customers visiting your website and exploring your products.
2. Social Media Marketing – This is another way to reach more audiences. It can be done through ads or dedicated campaigns that attract people to your products or services.
3. Affiliate Marketing – This approach uses people who personally reach out to the audience to recommend your products or services, in return for a commission based on the number of sales.
4. Display Advertising – A classic way of making your brand visible by displaying advertisements across social media and different websites through agents like Google Ads, YouTube ads, etc. 
5. Native Advertising – Compared to display ads, this technique puts up the advertisements in places like blogs or YouTube videos in such a way that they don’t “stand out”, and give the customers the feel that they naturally “belong” there. Hence the term native. For example, when you book a train ticket using the Rail Yatri app, you instantly receive an email with the details of restaurants you can order from that lie along your journey.

Metrics

1. Cost per Click (CPC) – A simple measure that calculates payment based on the number of clicks you receive on your ads. But clicks do not mean sales, simply the number of people who clicked on the ads. 
2. Cost per Impression (CPI) – Calculating costs based on the number of times an advertisement is shown across the different platforms. Generally, payment is made for every 1000 instances of display.
3. Cost per Acquisition (CPA) – This metric looks at the number of people who completed a particular activity, such as signing up for your mailing list, downloading your brochure, etc. These may increase the chances of converting them, or simply spread awareness about the brand.
4. Cost per Sales (CPS)– Simply put, the number of people converted through the promotional content. 
5. Lifetime Value (LTV) – This is an estimate of the amount that the customer is likely to spend on your products over a long period of time, essentially looking at how much business you get from the single converted customer. Helps to assess the long-term impact of your promotional campaign.

Conclusion

Whether you are looking to outsource your brand’s entire marketing function or need insights over the multiple moving projects of your in-house content managers to boost their efficiency and impact, Brydgework Consultants can help your business reach out to your desired target markets through customised Performance Marketing strategies. To learn more about the full suite of our Branding and Outreach Consultancy Services, click here.