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Performance Marketing

Performance Marketing

Performance marketing refers to a form of digital marketing in which brands only pay marketing service providers after their business objectives have been met or when specific actions have been taken, such as a click, sale, or lead. In other words, it is performance-based marketing.

Brand marketing vs Performance Marketing

Brand marketing is focused on building awareness and creating an emotional connection with the customer. Performance marketing, on the other hand, is focused on generating leads and sales.

How it works?

Advertisers put their ads on a given channel:

1. Cost Per Click (CPC)

Advertisers pay based on the number of times their ad is clicked on.

This is currently the most common tool; the product owner pays the website or host every time someone clicks on an advertisement banner.
The cost per click is defined according to keywords and success rate. A keyword is used for a search; its rate is assessed according to its success. For example, the keyword «real estate» will be more expensive than «opossum.»

CPC = what you pay to get a click on your ad

How to calculate the CPC?
CPC = Total spending / Number of clicks

2. Cost Per Impression (CPM)

Impressions are essentially views of your ad. With CPM, you pay for every thousand views.

The most basic tool is CPM, cost per thousand of impressions, or how much it costs to have an ad published a thousand times on the Internet, and seen by users.

CPM is used by publishers to show their pricing to advertisers. It allows you to compare different offers.
 CPM = the cost of showing your ad 1000 times

How to calculate the CPM?
 CPM = Total spending / Number of impressions

3. Cost Per Sales (CPS)

With CPS, you only pay when you make a sale that was driven by an ad. (commonly used in affiliate marketing)

4. Cost Per Leads (CPL)

Much like cost per sale, with CPL you pay when someone signs up for something, like an email newsletter or webinar.


CTR (Click through Rate)

When CPM and CPC indicate the cost of advertising, CTR measures its efficiency. The number of clicks can be skewed by the number of impressions: an ad that is published more times will have more chances of getting clicks. By dividing these numbers, one obtains an efficiency percentage that is more relevant to the ad: the number of clicks in relation to the number of impressions.

CTR = percentage of clicks per impression

How to calculate the CTR?
CTR = (Total clicks / Number of impressions) x 100

Types of Performance Marketing Channels

1. Banner (Display) Ads

2. Native Advertising

Native advertising works because it allows your sponsored content to live seamlessly beside other kinds of organic content. For example, sponsored videos appears in YouTube.

3. Content Marketing

A type of marketing that involves the creation and sharing of online material (such as videos, blogs, and social media posts) that does not explicitly promote a brand but is intended to stimulate interest in its products or services.

https://www.thedigitalorbis.com/2023/05/content-marketing-digital-marketing.html

4. Social Media Marketing https://www.thedigitalorbis.com/2023/01/social-media-marketing-digital-marketing.html

5. Search Engine Marketing (SEM) https://www.thedigitalorbis.com/2023/08/search-engine-marketing-sem.html

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