What Is The Role of Performance Marketing?

Businesses across the globe are seeking affordable solutions to expand their sales in a fast paced, extremely competitive environment. Because of this, marketers are increasingly being pressured to prove their value. 

Executive marketers are expected to drive growth, 64% of CMOs say that proving they have had a positive influence on finances is their greatest challenge, according to the Deloitte CMO Survey; 52% find it impossible to directly correlate marketing and company performance, according to the Korn Ferry CMO Pulse; and just 16% feel that new customer acquisition is one of their team’s top three strengths, according to the Gartner CMO Survey.

Fortunately, performance marketing can help. Performance marketing excels at driving conversion outcomes – leads, sales, installs, etc. These conversion outcomes can be correlated directly to revenue, which ties marketing investment directly to your company’s financial growth. 

Performance marketing makes it easy to prove the value added to a business by its advertising, with ROI being quantifiable and clear. And while this strategy is generally employed close to the sales point, it can also be beneficial across the marketing funnel.

Access to the Internet’s “Long Tail”

According to eMarketer, up to 70% of digital advertising budgets go to Google and Facebook. . Too many marketers are missing out on the opportunity to expand their campaign reach and engagement. Instead by pushing to these two platforms as a default, marketers should consider whether increasing their spend on these platforms is really giving them the results they need. The advantage of performance marketing is that it encourages creative approaches and strategies that may not have been previously considered.

Affiliate marketing is one of those strategies; affiliates get paid on performance, so all the work done before a conversion happens is effectively free. Affiliates are often deeply experienced in terms of their target audience, providing a level of customer insight a company may not have in house and thereby increasing conversion rates. 

A notable example of this strategy is the popular product review website The Wirecutter, which was so successful in completing product conversions that it was purchased by the New York Times in 2016 for $30 million. The site was founded by an affiliate entrepreneur who realized that consumer electronics was a sector in which few customers had enough technical knowledge to make informed choices. To assist consumers, the website started leveraging the knowledge of technical experts to help compare brands and share their knowledge in an easy to understand way.

My own personal experience using Wirecutter to buy a new TV proved just how effective this simple idea was. The website showed me in clear simple language what my options were. It included models I wouldn’t have considered otherwise (awareness), and the good and bad points of all models (education). Ultimately I clicked on affiliate links and bought two TVs (conversion); I got what I wanted and the website received its commission. This strategy worked brilliantly on me in a way that no traditional advertising would have.

This demonstrates how performance advertising can unlock the “long tail” of the Internet. By all means, begin at the lower end of the funnel, but these strategies can actually work across the spectrum of customer advertising.

Business Outcomes: the New Marketing Frontier

As performance marketing delivers business outcomes that can be directly related to the outlay of the creative assets, it is becoming more and more attractive to many different brands. Many new performance marketing agencies have been established, offering expertise in different sectors – from creating content, email campaigns, and mobile push notifications.

The great advantage of this approach is its business model. You don’t have to take on any financial risk in order to try out these strategies. Performance marketing is a genuine partnership where the marketing experts are making their own investments, doing their own calculations around the number of conversions they can deliver. If the campaign isn’t successful, there’s no cost. 

Performance marketing is a valuable partner to traditional digital marketing strategies. It’s a powerful way of driving growth and provides a clear, direct and easily understandable return on investment.


About Author

Ethan Hays

Since beginning his career in Silicon Valley two decades ago, Ethan has been building performance-based businesses to empower brands to acquire new customers across diverse digital channels. Prior to committing his performance marketing expertise to PathIQ, Ethan worked for firms both large and small, helping lead four venture-backed startups to successful exits. As SVP at Vision7, he is responsible for the strategic direction and growth of the company’s Marketing As A Service (MaaS) division, where he encourages a culture of curiosity and candour. Ethan believes that there’s no such thing as failure, only feedback. And the chance to begin again—better prepared.


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