In online marketing, there are several ways to win new customers and build your brand. Effective performance marketing should make it clear which measures work and where investments are worthwhile. But what exactly does that mean? And why are the KPIs so important? The following article describes the definition of performance marketing and offers a practical 4-step guide to implementation. In addition, there are the essential advantages and disadvantages of this marketing measure.
Performance Marketing: The Definition
Performance marketing means a data-oriented strategy in online marketing that makes the results of marketing measures measurable. This means that the focus is on the quantifiable interactions with the target group of a campaign, referred to as Key Performance Indicators (KPIs). All marketing initiatives can be aligned with these KPIs, such as click rate, conversion rate, or impressions. Therefore, performance marketing aims to increase the efficiency of individual marketing measures and to adapt them continuously. As a result, many new customers can ultimately be generated, and, at the same time, an increase in customer loyalty is possible.
Performance Marketing Guide – 4 Steps to Success
If you want to use performance marketing, you need a concrete plan to make all KPIs measurable and ultimately lead to success. The following instructions show how the performance in online marketing can be improved step by step:
STEP 1: DEFINE THE GOALS OF PERFORMANCE MARKETING
To improve performance, there must first be fixed goals that the marketing measures should achieve. It is essential always to use measurable values. Otherwise, the evaluation will be complex. For example, a plan could generate 10,000 website visitors or 100 newsletter subscribers within a month. In general, these goals depend on your orientation, and they can also be adapted again and again. The following areas are possible:
- Campaign goals: increase visitor numbers, increase subscribers, maximize participants
- Company goals: maintain or increase market share, weaken competitors
- Aims to increase customer loyalty: customer loyalty increase, increase customer loyalty
It makes sense to start with smaller goals to be able to assess the overall situation. In addition, a few dreams are better at the beginning than trying to achieve several successes simultaneously.
STEP 2: SELECT THE INSTRUMENTS OF PERFORMANCE MARKETING
To ensure that the desired goals can be implemented, various instruments in performance marketing are assigned to online marketing. Here, too, these instruments must contain different measurable KPIs to facilitate the evaluation. The following instruments are prevalent:
Search Engine Advertising (SEA)
With Search Engine Advertising (SEA), paid advertisements are created in search engines for performance marketing, which is intended to increase the ranking of a website or, in general, brand awareness. For example, the click-through rate (CTR), which describes the click rate on an advertisement, can be used as KPI. Or the cost-per-click (CPC), i.e., the fixed costs for a click on an ad. These critical figures make it possible to determine how effective the advertising measures are and how high the prices are.
Search Engine Optimization (SEO)
The rankings within a search engine should also be improved in search engine optimization (SEO). For this purpose, websites are, for example, set up in a search engine-friendly manner, or profitable keywords are used in the texts. Keyword rankings or the number of backlinks are therefore helpful KPIs. However, these are not paid advertisements but various measures so that the respective search engine rates a website better and shows it higher in the search results. Because in this way, it can quickly be determined in performance marketing whether the SEO measures are successful.
Social Media Marketing
In recent years, social networks have become more and more important in online marketing, so they should not be missing as an instrument in performance marketing. You can use your profiles to communicate with users to build your community. Paid ads, such as Facebook ads, are also viral here. Therefore, the number of clicks of the ads are suitable as KPIs, but also the growth of the network and thus the number of followers or likes and shares in this area.
Display advertising includes graphic advertisements on external websites. This means that there are, for example, advertising banners for a product on third-party websites. In general, this measure is suitable for external websites that are particularly popular with the target group, such as blogs. Ad impressions are particularly popular as KPIs. Because these determine how often a user potentially viewed an ad. But the click rate is also often used as a KPI.
As the term suggests, this performance marketing instrument is all about sending emails. This includes offers, feedback emails, reminders, or newsletters. Because in principle, customers can be informed of all news from an email distribution list. Congratulations or holiday greetings can also be implemented to increase customer loyalty and strengthen your brand. The recommended KPIs here are the number of subscribers, the opening rate, or the delivery rate.
3RD STEP: CONTROLLING THE MEASURES
Now the instruments of performance marketing have been determined. This also means that the controlling of the marketing activities now begins. Because now the advertising measures start and the individual KPIs can currently be evaluated. To check this effect, some various tools and aids facilitate the analysis. This includes, for example, Google Analytics, because there you can see how high the number of clicks on your website is or whether an item was purchased directly after clicking on an ad.
On the other hand, if you want to keep an eye on your SEO measures, you can use tools like Sistrix. Not only are all backlinks visible, but explicitly defined keywords can be tracked, or the competition’s keywords can be analyzed. There are also some practical programs for social media marketing, such as Hootsuite or Later. However, many of these analysis tools are only accessible in the test version or with essential functions.
4TH STEP: START OPTIMIZING THE PERFORMANCE
After evaluating the data, it is clear where the performance in online marketing is already working well and where not at all. You can also check whether the previously defined conversion rate, traffic, or new registrations can be achieved. But also how high the costs for the goals achieved are and how they are reasonably related to the benefits. Because if, for example, an advertisement on Google receives 1,000 clicks, but the customer has only ordered a product 30 times on the website, the purchase process is analyzed important. Are there enough call-to-action elements on the website? Are the texts meaningful at all? At this point, performance marketing optimization begins, which includes all processes and whose success can then be measured again.
The Advantages of Performance Marketing
Those who choose performance marketing can benefit from the following advantages:
- The measurable results enable detailed analysis of how well an advertising measure is working.
- All optimization measures have a specific goal.
- Advertisements and measurements can be used flexibly and changed at short notice.
- The costs are easy to control, as the advertising measures can be quickly switched off if they fail.
The Disadvantages of Performance Marketing
Despite these advantages, entrepreneurs should also be prepared for the following disadvantages in performance marketing:
- The analysis effort is relatively high because the data must always be up-to-date.
- The evaluation is complex, which is why professional training is necessary.
- Due to the constant optimization, advertising measures have to be adapted again and again.
The principle in performance marketing sounds sensible and easy to implement. But it would help if you didn’t underestimate the effort involved. Because only if you master the analysis tools and determine valuable data in controlling can meaningful measures be derived from them. It is therefore essential to first deal with the most important KPIs and to focus on individual goals. Because it makes little sense to question all measures simultaneously, it is better to evaluate your chosen KPIs step by step and then be successful in the long term.