Although performance marketing is by no means a new concept, there remains a lack of understanding around it. While certain industry insiders have predicted it will become standard practice for digital marketers and a vital driver of results, others believe it has had its day. So which is true?
It’s time to take a look at the key misconceptions surrounding performance marketing, and set them straight.
Myth one: ‘Performance and affiliate marketing are the same’
The similarity between affiliate and performance marketing is a root of misunderstanding, with some even considering affiliate and performance marketing as interchangeable terms. But just because the solutions are alike, doesn’t mean they are the same. As most industry professionals know, performance marketing is a term applied to the process where marketers only pay for media — such as in-banner desktop or mobile advertising — when a specific measurable action occurs: be that a click, newsletter signup, or discount voucher redemption.
Affiliate follows this model, but with one key difference: it takes the form of a reciprocal deal, with one party displaying ads or links for another in return for action-based payment. For example, an emerging retailer might seek to boost its online reach by partnering with a large ecommerce site and agreeing to pay for each click, if the ecommerce site hosts its ads. The association has benefits for both parties; the retailer achieves greater credibility and exposure at a relatively low cost, while the ecommerce site gains a new revenue stream.
Admittedly, not all unions conform to this ideal. There are cases of attribution theft where purchasers are charged for outcomes they were already driving — such as new customers attracted by standard display, not affiliate ads — and handing over control to partners can mean there is little clarity into how responses are measured. This makes it crucial to choose partners and platforms wisely: only opting for technologies that provide a clear and transparent view of activity and implement measures to vet site traffic, and guard against fraud.
Myth two: ‘Performance marketing isn’t relevant in today’s ecosystem’
Performance marketing came to prominence a decade ago, so it’s no surprise that its place in the fast-moving digital landscape is being called into question. After all, iPods from the mid-2000s are now considered museum pieces. But performance marketing isn’t bound for the scrap heap; the approach remains vital for fuelling measurable success across multiple channels.
Take, for instance, mobile. Smartphones are a key part of the media mix — especially apps, used by 81 per cent of the UK population. For marketers, this makes in-app advertising an essential component of digital campaigns, as well as measurement that accurately traces impact. This is where performance marketing comes in. Firstly, it enables marketers to match KPIs such as higher acquisition with tangible metrics, including app installs or a certain number of app returns. Secondly, assessing performance against these goals provides a clear view of which mobile tactics and ads are working, and which aren’t. And considering the accelerating rate of mobile ad spend — up 26.5 per cent for the first quarter of 2018 and still growing — precise understanding of the results such substantial investment yields, is increasingly crucial.
In addition, performance marketing can also drive important KPIs such as Lifetime Value (LTV), a key ad spend optimisation metric. By analysing an individual’s engagement with in-app ads, it enables marketers to approximate the monetary value of that consumer and tailor the messaging and timing of ads to maximise on this.
Myth three: ‘Performance marketing doesn’t provide the right insight’
Following multiple high-profile brand safety issues, cultivating a positive brand image is key. Consequently, many marketers are focused on measuring the ability of campaigns to power favourability and believe performance marketing — frequently associated with monetisation metrics such as clicks — isn’t the best tool for the job. But this is a prime misperception, and as a result of which many marketers are missing out on the true benefits of this technique.
Performance marketing offers a highly effective way of making hard-to-measure objectives quantifiable. By breaking down overarching goals into related actions, marketers can assess the exact contribution of particular activities. For example, if the aim of a video ad on social media is enhancing awareness, metrics might include the volume of shares, visits to the brand site, or even tweets mentioning the brand after the ad has been viewed.
And when measures are connected to purchasing behaviour — app downloads, buys, items placed in online shopping carts, clicks through to product pages — the data they produce is just as valuable. A defined picture of the ad variations, tactics and channels that generate the best return on investment not only allows marketers to uncover individual preferences and fine-tune targeting, but also creates a stronger basis for efficient budget allocation.
Often misunderstood and occasionally maligned, performance marketing has the potential to be one of the most effective tools at a marketer’s disposal and the adoption of this marketing method is only set to rise. With increasing pressure on marketers to prove the effectiveness of digital campaigns to justify marketing budgets, it is arguably more imperative than ever. By setting aside misconceptions and taking stock of its true value, marketers can harness performance marketing to build quantifiable, impactful cross-channel campaigns that make a real difference to the bottom line, and most importantly, drive consumer engagement to new heights.
Luca Mastrorocco, VP Global Sales, Glispa
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