Performance Marketing and how to apply it to your business

We are currently living amidst constant changes that occur in our lives: new media emerging, the way we communicate with each other, and the relationship between brands and consumers. It’s all connected to the digital environment. We can observe, for example, the various ramifications of digital marketing and the new strategies that have emerged over the last few years, such as Content Marketing, Inbound Marketing, and, more recently, Performance Marketing.

Have you heard of Performance Marketing? The term, relatively recent, is increasingly being used by companies in their strategies, although many professionals still do not know exactly what it means and how important it is in bringing better results and aiding in decision-making.

In this post, we will explain what Performance Marketing is, how the term came about and its definition, its importance, its main benefits, and how to apply it in a business. To learn everything about it, follow this text until the end!

What is Performance Marketing?

The term “Performance Marketing” arose because professionals in the field commonly stated that their internet campaigns needed to perform well. That is, they needed to deliver good results and show progress that brings value both to the company and to the customers.

Traditional strategies have been left behind as the need to reach the target audience through more practical strategies that provide a higher return on investment became evident. Performance Marketing addresses this need by focusing on measuring results in a clear and direct manner, allowing companies to know exactly what to do to achieve their goals.

The importance of performance marketing

The essence of Performance Marketing is to create campaigns where actions are paid based only on the performance of the ad or when the desired conversion actually occurs. This conversion, also called an action taken by the user, can be the sale of a specific product, the generation of a lead (downloading free material or registering for an event, for example), engagement with the target audience (such as reactions on social media), an ad click, or website traffic. After all, there are many possibilities.

The main objective of Performance Marketing campaigns, based on data analysis, is to identify whether the investments made are giving the expected return, verifying the performance of the advertisements made. Therefore, a company’s decisions must be made based on the performance data of these advertisements, which are constantly monitored and tested.

Main benefits of this strategy

As we mentioned earlier, Performance Marketing is focused on data analysis, which ensures the best decision-making, generates insights, and detects possible failures. Based on the performance analysis of advertisements, professionals can increasingly improve the quality of their campaigns.

By tracking real-time performance, you can identify the causes of some issues, such as low clicks or low reach for an ad, learn how a campaign went viral, and quickly make changes. Thus, it is possible to evaluate all the actions carried out within a campaign and make the necessary comparisons to obtain good results, all in a very practical way, “in the palm of one’s hand.”

Performance Marketing has made the digital strategies of businesses increasingly assertive, eliminating assumptions and guesswork and bringing more accurate responses, which positively impact campaign results.

How to use Performance Marketing

Performance Marketing is conducted through specific media ads on the internet, such as Google Ads, Facebook Ads, and Instagram Ads, among others. It is carried out with different objectives, including brand awareness, sales, or engagement with the public.

However, merely creating the ads and assessing their performance is not sufficient. It is necessary to possess knowledge and understand how to set up campaigns in order to evaluate their results and take prompt action to enhance them. So, what data should be monitored in Performance Marketing? Metrics, also known as Key Performance Indicators (KPIs), are the primary data that should be analyzed in campaigns. In the following sections, we will discuss them briefly.

Impressions

This KPI is very important to monitor in Performance Marketing. It indicates how many times an ad was shown to your audience. Whenever an ad is shown on a channel (Facebook, Instagram, Google Ads, etc.), it is counted as an impression. The number of impressions does not represent the number of people who saw the ad, as the same ad can be seen by the same person more than once. Therefore, impressions are related to the frequency and total number of views.

Clicks

This metric is one of the most important in Performance Marketing, mainly allied with the impression rate. With the number of ad views, it is possible to determine how many of them were clicked. This KPI evaluates the performance of the ad’s content, determining whether it is interesting enough to generate a good number of clicks. It also takes into account the impressions. Based on this evaluation, changes can be made if necessary to improve the click-through rate.

Engagement

Another important KPI to analyze is engagement. It indicates the amount of user interactions in a campaign, such as likes, comments, clicks, shares, and other actions. However, engagement can be monitored not only on social media but also on platforms like Google Analytics and Google Ads. In these cases, the number of pages visited per session and content sharing, among others, should be observed.

Leads

One of the main objectives of any digital marketing strategy is lead generation, which identifies people with the potential to start a relationship with a brand and become customers. A user can become a lead after expressing interest in receiving a quote, downloading free material, or subscribing to a newsletter, for example. It is important to monitor this KPI to understand whether the campaign’s communication is effectively generating leads for the sales teams.

Acquisition of new customers

Another goal is to generate sales and acquire new customers. There is no point in investing in ads and campaigns using Performance Marketing if they are not bringing sales to the business. Therefore, by monitoring the rate of new customer acquisitions, it is possible to verify whether there is good communication and alignment between the sales and marketing teams, and whether the teams’ objectives are being achieved.

Paid and Organic Media

Even though the focus of Performance Marketing is to evaluate the performance of paid advertisements, organic content should not be overlooked. If the amount of organic traffic from websites or social networks is good, the investment in ads may be reduced. Of course, that doesn’t mean stopping paid ads altogether, but rather reducing spending to maximize impressions, clicks, new leads, and new customers.

Therefore, it is important to identify the source of traffic on websites and evaluate the ratio of organic and paid publications on social networks. The greater the organic traffic, the less the need to invest in digital ads. In this way, your brand channels convey more security and authority to your audience. To establish this relationship, it is recommended to seek the assistance of specialized agencies.

Now that you already know what Performance Marketing is and how important it is to closely monitor the performance of your campaigns to make informed decisions and define the best strategies for your business, how about starting to evaluate the performance of your advertisements? Don’t know how to do it or still have questions? Leave it to us, and we can help you. Get in touch with us right now!