Published On: Tue, Dec 5th, 2017

The Inside-Out of Performance Marketing

Do you catch all the adverts you come across while browsing a site or reading a newspaper? It is basic human psychology to notice only the ones that attract visual attention or provides an answer to a requirement. Furthermore, it is dependent on the time you have on your hands. The point here is, the companies must pay the price for the advertisement space even if the reader hasn’t read it or for that matter, noticed at all.

This is the reason why Performance Marketing is in trend; it cuts off the extra cost where the target audience isn’t responsive to the advertisement. According to the Performance Marketing Association (to which companies like Google, Yahoo!, Dell, EBay or Amazon belong) we are dealing with an online marketing model in which the advertiser only pays for the results achieved”.

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photo/ Michael Jarmoluk via pixabay.com

Performance-based marketing is a method of interactive advertising that doesn’t come with a set price, but with a variable price that depends on the performance of the advert.

For instance, the advertiser will only pay for an ad that is clicked upon or viewed by his audience. This kind of marketing involves payment only when a specific action is completed like a sale, lead or click. The specific action must be decided prior, in the contract by both the parties. Performance Marketing is particularly evident in fast growing countries like India, where E-commerce industries are flourishing with the likes of international players like Amazon and home-grown counterparts like Flipkart running Affiliate or Performance Marketing programs through their Affiliate Marketing portals.

As such the industries dependent on E-commerce and online businesses viz. the coupons and deals space, have mastered the art of Performance (Affiliate) Marketing. One such example is GrabOn, India’s most prominent player in the coupons space who pioneered Affiliate Marketing by tying up to the big names in the indigenous and global scene across various sectors, from web hosting to recharge and bill payment portals all the way to flight and hotel bookings and much more.

Let’s have a look at some of the different types of performance payments:

  • Cost per Thousand views (CPT); where price depends upon how often the ad is displayed to a user.
  • Cost per Click (CPC); whenever a customer clicks on the advert.
  • Cost per Lead (CPL); whenever a customer provides contact information.
  • Cost per Action (CPA); generally, a sale requiring credit-card information.
  • Cost per Download (CPD); when a customer downloads the product.

Why has Performance Marketing become the go-to for product advertisements?

Performance marketing has completely transformed the way companies sell and advertise their products and services. It has affected the way companies analyze and assess the success of their marketing campaigns. If it hadn’t been for affiliation, this attribution would have been very difficult. Today, performance marketing gives you the ability to measure everything starting from the reach of the product, service or brand to conversion rate down to a single advert in a specific geographical location. This can in turn help the companies to focus better on their target market.

According to Out Brain, “This new age of data-driven marketing has given advertisers valuable insight into their performance, which has helped them optimize their campaigns according to the best cost per acquisition. As advertising becomes more transparent, advertisers are looking beyond branding to build marketing strategies with proven ROI. Performance marketing was born from a need to decrease cost per acquisition and increase ROI.”

What makes it different and a better option?

  • The risk is lower for advertisers
    Since the deal is to spend for what you get, specifically, to only pay for your choice of actions, the risk percentage minimizes instantly. It is an aid to both small businesses and multi-national firms. For initial phase of businesses, the company inclines towards low cost adverts and investments which make performance marketing the best option to increase awareness about their brand, product and services. Whereas, in the case of already establishes businesses, performance marketing cuts on cost that can be utilized in other sectors like enhancing the product overall. The campaigns also can be launched in time because there is no laborious approval process included, unlike the traditional advertising.
  • Budget Flexibility
    This might be the best thing about performance marketing; it is possible to execute and work this type of marketing with any kind of budget, be it small or big.
    The option of starting with a small budget makes it more accessible to smaller organizations or brands that are just starting to figure out their marketing strategy.
  • Traceable reach through ROI
    You can easily track the reach of your affiliate or performance marketing strategy through ROI which stands for Return for Investment. It is traceable to every click, view, and conversion which provides significant data for future goals and procedures. The advertisers are enabled to measure and analyze everything starting from cost of acquisition to the incrementality in customers or viewers.

There are a few crucial elements of Performance or Affiliate Marketing that makes it successful. The first and foremost step is to have an attention-grabbing advert that attracts viewers; the number of views is highly proportional to the inventiveness, creativity and emotional psychology used in the advert. The relevancy of placing the advert is also very important. If the advert is not targeted at the right audience, it would not produce desired results. For example, for an advertiser like Nykaa (which is an e-commerce platform for beauty and skincare products), performance advertising on complimenting platforms like a fashion or beauty blog would get the best results.

For click adverts, it is suggested to use user friendly and creative landing pages. The advertisers must also keep a track of their campaign to study the market and derive better results in future campaigns or sales. Here are a few examples of Affiliate or Performance Marketing done right.

Many online companies who sell products on web-hosting spaces, or some other service, usually offer an affiliate program. It is easy to sign-up for these programs and get tracking links. Whenever you are write about their product, you can simply use this special tracking affiliate link to promote the company’s site and get paid for it. One of the examples of these type of companies is Shopify; they have an extensive Affiliate Program. Even companies like Flipkart and Amazon, which are the current e-commerce giants, have their Affiliate Marketing program.

The other side to Performance Marketing: Affiliate Marketer

Performance marketing is not just about companies benefitting from a marketing strategy that gives them huge returns for a less amount of money. There is another side to this coin, which is the affiliate marketer, the individual, or organization behind the publishing.

According to Neil Patel, an Entrepreneur and Online Marketing Expert,Affiliate marketing can be seen as the process of spreading product creation and product marketing across different parties, where each party receives a share of the revenue according to their contribution. It’s not just the promotion or just the product creation that defines who you are as an affiliate marketer. You can be both the creator and the marketer and still profit from the underlying idea of sharing revenue.”

Basically, this is where all the publishing happens. The affiliate promotes one or multiple affiliate products and tries to attract audience. Further the affiliate should be able to convince potential customers of the value of the merchant’s product through words, visuals or others so that they actually end up buying it, which in brings commission to the affiliate. One can sign up to be a companies’ affiliate through their program.

Turning content into conversions is not an easy task for affiliates. The whole process is usually analyzed used a conversion funnel which helps to keep a track of the content, clicks and conversions.

The main elements of a conversion funnel are Awareness, Interest/Motivation, Desire/Need/Want, and Clicks/Conversion Obstacles like slow internet, then finally the conversion continued by re-engagement with the content offered by the affiliate. The affiliate must keep up with the worldly trends in order to attract potential customers.

Evolution in Performance/Affiliate Marketing

Performance marketing has also evolved and grown with the times, all thanks to progress in technology and the change in consumer behavior. “In today’s performance-driven world, digital marketing is all about hitting the right people on the right device at the right time. Desktop now falls by the wayside, as marketers and their clients look to reach people on mobile.”

The newly casted scenario is changing the traditional and conventional methods of marketing and advertising like Email marketing and favored by Search Engine Optimization. Earlier professionals relied on keyword optimization and link-building to perk up website rankings but now, they must look for ways to make use of unique and appealing content in order to promote their merchant and themselves.

Even though performance or affiliate marketing is a smart way to success, it cannot be denied that it does have a few hindrances like the whole system being lengthy and complex, due to the huge number of affiliates that turn up with the numbers increasing every year. It becomes a bit difficult for companies to manage the huge databases which could sometimes result in delay of the payment. Nevertheless, performance marketing is in trend and its possibilities are reaching the sky.

Author: Pankaj Deb

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Displaying 3 Comments
Have Your Say
  1. Manvendra says:

    Thanks! Great Article.

  2. […] are countless ways to calculate customer lifetime value. The simplest one includes three essential variables – average order value (AOV), purchase […]

  3. one dollar hosting says:

    Affiliate Marketing is the Best Place to earn money.

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