What is Performance Marketing? An Overview

what is performance marketing
18 Oct
2021

Marketing is an essential aspect of any business. Good marketing translates to higher profits and better business. Therefore, resources need to be channeled in extra effort needs to be made when it comes to marketing.

Over the years in India, almost every digital marketing agency has invested a decent amount in various marketing strategies and creative ideas, to elevate the profits of companies. However, performance marketing is one of those rare strategies, which is both affordable and effective and guarantees success.

Considering the return on investment and profits acquired through this method, there is a huge benefit with performance marketing in India.

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What is performance marketing?

As the name suggests, performance marketing refers to promoting products and services, keeping in mind the performance. Here the marketers only get paid when an advertisement reaches people as per the expectations. These desired goals can vary, depending on the situations and companies.

It is one of the best money-saving, profit-making, and measurable techniques. There are mainly four types of goals that come under performance marketing –

1.Cost Per Thousand (CPM)

Before proceeding with its definition, let’s clarify  that ‘Cost Per Thousand’ is abbreviated as ‘CPM’, where the “M” refers to the roman numerical abbreviation of 1000.  CPM is a cost or amount that the advertisers pay to the marketers per one thousand views on advertisements.

However, when it comes to CPM, it’s hard to figure out if people have actually read the advertisement or just scrolled through the web page.

2.Cost Per Click (CPC)

Unlike ‘Cost Per Thousand’, where the payment is made based on views, ‘Cost Per Click’ claims to pay only when the audience show interest in the product or service, by clicking on the advertisement.

It is comparatively more reliable than CPM, as here there is a measurable reaction following an action. The CPC rate, however, differs for different clients and depends upon their expectations.

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3.Cost Per Lead (CPL):

Here the relevance of price takes the foreground. Cost Per Lead doesn’t demand mere views or clicks, but it expects some kind of lead, like signing up, filling a form, etc. This method helps in contacting the target audience efficiently while figuring out how impactful the advertisement has been on the audience. This increases the chances of people buying the product.

4.Cost Per Acquisition (CPA):

This is the most effective, accurate, and expensive method of performance marketing. Here the payment is made by the advertisers only when a purchase occurs, post the product or service advertisement.

In the previous methods, the chances of tampering remain high compared to CPA, as buying bots or smartly placing the ads to get higher but ineffective views can rarely be followed in this technique.

What is a performance marketing channel?

Performance marketing channel helps the advertisers drive traffic, to make sure that the advertisements reach a greater number of people while redeeming valuable clicks. Search engine marketing (SEO), social media marketing, native advertising, content marketing, sponsored content, and affiliate marketing are a few types of performance marketing channels.

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