The introduction of performance marketing has revolutionized online marketing and advertising campaigns. However, the “online approach” of performance marketing should not be confused with digital marketing, per se. Notably, both marketing methods focus on generating real business outcomes through the online marketing approach. But, despite the similarities, performance marketing is not a part of the digital marketing segment. The question that continues to perplex brands is, how is performance marketing different from digital marketing?
The difference in Focus Areas:
Unlike digital marketing, performance marketing focuses on generating sales, leads and conversions. Whereas, digital marketing focuses on broad aspects of online marketing. Consumer awareness, brand loyalty, reach on digital platforms and across devices being few of them.
The difference in the Payment Model:
The payment model of both marketing methods plays a significant role in setting them apart. Performance marketing pays on a per-result basis, rather than paying an upfront cost for services. As a result, the model is chosen as a budget-friendly option by smaller companies and start-ups. On the other hand, digital marketers often charge on an hourly or monthly basis for services rendered.
The difference in Goals:
Performance marketing focuses on immediate results versus short and long-term gains. The model makes use of shady strategies or tactics to create effects. Digital marketing, instead, focuses on developing a strategy for driving future-oriented long term results.
The advantages of performance marketing:
- Low-risk in terms of investment: Performance marketing has the pay as you go approach. It pays the marketers only if a specific action is completed towards the growth of the brand. Not only the money is well spent, but it also reduces the risk of investing and not getting the desired results.
- Focused on return on investment: Performance marketing makes it easier to keep track of return on investment, or ROI’s. The approach makes it easier for brands to evaluate how much they are financially responsible for paying for the campaign.
- The marketing model is 100% measurable: The confluence of modern technology with performance marketing makes it easier for brands to track the campaign’s performance. The marketers can not only monitor the campaign metrics but also make necessary adjustments based on data collection.
- Optimize KPI’s: The performance marketers focus on driving higher performance levels, and Key Performance Indicators help them target the metrics easily. KPI’s make it easier to track impressions, leads and optimize clicks.
How does performance marketing work?
The entire work structure of performance marketing consists of four crucial groups:
- Retailers or Advertisers or businesses that want to promote their services and products through publishers and affiliate partners.
- Affiliates or Publishers or marketing partners. These affiliates come in as product reviewers, online magazines, coupon websites, blogs etc.
- Third-party tracking platforms or affiliate networks that offer tools and information such as text links, banners and payouts. For both merchants and affiliates, these networks provide a way to keep track of clicks, leads and conversions.
- Outsourced Program Management Companies or affiliate managers who ensure that everything the affiliate needs is within reach of the merchants in the network. These affiliate marketers can either be in house or maybe hired from outside companies to manage the entire program.
Performance Marketing trends to keep track of:
The deployment of Artificial Intelligence and Machine Learning are examples of patterns that drive sales. Automation, personalization, segmentation and optimization are some areas of performance marketing where AI and machine learning are making dramatic progress.
The other new developments to watch for are multi-touch, time decay, position-based linear options.
The development of performance-based brands and companies and content sites has made it crucial to understand how is performance marketing different from digital marketing.