By Seema Poptani
The best businesses can flounder if their marketing campaigns don’t provide productive outcomes. Merely churning out greater output with huge marketing budgets won’t benefit the bottom line unless a company’s campaign goals are realized.
Here’s where performance-based marketing can make a big difference by ensuring an organization’s digital marketing campaigns work in sync with the business objectives. In such scenarios, marketing partners or professional service providers are only paid when pre-determined business goals are achieved since success is linked directly to performance. These results may be through extra sales, conversions, clicks, views, installs or leads. Based on the real-time impact of the marketing campaigns, the other business aspects are then optimized.
In today’s digital world, performance-based marketing helps to address one of the biggest obstacles: attribution. Typically, brands may struggle to pinpoint specific measures generating positive business results. But by directly connecting initiatives to outcomes, attribution resolves this problem.
While there could be variations in performance-based marketing, broadly, two main elements are involved here: the brand, company or service that seeks promotion and the advertiser, publisher or the person that promotes the same. The two entities work in unison to establish specific objectives and then go about accomplishing them through certain metrics or tracking devices to ascertain that the goals are met. When the marketing campaign is completed, the brand only pays the service provider for the tasks accomplished.
To promote performance-based marketing, strategies are used as per actions, which include:
Cost per click: This is the amount advertisers pay when their ad attracts clicks.
Cost per impression: The amount advertisers pay the publishers per thousand times an ad is shown.
Cost per lead: The amount paid when advertisers obtain a sign-on from the interested consumers directly because of the ad.
Cost per sale: The amount paid when sales are directly generated from advertisements.
Cost per acquisition: The amount paid when specific actions, such as a click, sales or form completion, are done.
For brands, performance-based marketing ensures an appropriate return on investment. There are multiple benefits of such an arrangement, such as:
Transparency: The brand and its marketing managers are aware of the results required. There is no room for ambiguity or confusion about fees being paid unless pre-decided objectives are attained.
Direct information: Brands know exactly where their marketing budgets are being spent and the yields generated. Views, clicks and the total time consumers spend on specific pages can be easily tracked. Thereby, brands gain insights about costs per lead and per sale, including total customer acquisition cost. Based on this information, marketing allocations could be revised, if required.
Measurability: Since all requisite data is available on the dashboard, campaign goals can be set as per business objectives and their progress tracked.
Lower risk: Budgets can be planned meticulously, ads can be scheduled during the best time, results can be viewed in real-time and campaigns tweaked along the way to obtain the best outcomes. Better control minimizes risk and helps to generate positive marketing ROIs.
Better insights: Brands are well-positioned to learn more about their business, markets, tactics and consumers. For instance, the performance management dashboard will reveal data such as the ads with the highest ROI, the most engaging product or service, at what stage customers disengage and which parts of the funnel need more attention. Backed by these insights, companies can undertake more data-driven business decisions.
Nonetheless, everything has pros and cons, including performance-based marketing. The challenges that could cross the norms of online marketing ethics include:
Greater chances of fraud: Since payments depend on deliverables, there is an incentive to use wrong practices and agencies may opt for quick results via fraudulent, unethical or low-value means. This could comprise cookie stuffing (placing multiple cookies in users’ browsers for claiming higher commission); location fraud (giving false location data); domain spoofing (deceiving users via fake website names or email domains); ad stacking (charging for fraudulent impressions by overlaying ads) and malicious bots (that impersonate humans, click ads, send spam emails and launch cyberattacks).
Decoding cross-device user journeys: A brand’s product may be discovered by users on an iPad, researched/reviewed on their PC and ultimately purchased on the phone. Tracking their journey accurately across devices can be extremely challenging. Typically, this may end as the last-click attribution, overlooking the varied marketing interactions before customers later reached the sales page.
Inadvertently underplaying long-term goals: As performance-based marketing focuses on real-time results, long-term goals may be lost in the push to generate immediate ROIs. Consequently, despite driving desired outcomes quickly, the overall marketing funnel should stay focused on nurturing and retaining both new and existing customers who discover the brand through other means.
Finally, although measurable ROI remains the most salient feature of performance-based marketing, specific measurement tools should be in place to gauge this success. These include:
Prior business objectives: Pre-determined business goals are the pivotal pillars of performance-based marketing. Besides determining business metrics, these goals can help gauge the success or failure of campaigns.
Predetermined keywords: When the goals are clear, the most relevant keywords can help to target the right prospects, thereby boosting the chances of success.
Track campaign results: Once a campaign gets live, brands need to monitor all marketing activities to check what’s working best and what’s not. Thereafter, they retain what works and drop what doesn’t.
Create unique codes/links: Having unique codes/links for an advertising or marketing partner helps in tracking the effectiveness of the work managed by different affiliates. Special care needs to be taken to ensure that these codes can be tracked clearly through reporting tools such as Google Analytics.
Meanwhile, none of the above would be possible without the right marketing affiliate or partner. So, think wise before selecting a marketing partner. If all these boxes are ticked, success is guaranteed.
The author is marketing lead, mPokket. Views expressed are personal.
Also Read: Chai Pe Charcha with BrandWagon