In an ideal world, you should pay for everything you get. The cost of advertising is the same. Advertising costs can vary from campaign to campaign due to many variables. Many marketers resist advertising because the cost of advertising is too high for some businesses and they cannot be sure if their ads will be successful or just an extra expense. This is where the importance of performance marketing or pragmatic marketing becomes clear.

In this article, we have introduced pragmatic marketing and described its different types, evaluation methods, channels used, and the stages of developing a performance marketing strategy.

What is performance marketing?

Performance marketing is a general term for online marketing and advertising programs where advertisers only pay when a specific action occurs. This specific action can include leads generated, sales, clicks, and more.

By using pragmatic marketing methods, marketers can be sure that their marketing budget is being spent on successful campaigns. Because the use of pragmatic marketing gives this power to advertisers who pay after achieving the desired goal.

Most importantly, the success rate of actionable marketing campaigns is usually higher because these campaigns are highly targeted, marketers are data-driven in their decision-making, and they can also optimize their campaigns based on results.

The benefits of performance marketing

Performance Evaluation: Using actionable marketing campaigns makes it easier and more accurate to track and measure your success.

Low risk: it is up to the marketer to choose specific goals and actions suitable for the type of business, for this reason, it can be largely assured that the use of performance marketing is targeted and has a much lower risk than other advertising.

Focus on ROI: Performance marketing is driven by ROI, so the focus is always on the end goal of improving performance. This ensures that performing campaigns are consistently moving towards better results, which helps to promote the brand and increase sales.

The difference between performance marketing and other methods

In most traditional advertising methods, the advertiser pays for ad space, independent of performance. This can mean spending hundreds to thousands of dollars without seeing results. Whereas with actionable marketing, advertisers only pay for successful actions for their business.

The difference between performance marketing and brand marketing

In a market that is saturated with different brands, being seen and recognized is a fundamental and important challenge. The importance of brand awareness is determined at this stage. There are many ways to increase brand awareness such as social media campaigns, native advertising, content marketing and more. Some of these actually fall under the umbrella of performance marketing because they are measurable and advertisers only pay for specific actions.

The difference between performance marketing and affiliate marketing

It can be said that affiliate marketing is one of the subsets of pragmatic marketing, because it is completely driven by criteria and goals. In affiliate marketing, an affiliate marketer earns a percentage of commission for promoting a product or service online with the goal of driving traffic, clicks, and sales to another company. In fact, the criteria for measuring the amount of payment in affiliate marketing are based on the actions taken, such as the number of clicks, conversion rates, etc.

The difference between performance marketing and planned marketing

Programming is becoming an essential element in performance marketing. Programmatic marketing is an automated method of advertising that targets the most relevant audience at the best possible price. One of the benefits of programmatic is deep data reporting and analysis, which means advertisers can monitor the performance of programmatic ads and optimize them in a highly focused way.

Performance measurement criteria in performance marketing

You can track and measure actionable marketing based on any agreed-upon metric, but the following are the most popular:

CPM (Cost Per Mille)

CPM stands for Cost Per Mille or Cost Per Thousand, the cost that the advertiser pays for every 1000 impressions of a digital ad.

CPC (Cost Per Click)

CPC represents the price paid for each time a user clicks on an ad. CPC represents a better user interaction with the ad than CPM, because the viewer took an action and clicked on the ad.

CPA (Cost Per Action)

CPA measures campaign performance against a specific action you want your target audience to take, such as downloading an e-book, signing up, purchasing a product, or any other action. In pragmatic marketing, actions taken by potential customers are considered the most important tangible and measurable result, so CPA is also one of the most important and popular metrics.

CTR (Clickthrough Rates)

With CTR, you can tell if your ad campaign is working or not. The method of calculating CTR is that the total number of clicks received in a particular ad is divided by the number of times it is displayed. By reviewing your CTR data, you can determine which ads are performing well and which are not.

LTV (Lifetime Value)

LTV is becoming one of the most popular metrics in performance marketing. LTV analyzes and predicts a customer’s relationship with the company using advanced methods, and by using it, it is possible to estimate the amount of income that can be earned from a customer based on their continuous activity.

Familiarity with functional marketing channels

Now that you know what performance marketing is and how it works, let’s talk about the different channels used in different performance marketing campaigns.

Native advertising

Native advertising is a type of advertising content that does not look like advertising! In fact, the production of the content of this type of advertisement is done in such a way that it is completely consistent with the content of the platform where we want to advertise. Marketers can provide potential customers with useful and valuable information in the form of attractive content to arouse their interest and lead them to take a specific action. A common metric used for native advertising is CPM or CPC.

Sponsored Content

This type of performance marketing channel includes working with influencers, celebrities, and content creation websites. They publish a post or article to promote a brand or product or service. Some people believe that advertisement reporting is also a type of sponsored content. Payment in this method can be in the form of products, services, and free experiences, CPC, CPM or CPA.

Social media

Many brands can find their audience on social media channels including Instagram, Facebook, Twitter, Pinterest and LinkedIn. Using these platforms for performance marketing campaigns can include influencer marketing or paid advertising strategies.

To use social networks, you must first determine which platform the majority of your audience uses. Commonly monitored performance metrics for social media marketing are likes, shares, comments, clicks, sales, and payments.

Search Engine Marketing (SEM)

Most online research is done through search engines, which means having a website that is optimized for search engine marketing (SEM) is essential.

In SEM, the advertiser pays for the number of times a user clicks on a website on a search engine results page.

Affiliate marketing

As mentioned in the comparison section of affiliate marketing and pragmatic marketing, affiliate marketing is one of the subsets of pragmatic marketing that is paid after taking the desired action. Among the common examples of affiliate marketing, we can mention the partnership of companies with affiliated websites or influential people to promote their brand and products or services.

The main steps of creating a performance marketing strategy

There are many different types of performance marketing channels and campaigns, so there is no single way to do it. However, this section outlines the main steps for creating a performance marketing strategy.

Step 1: Determining goals

Before you can measure the success of any campaign, it’s important to define your campaign goals. Setting goals before launching is the foundation of performance marketing. Many advertising platforms require you to set goals before creating an ad or launching a campaign. Your campaign objectives determine where and to whom your ads will be shown.

The most important goals of digital marketing are:

  • Brand awareness
  • sales increase
  • Increase website traffic
  • Increasing participation or engagement

Step 2: Select digital channel.

In performance marketing, it’s wise to diversify the channels you use instead of focusing on just one. This helps spread the campaign and increases the chances of success. For example, by being on different social networks, or using different advertising channels, you can expose your performance campaigns to a wider audience.

Step 3: Launch the campaign

The campaign launch phase includes identifying the target audience, understanding their needs, and creating advertisements to meet their needs and attract their attention. In addition, it is also important to consider the technical side of campaigns, such as ad size, number of characters, and standard images.

Step 4: Campaign evaluation

The real work begins after launch. Performance marketing campaigns start generating data from the moment they are launched and executed. By analyzing this data, marketers determine which channels have performed best, and make decisions based on that for their next campaigns.

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