What is Performance Digital Marketing?
Performance Marketing, also known as Results-Based Marketing, is a type of Digital Marketing that focuses on measuring the performance and success of an advertising campaign through a set of Key Performance Indicators (KPIs), which can include conversions, leads, revenue, traffic, return on investment (ROI), and much more.
Beyond Pay-per-Click, it’s a Data-Driven Decision
Performance Digital Marketing is characterized mainly by the management of KPIs, measurable results, and payment for achieved results. Therefore, Performance Marketing strategies are focused on constantly optimizing and staying on top of the latest trends to reach its target audience at the right moment, place, and with the appropriate message.
Performance in the Digital Marketing World
The term Performance is part of various areas of Digital Marketing, including Affiliate Marketing, Sponsored Content, Search Marketing, and Social Media Marketing.
Search Engine Marketing (SEM) and Search Engine Optimization (SEO) strategies are also considered Performance Marketing campaigns. Search Engine Marketing aims to drive traffic to the website through paid ads on Google, and depending on the objectives, metrics can be used to measure its effectiveness, including Cost per Click (CPC), Cost per Lead (CPL), or Cost per Acquisition (CPA).
On the other hand, SEO Performance Marketing aims to drive traffic to the website without payment, also known as organic traffic, through optimized content in the form of articles, videos, or images. SEO strategies focus on positioning the brand’s content among the top results in search engines with relevant keywords. The performance of each article is analyzed with the number of organic visits to the website, conversion rates, leads, among others.
Performance Marketing Indicators
The goal is to identify whether digital media investment is successful. To measure the performance of strategies, it focuses on the performance of its main indicators: CPM, CPC, CPL, and CPA.
01.
Cost-Per-Mille (CPM)
Cost per thousand, focuses on charging for brand exposure or visibility per thousand views. This indicator allows us to assess the performance of our campaign in the first part of our sales funnel, Awareness. Based on the results obtained, we optimize strategies to reach conversion.
02.
Cost-Per-Click (CPC)
One of the most common models. It is the number of times a user clicks on the ad, regardless of whether they complete the purchase on the site or not.
03.
Cost-Per-Lead (CPL)
Cost per lead. As the name suggests, in this type of advertising, payment is made each time the user enters the website through the ad and fills out a registration form or completes a series of steps that provide information to enrich the advertiser’s database.
04.
Cost-Per-Acquisition (CPA)
Cost per acquisition, the advertiser only pays if a transaction is completed through the ad. It is part of a direct conversion strategy.
Performance Marketing in Your Business Profitability
To know the benefit obtained from an investment or if your company generates enough profit, you must understand the economic unit. Unit Economics allows us to monitor how much it costs us to sell a product and the profitability it generates. This calculation forecasts break-even points, margins, and projections. It can be approached especially from the following metrics:
Customer Acquisition Cost (CAC)
The result of the sum of marketing investments divided by the number of customers gained during the same period of time. It indicates how much it costs us, monetarily, to acquire a new customer.
Customer Lifetime Value (LTV)
How much revenue we can expect from a customer during the course of the business relationship. The sum of all the average money left in the company. More purchases equals greater value.
Return on Investment (ROI)
ROI indicates, in a simple and straightforward manner, the economic value we have obtained as a result of investing a specific budget in the execution of an advertising strategy.
Return on Ad Spend (ROAS)
It allows you to evaluate the performance of investment in marketing campaigns based on the amount of revenue the business generates for every dollar invested.