The Promise and Perils of Performance Marketing

market research, marketing researchOne of the challenges for — and criticisms of — the marketing function is that it’s often difficult to calculate an ROI on a company’s marketing efforts. For example, how does a soft drink or beer company determine whether or not their multi-million-dollar Super Bowl ad was worth the investment? How can they tell whether a customer made a purchase based on that ad as opposed to a purchase they were going to make anyway? Not an easy task.

And yet both employers and clients want (and deserve) to know if their marketing investments are paying off for them. Fortunately the measurement game these days is often much more straightforward than in the past. 

With the rise of online marketing and ecommerce, businesses and marketers have better tools and analytics at their disposal than what is available for older business models. The ability to track consumer online behavior from page visits through to purchases has led to the evolution of performance marketing.

What is Performance Marketing?

The Performance Marketing Association defines performance marketing as “a comprehensive term that refers to online marketing and advertising programs in which advertisers (a.k.a., ‘retailers’ or ‘merchants’) pay marketing companies (a.k.a, ‘affiliates’ or ‘publishers’) when a specific action is completed; such as a sale, lead or click.”

In other words, you pay for the results after the results have happened. This is the reverse of the traditional model, where you invest in advertising or other marketing and then hope it pays off with increased revenue.

Performance Marketing Favors Clients

In an article for Forbes, Nick-Bjorn Slettengren argues that performance marketing often disproportionately favors the client. “For the client,” he writes, “performance marketing is usually a no-brainer because they can set a bar of performance that they know will drive major goals within their marketing campaign.” For the agency, Slettengren says performance marketing can be advantageous as a way to stand out among competitors or to ingratiate the agency with the client. But even these are really just agency-focused spins on the advantages to clients: “This is really beneficial to the client, so it’s a good selling point for me if I do it.”

But performance marketing isn’t necessarily the perfect option. Because it is so results-driven, it incentivizes short-term metrics. How many clicks per day? How many sales this month? A focus on performance marketing can neglect long-term brand growth and even harm the long-term health of a brand depending on how short-term performance metrics are achieved.

For example, are you generating a lot of web traffic through clickbait? That won’t make consumers think highly of your brand.

Improved capabilities around collecting data on consumer decisions and actions has allowed the emergence of performance marketing, which can be a boost to efforts to pin down a marketing ROI. But it’s not a silver bullet, and its use should be couched in the context of your overall strategy and not simply focused on short-term goals.

About Us

Strategic Communications, LLC, works with B2B clients to help them achieve their goals through effective content marketing and management with both internal and external audiences. We work with clients to plan, create and publish high-quality, unique content. Whether on- or offline, or both, we’ll help you achieve desired results.

(Strategic Communications is certified as a Woman-Owned Business Enterprise through the Wisconsin Department of Administration.)

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