One of the biggest problems for advertisers is that some of the money they spend is wasted. This fact has not changed, although measurement methods have become far more sophisticated with the increasing weight of online advertising.
Performance marketing provides a solution to this problem. Advertisers who want to invest for the results of the ads, not for the ads, turn to performance marketing.
In classical advertising models, regardless of the effect of the advertisement, it is the advertiser who pays the advertising agency or the media in advance. In performance marketing, on the other hand, the advertiser pays if and only if the action he/she expects from the target audience is taken. This may be the sale of a product on the website or the completion of a form.
With performance marketing, the advertiser can more accurately predict how much of the money they spend on their marketing budget will return as profit. It is not possible to have such foresight with classical advertising planning techniques.
Why Not Use Performance Marketing for Every Campaign?
If advertisers waste some of their money on other ad models, why don’t they use performance marketing in every campaign?
This is a good question. To answer it, we must discuss the concept of “advertising”.
Advertising is not just for the sale of a product or service. In general, advertising is a form of persuasive communication, and selling is merely one of the outputs of this persuasion process. Making brand communication or expanding the category may also be among the purposes of the advertisement. Since the communication to be made for these purposes cannot be measured based on user actions, performance marketing techniques cannot be used in all cases.
One of the biggest obstacles to the widespread use of performance marketing is its cost, which can be high. The media, which is paid for a specific performance, naturally demands higher budgets for this type of advertising.
How to Use Performance Marketing
It is possible to use performance marketing techniques in every advertising channel where user actions can be measured.
Content can be used as a performance marketing channel. When the budgeting of sponsored posts, native advertising, or affiliate marketing activities is performance-based, they turn into performance marketing examples.
Social media ads can also be evaluated within performance marketing. If your campaign goal is to sell a product or service directly, or if you want to increase the number of fans on your social media profiles, your advertising efforts for all these fall within performance marketing.