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The Skai 5: Five Performance Marketing Models

Skai™

March  15, 2022
performance marketing

Performance marketing like search, social, retail media…you only pay when you get a consumer to take action

Before the advent of the internet, most advertising was akin to taking a shot in the dark by offering up a piece of content and hoping it reached the right person at the right time. However, as most of us are connected to the internet one way or another almost all the time—be it via social media, apps, games, third-party sales platforms, or even streaming services—there’s never been a better opportunity for advertisers to connect with users on a personal level. 

Performance marketing is a type of advertising that appears on any web-based platform and is sold based on prompting users to take a desired action. Far from being a shot in the dark, performance marketing is one of the best and easiest ways to make sure your ads are being seen. Here’s everything you need to know to get started with performance marketing. 

What is performance marketing?

Simply put, performance marketing is a term for a type of advertising in which advertisers only pay for ads that audiences see. Traditionally, those views were measured by how many people clicked on an add, but in today’s media landscape there more ways than ever to engage with content, meaning that performance marketing can now be measured by many methods beyond the pay per click (PPC) or cost per click (CPC) models. 

There are three main groups typically involved in performance marketing. The first are the advertisers and marketers who buy ads across channels, be they websites, search engines, streaming services, apps, third-party sales platforms like Amazon, social media, etc. Generally, marketers interested in performance marketing are looking to drive engagement with their products in hopes of moving potential customers down funnel to generate sales and drive revenue. 

The second group are, of course, the platforms that sell performance marketing based advertising. Companies the operate websites serving performance marketing ads are called publishers. Generally ads are sold based on a bidding model, and the advertiser who offers the highest bid on an ad space or keyword “win” the chance to have their ad served to the sites general audience or a segment of that audience selected by the advertiser. 

However, many advertisers don’t work directly with publishers and hire agencies to handle the ad bidding on their behalf. Usually performance marketing-based advertising is sold programmatically, meaning an algorithm bids on many ads at once, offering advertisers a higher chance of winning the top bids and having their ads served. Many agencies and SaaS platforms offer dashboard in which advertisers can see all the places their ads are running at once, along with the bids they are winning and losing, and how their ads are performing across platforms. 

Why is performance marketing more valuable than other types of marketing?

One of the best reasons to use performance marketing is that the results are easily measurable. If an advertiser buys a billboard or a page of copy in a magazine, there is no easy way to tell whether or not intended audiences ever received the message. However, performance marketing can be measured based on a number of criteria, from how many people clicked or viewed an ad right down to whether or not those who clicked made a purchase. This information creates a feedback loop, which strengthens future campaigns by providing valuable insight into audience behavior. 

Performance marketing is also a more cost effective form of advertising. Television and radio commercials, along with print advertising, can be costly, with no real proof of return on investment (ROI). With performance marketing, advertisers only pay for ads that they are sure a target audience has seen. 

Performance marketing models

Here are the a few of the ways it is possible to use performance marketing to serve ads guaranteed to be seen. 

Cost per click

CPC is a term that is interchangeable with PPC. In this model for performance marketing, the advertiser only pays when a user clicks on an ad that sends them to a company’s landing page. 

Cost per engagement

Cost per engagement (CPE) is when advertisers only pay when audiences complete a desired action. These actions could include anything from signing up for an email list or trying out a new service, like booking a first ride on a rideshare app after engaging with an ad in a music streaming app. 

Cost per acquisition (cost per conversion)

This term refers to how much  an advertiser pays for a specific action, such as acquiring a new customer, a signing up for an email list, or a click. 

Cost per view

This term applies to video ads in which advertisers pay each time audiences watch a sponsored video for the duration of ads under 30 seconds or at least 30 seconds of longer ads. 

Cost per install

For app marketers, this term applies to a performance marketing model in which advertisers pay for every new user who installs an app after viewing or engaging with an ad. 

How can you get the most out of performance marketing?

Performance marketing works best when advertisers have clear goals set for their campaigns. Knowing what you want out of a performance marketing campaign–whether its impressions, conversions, views, or clicks–means better results for your brand.

Additionally, adopting a platform that allows your brand to see how all its ads are performing across channels is an important way for marketers to not only see where ads are getting the most ROI but also to create cross-channel performance marketing campaigns that generate review and grow your business. 

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