Performance marketing for real measurement of one's potential

What is the Performance Marketing approach? What are its aims? How is it changing the way we do business?

Rational cost management and measurement of one's actions: performance marketing as pure targeting and 'reasoned guessing'.

Defining it unambiguously is not easy, because it is a series of strategies, best practices and activities that are constantly being updated and refined: performance marketing is an approach based, as its name suggests, on results (or performance).

The substantial difference from classic marketing, or other types of approaches, lies in the location of the budget: in classic strategies, against an initial, allocated and reasoned expenditure, specific actions are taken that fall within the budget.

In performance marketing, the action plan works in the opposite way; campaigns (digital by now - but not only) are launched and their results are measured. Based on these, the campaigns, designed on the target, are constantly optimised, monitored again and implemented. Fundamental then becomes content marketing: measurements and performance depend on the proposed content, which is the most powerful means to achieve one's goals.

One strategy, many metrics, differentiated costs.

Data: the most valuable resource of this century.

Any digital information from collection and analysis tools (Google Analytics, Adobe Analytics to name a couple) is data; it can be quantitative reports of traffic activity, audience demographics, or performance metrics - the ones we are interested in now. What we need to understand, as a first step, is what data we need for the purposes of optimising our business.

In the ongoing process of optimising our own performance, there are metrics we cannot ignore. Among the fundamentals we have:

• Click-through rate - by monitoring clicks on a CTA (call-to-action) or on a specific link we have two very important pieces of information: effectiveness of our campaigns and origin of the clicks, which will help us to define our audience more and more cleanly;
• Conversion Rate - by measuring predefined conversions (registrations, downloads, newsletters, payments) we can define the type of cost, relative to the ads being analysed, that is most in line with our targets (as we will see later),
• Customer Lifetime Value - how much is a customer worth in economic terms for as long as they use our products and services? Keeping track of this helps professionals not only to define the trend of the strategy, but above all to make more targeted ROI calculations;
• Social metrics - also often called Vanity metrics, they include likes, followers, comments, shares; they are not among the most effective tools for measuring performance, but monitoring and analysing some of these indicators helps to improve the relationship with one's audience and the sentiment relating to the brand.

Depending on the performance of the campaigns, different types of costs can then be assessed, again based on the performance itself:

• Cost per click - payments are based on the number of clicks on the ADV, great for driving traffic to the site;
• Cost per impression - payment is based on impressions, i.e. the number of views of the content;
• Cost per sales - payment is dependent on the sale that comes through an ADV (how much it cost me to make that sale);
• Cost per leads - like CPS, here the conversion signal is linked to a subscription or a non-commercial event that generates leads (potential customer);
• Cost per acquisition - determines how much it cost to acquire the customer (including all marketing and sales costs).

Performance Marketing, the real question: benefits for the SME.

Looking to the future of digital marketing and content marketing, working with a performance-based strategy is certainly among the most profitable directions for a company.

Beyond the lack of large preventive campaign budgets, and thus rationalised and results-based spending, there are several interesting benefits to consider.

Since it is a ROI-focused approach, every single action has its own positive impact on the economic results of one's business, with a much lower risk rate than with classical methodologies. Generating masses of data (big or small) is an additional value for the company, which will be able to profile itself even better as a data-driven reality, with all the advantages of the case. Campaigns, in this way, will be easier to track, and any intervention and optimisation will not be lost in a stream of inconclusive hypotheses and tests.

Some best practices:

1. Always set a goal: only in this way can you be sure of going in a concrete direction and not risk losing out on costs;
2. Design appropriate KPIs: try to follow indicators that are consistent with your business strategy;
3. Work creatively on campaigns: don't indulge in quick or simple solutions, but always create original, high-performance content;
4. Constant measurement: since you have to rely on your own activities, don't forget to keep performance monitored at all times, with the help of effective tools or appropriate advice;
5. Continuous benchmarking: taking cues from competitors and monitoring their performance is not a bad practice. Setting yourself the target of someone else can become one.

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