What is performance marketing and why is it important for startups?
Chances are, you’ve heard the term ‘performance marketing’. But do you know the ins and outs of what that term means, or the benefits a performance marketing agency can bring to your brand? Throughout this post we’ll be introducing you to exactly that, as well as what you should be aware of before bringing a performance marketing agency on board.
What Is Performance Marketing?
Performance marketing defines the efforts you invest to make someone aware of your offering. How you define that performance might be different depending on your brand, or the product/service you’re promoting, but they’re measured by their efficacy in delivering a strong ROI. It could be a lead, a sale, or a click, but ultimately it’s about analyzing different channels and brand touchpoints, and using them effectively to drive a desired result.
Before engaging in performance marketing, it’s important to be aware of how much you’re willing to pay for this result. You don’t want to spend more than your profit margin, for example. It’s worth looking at your budget and how sustainably that budget sits in the long-term vision of your brand.
Why Is Performance Marketing Important?
In the 19th century, marketing pioneer John Wanamaker (1838-1922) said that “half the money I spend on advertising is wasted; the trouble is I don’t know which half.”
It’s this tension that ignited our quest for attribution to help validate our efforts, and distinguish between what works and doesn’t work. Performance marketing embodies this. It allows us to track online behaviours – be it views, clicks or purchases – much more effectively than we ever could offline.
It gives a clear indication, particularly at a time when analytics are so important, to whether the marketing measures you’ve implemented are driving results. As such, the benefit to your brand is clear. Not only are you growing a new audience while engaging the one you already have, but you’re able to better place your marketing budget and define more realistic, impactful marketing goals. In addition, performance marketing advertisers only pay for successful transactions, meaning you get exactly what you pay for.
Marketing matters. Here’s why:
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On average, email marketing has a 44,000% ROI. (Source: OptinMonster)
5&V Insight: Emailing is free. So long as you aren’t paying for a subscriber list, you will have collated a group of people who care about your brand, product, service.
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60% of marketers say that inbound (SEO, blog content, etc) is their highest quality source of leads. (Source: HubSpot)
5&V Insight: Generally, this is considered a ‘qualified lead’, and is the result of someone reaching out to you to express interest and learn more after undertaking some research.
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Social networks are the biggest source of inspiration for consumer purchases, with 37% of consumers finding purchase inspiration through the channel. (Source: PWC)
5&Vine Insight: As humans, we are inspired by our friends and the communities we’re a part of. When they promote a product we love or respect, we’re more likely to give it consideration.
How Can A Performance Marketing Agency Help Your Brand?
As with any collaboration, it’s important to find a performance marketing agency that’s right for you. They need to understand the stage of your startup, help prioritize efforts and investment, and treat your budget, wins and losses as if they are their own. It’s also important to like the people you work with. Ask yourself whether you trust them, whether you like their approach, and whether they engage with integrity.
The following are techniques we use to help brands at 5&Vine, and ones you should keep in mind.
Define Success
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To get the most out of a relationship with a performance marketing agency, you need to know what your goal is, how much that goal’s worth, and how much you’re willing to invest in achieving it. In many cases, that is defined by looking at your CAC (customer acquisition cost) against your LTV (lifetime value). By evaluating this ratio, you can ensure you’re set up to achieve long-term profitability beyond the first purchase.
Map Out Your Funnel
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Marketing isn’t as easy as directing someone to a page and leaving them to do the rest. Instead, they need to be aware of you as a brand and feel compelled to invest in your story. By structuring your marketing efforts across different stages, and arming each stage with effective calls to action, you’ll have more meaningful opportunities to navigate customers to your brand.
Understand A Performance Marketing Agency’s Role In Your Ecosystem
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Online efforts are critical to winning, but they are likely not the only marketing vehicles you will employ. By engaging a performance agency that understands their role in your ecosystem, they’ll be able to better structure campaigns that complement your other efforts.
Get Clarity From Every Click
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Performance marketing is data-driven, and you should be making the most of that data. With just one click you might be able to determine how long someone has stayed on your page, what the click means in the context of the rest of your traffic, and the journey that user took before and after committing to that click. As this is your budget and your business, you should have access to your performance data in real-time. Purchase ads on your account so past performance data isn’t lost if you transition agencies, and ask for performance reports bi-weekly (at a minimum).
Find Success Through Search
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When looking for a performance marketing agency, you want to find a partner who is great at paid social (these are ads on Facebook, Instagram, TikTok, or other relevant channels) and paid search (results that show up on Google or other search engines). Ideally, you want to partner with an agency that understands the two, as both are meaningful contributors.
Experience Matters
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Sometimes all you need is a fresh perspective from someone who has a solid overview of what’s happening, not just with other brands but within your sector as a whole. You want to engage with an agency that has done this many times before, and can invest their time and your money from day one, instead of figuring things out for the first time. When choosing the right performance marketing agency for you, identify their track record and ask yourself whether they can deliver what you need.
Think Beyond The Numbers
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It’s true that, with performance marketing, every interaction counts. However, if a click you’ve generated leads to a badly designed landing page or an offering that’s unclear, you’ll be collecting as many clicks away from your products as you do to them. A successful performance marketing agency should be able to instantly recognize this, and see how your marketing strategy sits within the umbrella of your brand.
Is 5&Vine A Performance Marketing Agency?
Yes we’re a performance marketing agency but, as a fractional CMO and growth agency, we’re also so much more. We have a track record of delivering results for startups. We also don’t charge for services based on a percentage of media spend, because we believe it is wrong. If you want to hear more about how we can help you and your brand, you can contact us here.
