Here’s the current reality of online retail: Many merchants are opting to take their brands direct-to-consumer (DTC) to bypass traditional middlemen, to gain a myriad of benefits such as brand control and cost savings, to innovate their business model in the face of a rapidly changing world, and a multitude of other reasons.

That said, there are many challenges present in such an undertaking. For instance:

  • Ads are becoming increasingly costly
  • Customer acquisition costs are on the rise
  • Differentiating products from competitors
  • Maintaining customer loyalty

The fact is this combination of hurdles can frustrate even the most experienced of marketers.

Moreover, given that consumers have so many choices at their disposal, many brands are left to wonder how they will continue to optimize eCommerce sales and grow their business in the years ahead.

Enter: Performance marketing.

In a nutshell, performance marketing leverages tactics to understand the how, when, where and why of a seller’s marketing efforts. To help retailers better understand performance marketing and how it can aid their eCommerce businesses, today, we will explore what performance marketing is, why it is essential to online retail brands and the benefits that can be reaped from this discipline, along with some other nuances.

Let’s lay the foundation for what’s to come by taking a look at performance marketing as a concept.

What Is Performance Marketing?

The primary divider between performance marketing and all other forms is the way in which businesses pay for their campaigns.

Performance marketing is an approach to digital marketing and advertising wherein merchants only pay when results are produced. The result is whatever is agreed upon between the agency and the brand. For instance, potential results could be new leads, clicks, bookings, sales, app downloads or something else entirely.

This means in addition to the benefit of only paying when results are produced, retailers end up receiving tons of free brand exposure along the way.

Performance marketers tend to rely on a variety of marketing channels and methodologies to produce outcomes. Those techniques include:

  • Native advertising
  • Sponsored advertising
  • Social media advertising
  • Search engine marketing
  • Affiliate marketing

Why Performance Marketing Is Critical to eCommerce?

While there are scores of benefits to be reaped from performance marketing for all kinds of businesses, eCommerce is particularly well suited for this practice for a variety of reasons, including:

Brands Must Consistently Attract New Customers

As mentioned earlier, in many cases, the price of digital advertising has risen exponentially over the years. At the same time, many are failing to produce results via Facebook advertising and paid media run on other platforms.

The sad reality of online advertising is, for all the money that merchants invest, there is no guarantee of any positive or prosperous outcomes, meaning sellers could waste their entire budgets.

Fortunately, performance marketing flips this paradigm on its head, enabling retailers to only pay for results.

Loyal Clientale

Rising Levels of Competition

Alongside the need to constantly drive customer acquisition, 2020 brought about a significant increase in the level of competitors online. This is a hard pill to swallow for many, as eCommerce was already an incredibly competitive field.

Therefore, in order for sellers to be capable of standing out, it is imperative for them to focus on driving results which will bolster their bottom line. While PPC ads and the like certainly have their place in a merchant’s marketing efforts, they do not guarantee any sort of return.

Performance marketing, on the other hand, is all about results.

Therefore, in the eCommerce paradigm currently emerging, performance marketing should be leveraged by eCommerce retailers of all stripes.

Successful Campaigns Rely on Effective Management

Many online advertising campaigns do not fail because of their messaging, but because of poor management and optimization practices.

While retailers can potentially manage their ad campaigns across a multitude of platforms, successfully leveraging the considerable amounts of data that flow in from each campaign can be more than challenging.

This means PPC optimization opportunities are likely to be frequently overlooked, thereby resulting in adverts not reaching their peak potential.

 It is critical for retailers to partner with performance marketing agencies wo have the time, resources and experience necessary to pore over the data, identify definitive patterns and effectively optimize campaigns to ensure elevated levels of performance.

Performance Marketing Platforms vs. Performance Marketing Agencies

Before diving into the various benefits provided by performance marketing, it is necessary to take a quick look at the difference between performance marketing platforms and agencies.

In performance marketing, affiliates and publishers earn revenue based on clicks, leads and sales generated. Performance marketing platforms help this process along and make things more orderly.

However, a significant downside here is that it is up to retailers to analyze their own data and optimize campaigns themselves. If sellers do not possess such skills, performance marketing platforms will be limited in their application.

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Alternatively, performance marketing agencies specialize in pay-per-action digital marketing strategies to drive conversions for retailers be it sales, leads, downloads or something else.

Given that retailers only pay for performance under this model, agencies have a vested interest in producing the best campaigns possible and optimizing efforts to their limit. As a result, agencies are likely to deploy a variety of platforms, tools and reporting solutions to meet this aim.

With that brief comparison, let’s go ahead and take a look at the benefits provided by performance marketing as a whole.

Seven Benefits of Performance Marketing

As readers have likely surmised, there are a slew of benefits to engaging in performance marketing.

Some of the more notable and pronounced of those perks include:

1. Real-time ROI Measurements

With performance marketing, tracking and measuring results is remarkably easy.

Each time a user clicks on an advert, signs up for the company’s email list or takes any other prescribed action, retailers will know their goals are being met.

This makes tracking a campaign’s ROI at any given moment incredibly simple. Moreover, retailers will also be able to understand at a glance how much they will end up paying for their performance marketing campaign.

2. Better KPI Optimization

Of course, key performance indicators (KPIs) play a critical role in a brand’s ability to achieve its aims.

No matter if sellers are seeking to increase customer retention, boost retail sales, elevate conversion rates or achieve something else entirely, performance marketing enables retailers to directly target these metrics.

Moreover, since performance marketing agencies are focused on producing tangible gains for a business, retailers can rest assured these marketers will be working hard to deliver results.

3. Enhanced Brand Reach

As touched upon earlier, performance marketing is an effective tool for increasing brand reach as the discipline gives retailers access to a wider and more diverse audience than would be possible through traditional advertising techniques.

This is particularly true for those who are leveraging affiliate marketing, where the result can be tapping into a highly targeted audience, pulling in more website traffic and generating an increased number of sales.

Given that performance marketing can take a variety of forms, this practice opens a brand up to new markets as ads can be placed across a multitude of channels and outlets, thereby helping merchants to increase their company’s potential reach.

4. Ability to Diversify Revenue Streams

Performance marketing is a versatile approach to digital marketing as it enables retailers to quickly pivot to another marketing channel when one is not providing the intended results.

Ecommerce Revenue Strategies

This is massively beneficial because it means that sellers do not need to continue to drain their advertising budgets on ineffective tactics as there are more tried-and-true ways to generate revenue.

5. Better, Faster Results

When merchants tailor their spending to obtain specific goals (as is done with performance marketing), they can achieve better results in less time.

At the same time, since performance marketers have a vested interest in achieving the best results possible, sellers can be assured they will get the absolute most out of each and every dollar they invest in their performance campaigns.

6. Only Pay for Results

In more traditional marketing arrangements, retailers pay agencies a fixed amount upfront. Performance marketing flips this structure on its head, thereby having marketers charge the client only when the desired action or goal is met.

When stacked up against traditional marketing and advertising models, performance marketing is fantastic for helping sellers optimize their budgets. Rather than spending money in advance without seeking any outcomes, retailers only pay when the desired aims have been achieved.

Therefore, it matters not if retailers are looking to increase website traffic, grow an email list, boost app downloads, generate sales or whatever else, as this approach to marketing means clients only pay when specific metrics are hit.

7. Pay-As-You-Go Models

In addition to retailers only paying for results generated by a campaign, performance marketing models are often structured in a way wherein merchants are charged only when a designated action occurs.

While this seems like a minor distinction, this can be a game-changer for smaller companies as it is more amicable to their restricted marketing budgets.

CBD Payment Integration

Final Thoughts

For many brands, performance marketing can be a revolutionary approach to obtaining results.

The plain fact of the matter is performance marketing is an effective means of helping merchants to scale their reach, engagement, conversions and sales at a lower price, with far lower risk and significantly higher ROIs.

Given the rapidly changing landscape of eCommerce, it is highly advisable that retailers look to evolve many of the ways in which they drive results online, and performance marketing could be just the answer sellers are seeking.

If your brand wants to see how performance marketing could benefit its bottom line and overall organization ambitions, reach out to Visiture for a free consultation and we can discuss how performance marketing can take your company from where it is to where it wants to go.

 Thank you Ronald for such great insights into your expertise. 

Author

  • Ronald Dod

    Ronald Dod is the Chief Marketing Officer and Co-founder of Visiture, an end-to-end eCommerce marketing agency focused on helping online merchants acquire more customers through the use of search engines, social media platforms, marketplaces, and their online storefronts.

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