Why You Should Use Performance Marketing

Posted on Posted in blogging tips, Marketing

The Marketing Metrics Continuum provides a fra...

You’ve got a business, you want to increase your sales (duh!) and you want a larger Internet presence and market share. In the old days, you know, circa 1992, you could put an ad in the local paper, you could run an ad on television (1 minute  = $$$) or you could try radio (1 minute spot = $+ a half $). As for marketing, you could slap your logo on a hat, pen, refrigerator magnet, tote bag (think PBS’ annual telethon), and then go to conventions and trade shows to give them all away.

Several of these methods still work. Television works, but it’s even more expensive now than it was back then. Same with radio. You can advertise in the local paper, but in all likelihood, the only person who will see it is your grandmother, and unless she’s your target demographic, kiss your ROI goodbye.

So, how to you advertise and market to those most willing to buy without breaking the bank?

Enter performance marketing. In short – you pay for what you use and what works. It eliminates the issue that department store guru John Wannamaker quipped about when he said, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”

So, how does performance marketing work and why is it important to you? Think about this: We’re all pretty aware that the Internet is the new frontier as far as gaining new customers. We also realize that the Internet is a HUGE marketplace. When you consider how many millions of people use the Internet daily, that’s a lot of people to target, even when you narrow your demographic. If you tried to reach that many customers with a newspaper ad, you’d go broke. Reaching your entire audience through television is out of reach for many small businesses, and there would still be no guarantees that your marketing would work.

With performance marketing, ads for your business are posted on the sites of others, and the ads that result in a “click” are the ones you pay for. A “click” consists of either a new visitor, or if your link is for ecommerce, a new sale. For each “click” you receive from the link of the sites, you pay the site a commission.

Let’s look at it another way. Let’s say you offer online tutoring services to high school kids, and you place a flyer in a local bookstore with the arrangement that for every new customer you receive from that flyer, you’ll pay the bookstore a dollar. When the new customer tells you they got your information from the flyer in the bookstore, that’s a “click.” Now, instead of using a bookstore in town, substitute an online bookstore or website geared toward high school students. Make sense? You can set these arrangements up yourself through individual companies, or you can use an affiliate marketing program that will reach out to hundreds or thousands of website publishers who would love nothing more than to market your products and services.

So, how does this benefit you? Let me count the ways:

  1. You’ll know how much you’re spending on marketing and how much you’re earning from your marketing efforts. This is commonly referred to as “Return on Investment,” or ROI. You can keep the ads and publishers that work, and replace the others.
  2. You’ll know which marketing approaches are working, and which ones are not. Unlike more “old school” marketing methods, you don’t plop down the money first and hope everything works. You pay for the results after you see them.
  3. In real estate and brick and mortar businesses, one of the primary keys to success is “location, location, location.” With performance marketing, it’s “saturation, saturation, saturation.” The more places that offer your link, the more sales you’ll generate, provided…
  4. The links are on targeted sites that reach your demographic. It’s much easier to target your key demographic and have a link created that’s tailored for them and their needs.
  5. You’ll be working with innovative and creative advertisers. Affiliates only get paid if they drive traffic to your site, so you can bet your next 12 salary draws that they’ll create links that will get attention and increase your sales.

And there it is, your brief (very brief) crash course in performance marketing. Now, go forth and market.

Author: Guest Blogger