David Ogilvy
What is Performance Marketing?
Performance-based marketing - This is result-oriented marketing, increasing sales. Its distinctive feature is the ability to see at all stages of work a specific quantitative indicator that will reflect the result of the work of each individual area of marketing, for example, the cost of a site visitor, application, call, order and the final cost of attracting a purchasing client, and of course the return on investment in marketing - ROMI (Return of Marketing Investment).
iConText clients see increased sales from their marketing investments, not just impressions, clicks or CTR. In fact, payment occurs for a visible result directly related to a specific business: from increasing the number of applications on the site to optimizing return on investment or internal metrics received only in CRM.
We initially immerse ourselves in the clients’ business processes and select the most effective online promotion channels specifically for their business, determine the area of marketing problems and find tools to solve them.
What does performance give?
Focusing on a performance approach allows us to focus on tasks that lead to maximum results and require minimal costs from the client. The main aspect is the measurability of marketing results at all stages of the funnel, from the first contact of a potential client to the purchase of a product or service. Such control gives an understanding of the efforts that bear fruit.
Stages of work in performance marketing
Why choose us?
- We evaluate quantitative KPIs, relevant to a specific business. For example, the cost of achieving goals and quantity forecast. We rely on both industry experience and the knowledge base accumulated over 13 years.
- Introducing the strategy for solving problems. We offer you a description of the approach to work, detailing the stages of communication, giving specific examples from the industry or category, and justifying the stated indicators.
- We have really extensive experience working with performance campaigns, in which we consistently achieve high results. (link to cases)
- Proven professionalism. To achieve maximum results, we use advertising campaign automation systems and advanced tools for their analysis and optimization. Our employees are certified and experienced specialists in all the tools we use in our work:
We've released a new book, Social Media Content Marketing: How to Get Inside Your Followers' Heads and Make Them Fall in Love with Your Brand.
The basic principle of performance marketing can be explained using the following example. Imagine that you wanted to buy a house. To do this, you contact the realtor and agree that his commission will be paid only if you purchase the proposed option. The remuneration will be calculated at a fixed percentage of the value of the property - meaning you will be able to estimate the costs. And you make payment only for the result - a purchase, regardless of the total number of views of the proposed options.
Performance Marketing: What is it?
- image campaign;
- performance marketing.
The first task is to reach as many users as possible in order to increase brand awareness.
And the priorities of performance marketing are to increase sales and determine the specific and measurable effect of investments in promotion. This promotion method is aimed at a quantitative result that can be evaluated.
- coupon codes;
- referral links;
- individual telephone numbers.
Using this method involves a fairly large amount of testing and tuning. As a result, this pays off with a much higher ROI (return on investment) and ease of determining whether the launched campaign is successful. A large number of businessmen prefer this type of advertising, since its productivity is easy to measure.
What determines advertising costs?
Performance marketing differs from other models in that payment is made only if a target action has been completed (following a link, calling, filling out a form, placing an order), and not for ad impressions. This is called the (cost per action) approach.
The two main types of CPA used are:
- : cost per sale – cost of sale.
- CPL: cost per lead – cost per lead.
CPS implies the accrual of advertising commission only when purchasing a product or service; and is one of the most popular methods among advertisers. There are two payment options - as a percentage of the purchase made by the user or a fixed amount in monetary terms. Ideally, sales influence advertising costs.
The CPL method is also often used. It is based on the number of attracted leads (potentially interested visitors) who filled out the registration form with their contact information on the company’s website or landing page.
The least popular method of evaluation and payment is CPC (cost per click) since the actual click may not lead to a change in sales figures and the quality of the click itself is very difficult to evaluate.
Main performance marketing channels
The main channels used in performance marketing are:
- search engines (advertising in search networks, contextual);
- social networks (targeted promotion);
- partnership programs;
- mobile advertising;
- e-mail marketing;
- marketplaces.
The main tool of performance marketing is traffic analysis. The main factor influencing the success of a campaign is accurately identifying and searching for a specific target audience.
In most cases, the showing is determined by the auction price. Companies determine rates for displaying advertising to users with certain characteristics (gender, age, marital status, etc.) in a selected region. Moreover, the message is conveyed not to an abstract audience, but to a specific consumer. To analyze the effectiveness of channels, all steps from clicking on a banner to making a purchase must be taken into account. Google Analytics and Yandex.Metrica cope well with this task.
- only what the user is interested in;
- exactly at the moment when he needs it;
- where it is convenient for him.
The key advantages of performance marketing for the customer are payment for a specific target action, and not for the number and time of advertising; the ability to control the budget and set the maximum allowable cost of conversion, as well as a visual display of funds spent and received.
About investing in K50, a company developing an advertising management platform.
K50 General Director Georgy Ternovsky wrote a column for the CPU about what changes await the contextual advertising market, what performance marketing is and why the banking industry, along with Travel, is the most savvy in terms of contextual advertising.
I’m so tired of the word “crisis” that I’ll try to use it as little as possible, although the material, in principle, is about our difficult times. And, in my opinion, the contextual advertising industry, which is even now predicted to have an annual growth of 10% in 2015, should be one of the first to adapt to new realities.
In recent months, I have been actively looking for projects with a normal sales funnel, when the CRM system stores data in the context of the keyword for which the purchase was made, and where data on repeat and additional sales throughout the user’s life is stored. This is necessary to start managing bids in the Yandex.Direct and Google AdWords systems with an understanding of the exact profit for the key query, and not at the level of “far-fetched indicators”.
Over the last quarter, more than a hundred large advertisers have gone through this search, and only two have a normal funnel with an acceptable error, which you really can’t do anything about. At the same time, most agencies say that their profile is performance marketing, and most advertisers think that the transition from working on CPO to ROI is cool.
This is really not bad, but not enough for 2015 - we all need to fly on skateboards, but we still ride on a homemade board.
Let's understand the concepts.
Performance marketing- the direction of advertising on the Internet (primarily contextual and advertising on price platforms), aimed at the most transparent relationship between the budget for the channel and actual sales. In the normal approach, sales determine the advertising budget.
CPO (CPA, CPL)- cost per order (action, lead) - outdated, but still the most widespread KPI of the Russian elite of advertisers. I remembered the story of how an acquaintance of mine carried out the transaction plan for a startup that had recently left us: plastic cups, forks and other goods up to 300 rubles in the special placement of Yandex and Google gave an excellent CPO indicator, but the business was not brought to good.
ROI- return on investment in advertising, the top thought of most experts. And really, everything wouldn't be so bad. If every fifth advertiser considered ROI from revenue, and not from turnover. Or, for example, it would be based not on the average margin data for a store or service, but on the actual data on the margin of each keyword.
None of the projects I know have reached data on repeat purchases, at least within a year, by keyword. I’m almost sure that a couple of projects in Travel do this, otherwise they would have closed long ago at their lowest margins.
Why is this happening? Or why didn’t the author, if such D’Artagnan, do it himself? All because there is little competition, and dumping in Yandex.Market is the main model of competition in Russian e-commerce, and this industry is still one of the most advanced. But nothing, this year will fix everything, and soon real performance marketing will await us.
Now I will try, based mainly on fragmentary experience, to formulate the main claims to the market in the context of industries.
Banks
Probably the most advanced industry, on a par with Travel. But in Travel it’s simpler - 99% of orders are online, the main thing is to calculate LTV - and everything is cool. In banks, serious financiers are still pushing for a cool approach, working with user history data, and the level of loan refusals for a specific keyword. Why don't you like a flying skateboard?
For example, Tinkoff Bank uses one of the most advanced solutions for tracking the effectiveness of contextual advertising that I have seen over the past year, and many banks are copying this approach.
But dynamic call tracking (CallTouch and others) costs much less than 10 banks - and it’s not a fact that the data is uploaded to CRM.
My usual dialogue with a client looks like this (although it is much softer, so here and further in the text the dialogues are from my head, but this is the meaning. And I want to speak just so harshly, but my upbringing does not allow it - this is actually where the idea of the article comes from) :
Deposits are opened only by calling you, and not through a form. Yes?
(Client) - Yes!
- Don't need deposits?
- Needed.
- Why don’t you set up call tracking?
- We have a branded phone number.
- And name it by heart...
- I don’t remember him, but I understand it all, but the management doesn’t really understand. (In fact, most often he himself does not understand what dynamic call-tracking is)
- Explain, or management will explain to you, that the situation in the country is such that there will be no dismissal benefits. And somehow they will understand you, this is probably how they built the bank, this is not “forks in special placement.”
In general, the banks are great, however, only those few banks that are constantly advertised in the main positions, and not these ones that conduct advertising campaigns on the Internet for a period of two months. As they said in my childhood: “If it weren’t for people like you, people like us would be where people like them are.”
Car dealers, real estate and others who work through contacts
2014 was a breakthrough year for these segments. Previously, they bought traffic, now they have installed dynamic call trackers, chats and track the number and cost of calls (call + chat + application). But the dialogue is also difficult.
Why didn't they go further?
(Client)-Where else next?
- You can already track transactions and margin...
- For what?
- Well, to manage rates in contextual advertising.
- Oh, that's good, yes, that's what we want. True, our deals have a long cycle. Sometimes up to a year.
- Are you going to work here for less than a year?
- No, but our CRM does not allow integration, they have been setting it up for a year and a half (they are writing it), but I won’t go to the programmers.
- Go to management.
(Hereinafter, as with a bank)
Let's digress a little and return to the concepts that were mentioned.
Dynamic call tracking- a system for tracking calls by keyword. Of course, the key and most correct trend of the past year.
(Client)- So what should I buy, 10 thousand numbers?
- No, 10 thousand numbers are not needed, the system substitutes numbers only for those who are currently on the site. From 10 to 30 numbers are enough to count really big advertisers.
- Error?
- 5%-10%.
- It's a lot!
- Yes, I understand that now your error is zero. You are buying traffic. In general, the indicators for such advertisers sometimes increase by 10 times.
(Then it usually starts about the brand number and about the terrible management)
LTV- life time value (there is also the concept of cost per buyer) - the profit that an attracted user will bring during his “lifetime”, that is, while he interacts with your online business, and, accordingly, the cost of such a user.
Startups and startupers
Lots of insight and ideas here. True, the lifespan of an average startup usually does not allow time to calculate LTV. Well, where are you - businesses with corporate events in honor of the 10th and 20th anniversary? You can! I understand that it's late, but better than never. Just don't be lazy. Your analysts know everything and can do everything. You just have to persistently ask them.
Other
I haven't worked much with other industries. But I think it's even worse there. This is just a cause-and-effect relationship.
E-commerce
This is where the most difficult case is. Those who should be first are, in principle, the worst.
What is performance marketing?
There is a lot of talk about performance-based marketing; separate sections are dedicated to it at specialized conferences, and it may seem that this is a tribute to fashion, and not real effectiveness. And yet - does it work or not?
Despite the fact that attention to the term has given rise to many definitions, all of them are somehow related to the result. By performance marketing we mean an approach in which various promotion channels (contextual advertising, affiliate marketing, SEO, RTB placements, etc.) are used to achieve specific business goals: sales volume, cost of customer acquisition, ROI. It is important that the activity can be flexibly managed with a focus on results, preferably in real time.
Using a multi-channel approach, we can interact with the user not only at the moment when the desire to make a purchase has already formed, but also at other stages of the consumer’s life cycle, when he is just making a decision, choosing among several options, or is ready to make a purchase again. By collecting statistics on every customer action, digital marketers can measure the effectiveness of their marketing efforts at all levels of the sales funnel and continuously optimize their campaign based on the data obtained.
Why is this necessary?
The emergence of performance marketing has significantly changed the approach to planning advertising activities. The scheme in which the creative part exists separately from the purchasing part no longer works. The modern situation requires the ability to quickly change advertising campaigns. When different structures are responsible for their development, implementation and adjustment, the process of obtaining data and optimizing an advertising campaign inevitably slows down. Performance marketing allows you to avoid such problems. This approach is based primarily on managed channels that allow and even require constant optimization of structure, targeting and communication with potential clients, and therefore creative solutions become not only elements of strategy, but also tactics, and require almost daily attention.
The main thing is the result!
Now the market demands a performance approach to the entire marketing mix. E-commerce is perhaps the most striking example of business and marketing working as one. Competition in this area is so fierce that companies must constantly optimize costs and every action.
In most cases, an online store simply cannot afford to spend money on advertising without conducting a thorough analysis of the results of these efforts in real time. That is, it is important not just to conduct a campaign, evaluate its effectiveness after some time and then, having drawn conclusions, start planning the next flight - you need to constantly measure indicators and adjust placements.
Any activity: from clicks to viewing blog posts or downloading a mobile application should be aimed at solving specific business problems. It is important to understand that implementing a performance approach is impossible without integration with the client’s CRM to obtain data about attracted clients and their value. This is what TKS Bank did, for example. Now all the company’s actions in the field of marketing are clearly subordinated to business KPIs (the number of new clients that the bank has received); advertising activities need to be measured in real time and see what effect they have on the business. In this way, advertising campaigns are constantly optimized based on real-world performance data.
The introduction of performance marketing allows you to focus on those tasks that require the least cost and bring the most results - here the Pareto law classically manifests itself (“20% of efforts bring 80% of results”).
An important point is that performance based marketing can be applied not only to online promotion channels. You can also analyze business effectiveness in the case of offline campaigns. For example, after a TV spot is shown, we can measure changes in the volume and structure of search queries and, based on this data, indirectly judge the effectiveness of an advertising campaign.
The performance approach is also used when a business advertises on the Internet and tracks how online campaigns influence the increase in sales at offline locations. An example is the UK retailer Debenhams - 57% of sales generated by online campaigns came from offline stores, which proved the fact that online resources can be successfully used to increase offline sales.
Of course, to achieve these kinds of results, brand marketers and agencies must have access to real-time data on final sales. This is the only way to quickly monitor the impact of certain steps on sales and the emergence of new customers in order to make the necessary adjustments to the course of the advertising campaign.
Where does this not work?
The performance approach to marketing always works, the question is that when promoting some products and services we can get quick sales, but when promoting others we cannot. For example, we will not be able to get quick sales when launching a new online service or product, when brand knowledge is not formed and direct demand is very small, but we can work with intermediate KPIs, obtain statistics, optimize advertising campaigns and move towards more business-oriented KPIs . You can work in the same way when promoting goods and services that have a long sales cycle (for example, investment products, luxury goods, real estate and others). The main problem here is on the statistics side: it is necessary to accumulate a sufficient amount of data in order to move on to optimizing campaigns based on business KPIs.
What's next?
Tools for promotion should always be selected based on the real objectives of the business and its specific goals. At the same time, the development of technology promotes the use of performance marketing - this approach has more and more opportunities.
Already, every user has many devices that he uses throughout the day at work and at home. For example, he can start searching for information on one gadget, continue on another, and perform the action necessary for the business from his home computer. In this situation, you need to monitor its actions on different platforms and, when planning communications, take into account the features of each device in the context of the goods and services being promoted.
In the near future, iBeacon, an indoor positioning technology, will gain popularity and new targeting opportunities will emerge. If a customer spent a long time selecting a product on the website, added it to the cart, but ultimately did not order it, using iBeacon, the retailer can offer a discount on this particular product as soon as the customer enters the store.
The sensor system will also help analyze the behavior of visitors: who stood at which shelf and for how long. Based on this data, you can send a personalized message and track which offers the client was interested in and which were ignored.
One of the trends of the future is a deeper connection between performance marketing at the offline and online levels and, in connection with this, maximum personalization. Then we will be able to address the user offline based on online actions, and vice versa.
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