Each year, digital marketing is becoming more and more important for businesses of all sizes. In addition, companies are starting to understand the value of spending their valuable cash on digital advertising.
For example, in 2018 alone, there were more than 3.5 million brand-sponsored Instagram posts. According to Hubspot, at least 70 percent of businesses are “actively investing” in an online content marketing strategy. It’s in this landscape of an overwhelming amount of digital marketing that performance marketing agencies are starting to gain traction.
In this article, we’re going to tell you everything you need to know about performance marketing agencies, including what they are, exactly how they work, what to look for when choosing one, and what trends to look for in performance marketing over the coming years.
What is a performance marketing agency?
“A comprehensive term that refers to online marketing and advertising programs in which advertisers (a.k.a., “retailers” or “merchants”) pay marketing companies (a.k.a, “affiliates” or “publishers”) when a specific action is completed; such as a sale, lead or click.”
This is a results-oriented style of marketing. Instead of charging a fixed price up front, performance marketing agencies will charge their clients per result. This could be per sale, per generated lead, or any other KPI is decided between the client and agency.
The client is not asked to pay for the service until they can see the return they will get on their initial investment. This is a win-win for the client, as they know their money is going to be well-spent.
What makes performance marketing different from other kinds of online marketing?
The key differentiating factor with performance marketing is that clients only pay for advertising services after they have already been successful. If you hire a performance marketing agency, you are guaranteed a return on investment.
Traditionally, you would hire a marketing agency in hopes of getting your money’s worth. In contrast, you only pay for the returns you get with performance marketing.
In addition, you can track your ROI by each individual click with a performance marketing agency. This allows you to see where each of your dollars is going and how it is directly helping your business to grow.
How does performance marketing work?
Performance marketing is really an umbrella term for a variety of different marketing techniques and strategies. It includes things like search engine marketing, influencer marketing, paid advertising, and anything else where the agency can charge the client per completed action.
Each of these strategies has its benefits. The choice of what to use comes down to the goals and focus of your individual business.Affiliate marketing
Affiliate or influencer marketing is one of the most common methods in performance marketing. It basically works like this; the retailer or “merchant” has a product or service that they want to sell. Rather than buying ad space on Facebook, Google, or some other platform, they will create an affiliate program.
Those who have a following or presence online can sign up for that program and become a partner or “affiliate.” They will get sign-up or purchase links for the company’s product or service and include them in their content. Often, affiliate links will give potential customers a discount or special offer to entice them to come check out the company’s site.
You see this kind of marketing on sites like Instagram, YouTube, Facebook, and other social media. Podcast ads are also a kind of affiliate marketing.
The idea is that consumers are more likely to purchase products that are recommended to them by people that they trust. We can see this just based on a few statistics.
- The influencer marketing industry is set to hit $10 billion by the end of 2020
- Nearly 75 percent of consumers say they trust opinions that they find on social media when it comes to their purchasing choices
- 40 percent of users use some kind of ad-blocking software on their computer, rendering traditional banner ads useless
Affiliate marketing is growing fast, and it isn’t hard to understand why. It’s simple, effective, and continues growing despite most consumers’ distrust of advertisers.
However, performance marketing includes much more than just affiliate marketing. Although it plays a large role, there are many other strategies that fall under the performance marketing umbrella.
Search engine marketing
Another important element of performance marketing is search engine marketing (SEM) and search engine optimization (SEO). These terms have slightly different meanings, but they are sometimes used interchangeably.
However, there is a difference between the two. SEM is a broader term that includes any marketing efforts focused on using a search engine to drive sales and traffic. A company engaging in paid SEM will purchase ad space on Google, Yahoo, Bing, or another search engine in the hopes of acquiring new leads or customers.
SEO falls within SEM, but the difference is in the title. A marketer working on SEO is working to optimize the company’s webpage so that it shows up higher in organic search results.
SEM is a vital part of performance marketing, as it is easy to track where the clicks/sales are coming from.
Another element of performance marketing is native advertising. This is similar in some ways to influencer marketing but has a few differences.
Native ads are different traditional banner ads in that they do not appear to be advertisements at all. If you have ever been reading a news article in a magazine and noticed that it was sponsored by a retailer, that is an example of native advertising.
Typically agencies will charge by click or by impression for native advertising efforts. These can be a great way to increase brand awareness.
What to look for in a performance marketing agency?
When it comes to hiring a performance marketing agency, there are lots of elements to consider. These include the agency’s track record, their price structure, their current strategy, and what steps they take to optimize their performance marketing efforts.
The single most important thing you can look for in a performance marketing agency is a solid track record. You want to know that they have been able to help other companies find the same success you’re looking for.
At MuteSix, for example, we have dozens of testimonials from satisfied clients. We pride ourselves on making sure that you’re satisfied with the results and ROI that you get from working with us.
We’ve worked with some of the biggest companies in the world, including the NHL, MeUndies, JibJab, and Ring. MuteSix produces consistent results for each of our clients, sometimes giving them an ROI of 20x what they spend.
Any performance marketing agency needs to be able to show you that they have already been successful in the past. That way, you know you can count on them to do the job.
In addition to past success, you want to make sure you understand how they charge for their services. Depending on the specific marketing strategy, there are a few different ways of doing this.
Many agencies charge a cost per click (CPC). This means that they will charge you a fee for each time someone clicks through an affiliate link or to your landing page or website. In other cases, they may charge per sale. That would mean you only pay when a sale is finalized rather than just when someone clicks through.
And in some cases, you will pay a set cost per impression (CPM). This is common in things like podcast marketing. You will pay the ad agency for each time someone hears your ad, reads a native ad, or watches your video on social. This type of structure is great if your goal is building brand awareness.
Each way of structuring costs has its benefits, so make sure you understand from the start how the agency will charge you. No matter what with a performance marketing agency, you are guaranteed at least some ROI. However, you want to make sure you are getting the best return possible.
Current Marketing Strategy
Before you hire an agency, take some time to understand what their current marketing strategy or philosophy is. Ask questions like these:
- Where do they spend the most ad dollars?
- What social channels do they use to market products?
- Are they constantly changing their approach, or has it more or less stayed the same?
- What are they doing to keep up with the changes in the digital advertising landscape?
- What kinds of content do they create? Social posts? Creative? Videos? Banner ads?
These are the types of questions you want to ask when choosing a performance marketing agency. You want to know that they are constantly improving and tweaking their strategy.
At MuteSix, we focus on delivering scalable marketing solutions that help our clients grow their businesses for the future. We know that things are constantly changing, so we work tirelessly to stay on top of current methods and strategies that work for our clients.
Digital advertising is a complicated, ever-changing industry. The best marketers are consistently and constantly making adjustments to the way they advertise based on new research, data, and trends. One of the best ways to do this is through rigorous testing.
Consistent A/B Testing
This is most common in landing pages, but you can use A/B testing in all aspects of digital marketing. The idea is that you create two different versions of the same page or piece of content and see which performs better.
You can then use this information to inform your next piece or to understand your audience better. It can be difficult to know exactly why one performs better than others, but over time you can start to notice patterns and trends of what performs well with your audience.
What to avoid with a performance marketing agency
There are a few red flags to look out for when looking to hire a performance marketing agency. The first of these is to pay close attention to the way they structure their pricing.
If you’re trying to hire a performance marketing agency, they should only charge you based on results. They should not charge any kind of fee up front. If the company is asking you to pay a service fee prior to them generating leads or sales for you, this should be a huge red flag.
Some marketing agencies will charge prior to service, but that goes against the idea of performance marketing. You should only pay for the results that you actually get.
In addition, make sure that they can prove to you that you will actually get some results. Although it won’t cost you any money if you don’t, there’s no need to waste your time with a company that can’t get you the results your organization needs.
Only At MuteSix
MuteSix is an award-winning, full-funnel performance marketing agency. We work with our clients to produce consistent results with a customer-first approach across a broad range of industries.
We have worked with clients in e-commerce, retail, technology, sports, publishing, and financial services, just to name a few.
With more than $1 billion in trackable revenue, we work to constantly unlock new value from digital investments in a rapidly-changing marketplace.
We start by defining a goal for you and your business. From there, we craft a blueprint and plan to achieve that goal and determine the tools we’ll need to execute it.
After that, it’s test, learn, scale. We will continually test different variations of our strategy to find what gets you the best results, learn from each test, and scale our marketing strategy as your business grows.
If you’re looking for a performance marketing agency that focuses on your ROI and your customers, drop us a line. We’d love to hear from you and help you craft a marketing strategy that will help your business scale and grow to new heights you’ve never seen.