Understanding Performance Marketing

Performance marketing is a branch of digital marketing that focuses on tangible, measurable results – usually in the form of conversions or leads generated. This objective oriented approach, with its focus on hard numbers and achievable benchmarks, is ideal for businesses to achieve actual objectives and is the most direct contributor to profit margins amongst all digital marketing avenues.

Performance marketing campaigns vary in the objectives they seek to obtain. They can be used to boost engagement on a social media page, drive traffic to a website or improve discovery and brand awareness. What all of them have in common, however, is a commitment to achieving the best results with the most efficient usage of the available budget.

How performance marketing works, is when a defined action, such as a sale or a sign-up is completed, the responsible partner earns a pre-agreed payment. The goal of performance marketing campaigns then, is to optimize their ad spend to achieve as low a cost per result as possible.

Why Startups Need Performance Marketing in India

Startups face several challenges in their infancy. They start with a blank slate and little to no brand recall to aid them. Not to mention, they’re usually operating in a market that’s already heavily saturated with competition.

From the get-go then, one of the primary objectives of a fledgling startup is to achieve tangible results on a shoestring budget. This focus on achievable objectives (usually sales or the generation of leads) with maximum efficiency and minimum ad expenditure is the defining feature of performance marketing campaigns.

Performance marketing for startups is therefore the most preferable form of digital marketing, and the one which makes the most sense to prioritise early on.

Key Benefits of Performance Marketing for Early-Stage Startups

Performance marketing works by prioritising efficiency. Every result(clicks, leads, conversions, etc.) faces rigorous evaluation on the grounds of how low the cost of procuring it was. Having a higher cost per result immediately indicates that your ad campaign isn’t performing optimally. Performance marketing campaigns seek to minimise these costs and yield results in a manner that’s most economical.

This approach is especially beneficial for small and early stage startups. By placing an emphasis on achieving the most efficient results with the least amount of money spent, performance marketing for startups helps them attract new customers and generate more sales without mindlessly splurging on dead end leads with an already tight ad budget.

Additionally, performance marketing offers you the benefit of hyper-specific targeting settings. It allows you to target audiences on the basis of their geographical location, interests, age, sex and a variety of other relevant factors. By fine tuning their performance marketing strategy to only target individuals they’re the most likely to convert, startups stand to gain higher quality leads and benefit immensely.

Growth Marketing Strategies Every Startup Should Implement

Performance marketing works best when combined with broader growth marketing strategies that complement it. The two seek to achieve the same end goals, but differ from each other in subtle ways. Performance marketing places its focus on immediate results. Growth marketing strategies play the long game. The focus here is on experimenting with variations in messaging and tone of communication across a variety of channels. By identifying specific moments in the customer journey that are potential inflection points, marketing strategies can be fine tuned to enable sustainable business expansion. This, essentially, is what growth marketing seeks to achieve.

A few common growth marketing strategies include:

• A/B testing campaigns: Running variants of the same ad with different content can help determine the most effective ad creatives and copy.
• Retargeting audiences: Users who’ve already visited your website but didn’t convert can be shown ads to move them further down the marketing funnel. Converting a customer, after all, is often a war of attrition.
• Content-driven marketing: Blogs, videos and email funnels can complement paid campaigns.
• Referral and loyalty programs: These help reduce customer acquisition costs and increase lifetime value.

When combined, growth marketing strategies and performance marketing campaigns create a strong foundation for both immediate sales and long-term customer retention.

Choosing the Right Performance Marketing Campaign for Your Startup

Every startup has its own unique set of requirements and business objectives. Which is why the ideal performance marketing strategy for every startup varies depending on several factors including what results they’re prioritising, which primary audience they target and what monetary constraints the campaign comes with.

• If it’s immediate sales that are the objective, a conversion-focused Google or Meta ad campaign would be ideal.
• If the focus is building brand awareness, a mix of video ads, influencer collaborations and an engagement focused performance marketing campaign would be more effective.
• For B2B leads, LinkedIn ad campaigns deliver the best results.

Measuring Success: Key Metrics and ROI in Performance Marketing

Once you’re set on the specific type of performance marketing campaign you want to run, the question of how to assess its efficacy remains. There are a variety of performance marketing metrics that can be used to determine how efficient your ad expenditure is and to give you a clear picture of your return on investment.

Important metrics include:

• Cost per click (CPC) - This metric represents the amount an advertiser pays each time a user clicks on their ad.
• Cost per lead (CPL) - Similar to CPC, represents the amount paid for every lead generated, not just for a click.
• Customer acquisition cost (CAC) - Tells you the total expense your campaign has incurred to acquire a new customer.
• Click-through rate (CTR) - This is a measure of the percentage of viewers who’ve clicked on your ad after viewing it.
• Return on ad spend (ROAS) - The metric to rule them all, your ROAS tells you how much revenue you’ve generated for every buck you’ve spent on advertising.

Common Mistakes Startups Make in Performance Marketing Campaigns

Performance marketing campaigns can often devolve into a trial-and-error driven mess when not overseen by experts. Some of the most common mistakes digital marketers make while running performance marketing campaigns include:

• Not defining clear goals before launching campaigns.
• Ignoring demographic segmentation, which leads to wasting sizable proportions of their ad spend on irrelevant audiences.
• Neglecting creative testing and running the same ads for too long.
• Overlooking tracking and analytics, which makes it impossible to measure ROI accurately.
• Spreading budgets too thin instead of focusing solely on the most effective marketing channels.

Most of these mistakes can be easily avoided with clear cut strategies and the marketing acumen that comes from years of industry experience. Always pays off to trust the experts, eh?

Conclusion: Maximizing Growth with the Right Performance Marketing Approach

At Digikit, we have experience working with brands across multiple industries. Our clientele includes up and coming startups and MNCs alike, and we’ve helped our clients achieve unprecedented growth with proven performance marketing strategies.

And if all our years of experience have taught us anything, it’s that the right blend of research and careful planning can achieve remarkable results.