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Performance marketing, or in other words, functional marketing, is called online advertising in which businesses only pay for specific results, such as clicks per visitor, sales rate, or the like. Using performance marketing, marketers place their ads on social media, search engines, videos, and other channels to reach their goals; But how is this type of marketing?

What is performance marketing?

First of all, we need to answer the question of what performance marketing is and practically get to know more about the explanation of this topic. As mentioned, performance marketing is also called functional marketing, which in the digital world has its own marketing campaign, and people get measurable results in campaigns according to the budgeting and decisions behind advertising. Performance marketing is actually an iterative, but active cycle, and is often interpreted as:

Run campaigns, see what method works, double that method and repeat the [campaign] step all over again.

This was the theoretical view that we could present in a simple form of performance marketing; But regarding the practical view of this market, a term like performance marketing refers entirely to paid marketing campaigns. Although other digital marketing such as social media or content SEO can help to increase product sales, the feedback loops in these channels are very slow and such steps cannot be described as a functional and real marketing campaign.

The two companies Google and Meta (which the second company owns Facebook and Instagram media), are known common platforms for running performance marketing campaigns in the United States, which we all know is important and we know that millions of audiences are present on these platforms and Even each click on the ads returns a large sum to the campaign owner.

Read the sentence above which is written in bold again and if you don’t understand what you should do, let me explain it with an example so that you can naturally understand what performance marketing is and how it works. Yes, get to know more. Assume that you have a store that offers natural soaps to customers. You might start marketing by spending $1,000 a month on Google campaigns that drive two types of people to your business:

1. People who are searching for “natural soap”.
2. People who are looking for “natural skin care”.

In any case, one of these two categories will bring you the most return. As a result, whichever one performed the best, your task is to either spend your budget on these types of keywords, or to pay more money that will get more returns and more sales. Be.

The term performance marketing

Where performance marketing came from and why such a term has been applied to a new level of marketing is an interesting topic that should not be missed. As a term, performance marketing was coined shortly after the advent of pay-per-click (or PPC) advertising, which grew with banner ads (or display ads) and the Google AdWords advertising service (now known as Google Search Ads). found

In general, performance marketing is often associated with pay-per-results, and the billing model it entails for marketers has not changed. Whether my model of marketing is a performance type or not will be determined only when campaign decisions are based on measurable results, and then we can explain that such a marketing method is actually performance marketing.

But we only looked at the term functional marketing and we need to see what other terms are used in the heart of this work:

– Sales:

One of the main modes that managers and marketers look for. In this system, the cost of selling a certain amount of one or more goods occurs, but this model of performance marketing has a high cost.

– Payment for specific work:

Have you ever had to register for an event or download an app or even fill out a form somewhere? This type of functional marketing also exists.

– Number of clicks:

As we said above, maybe the number of clicks of each user and his entry to your site to view more products is of great importance to you, and in this field you can pay your own expenses for a certain number of clicks.

– Impression marketing:

This is similar to the number of clicks and is actually called the number of times your ads are displayed, which is mostly used to show the type of branding to the audience.

– Engagement or interaction:

You might consider that the level of participation of your users will push you further towards your goals. However, as each real audience interacts more with you and your ads, you will find specific programs for performance marketing in the future, and this type of marketing also has different costs depending on different platforms.

– Lead or clue:

Finally, the last term is lead, where you don’t just care about a certain number of audience, but you are looking for the highest quality of them to see what they want and what leads they give you to make your project bigger or better. This group of people will remain so-called leads for the time being so that you can eventually convert them into real buyers.

What is the application of performance marketing?

Now that you have learned the terms and performance marketing itself, you should know what this type of marketing is used for. As we have mentioned many times, performance marketing takes place in the virtual and online space where the results of advertising programs can be measured. All people who have small and large businesses can, depending on their goals; Use this marketing method.

Some people intend to sell more products, and others have the goal of attracting an active audience, which performance marketing will provide them with this capability. As a result, for the growth and expansion of stores, brands and service areas, using functional marketing is the best recommended option.

What are the stages of performance marketing?

So far, you have understood what performance marketing is, what terms there are in it, and what people it is used for. If you decide to go ahead and have your own big and creative marketing campaign, you need to learn and follow the steps to do it, which are briefly explained below:

Determining the goal: how you intend to use performance marketing.

Choosing a suitable marketing network or channel: If you are not familiar with the channels in this field, it is explained below.

Planning: To pay the budget and complete the marketing steps

Monitoring the performance of the advertising campaign: which type you can get the most return for your brand or store or platform and make your marketing investment on it.

Cost management: And the costs that you intend to invest in different sectors must be managed. It is very important to which sector to inject more money or to which sector to provide more targeted funding.

What are the payment methods in performance marketing?

Performance marketing is about the best possible results of the day. Since we spend money, it all depends on what we spend. In general, there are 4 key criteria for spending in any marketing campaign, which we will describe below:

-Cost per thousand impressions (CPM):

Cost per thousand impressions means the cost of an advertiser to generate 1000 views of his ad in this marketing method, which in English is Cost Per Thousand Impressions or CPM, and advertisers and marketers pay from 1000 views instead of cost per show use; Because the cost of a show can be very high and low, but advertising for more than a thousand people is more stable.

This metric primarily tells you how expensive it is to advertise on the platform and how competitive it is to reach the people you want to reach. For example, the CPM for reaching people who search for the keyword “buy natural soap online” (which we gave a more detailed example above), will probably be higher than the CPM for a keyword like “personal hygiene tips”; Because the search engine probably focuses more on the word “buy”.

– Cost per click on the link (CPC):

This item, which is known as Pricing on a per-click basis or abbreviated as CPC, is another performance marketing method that costs campaign operators and marketers for each click on ads. If you are one of those people who are looking for an audience for your brand, you should use this payment method.

– Acquisition costs (CPA):

There is another thing called CPA or Acquisition Expenses, which costs money for certain actions that the audience does (such as sales, sharing contact information, visiting your blog, etc.).

Lead acquisition cost (CPL):

Earlier, we talked about who the leads are, and the cost that managers and marketers pay to attract these leads is called Lead Acquisition Expense or CPL.

-Profit margin in product sales (CPS):

When using The Margin of Profit on Product Sales or CPS for performance marketing, only ads that result in sales will be paid. Marketers use this framework extensively.

What are the types of performance marketing channels?

Successful marketing flows through performance-based channels. Several digital marketing platforms are suitable for implementing performance marketing strategies, which we will describe below.

Digital marketing:

Different types of digital marketing fall under the category of “display advertising” or digital marketing ( what is digital marketing ?), among the most important of which we can mention banner, video, and media ads in general. Most of these ads are visual, however, they may include sound, images, or a combination of both.

Promoted Content:

A native ad, unlike the display ad mentioned in digital marketing, seems more natural in the marketing context. This is because the user feels your ad belongs there; Because its design, writing and formatting is similar to other free content that he has seen and gives the user a sense of safety margin.

Advertising in Search Engines:

Your brand may show new awareness of your brand to the audience and attract customers by placing advertisements in exchange for answering users’ questions in search engines such as Google, Bing and Yahoo. The average CPA for an advertising campaign on Google is about $59.18.

Advertising in virtual space and social media:

Advertising on sites and social networks such as Facebook, Twitter and LinkedIn or Instagram, etc. may help your business to attract more attention from online users and increase the traffic of your website and base.

Affiliate marketing:

This is used when you pay a partner or other goods to acquire a certain number of customers or complete a certain number of leads to buyers.

last word

In this article from Iranhost (provider of Iran’s cloud server services), we tried to give additional explanations about the question of what performance marketing is and how it is used and how to enter the world of performance marketing. It remains that you can expand your brand in this area through any of the mentioned methods