In the simplest terms, performance marketing refers to running ads or campaigns which are conversion-focused. But as a marketer or business owner you’d ask isn’t that the objective of all advertising campaigns? To get a user to buy/convert?

Yes. We all want a customer to buy our products. 

Thanks to the development of Google Ads, Meta Ads, and a variety of other ad platforms such as Snapchat Ads, TikTok Ads, Reddit, Quora, and more, today it’s much easier to target a user for conversion directly. So in some senses, if your objective is to get a transaction, we can easily apply that objective and run a campaign. 

The funnel of conversions

The reality is that it takes a lot more to convince a user to make a purchase. To simplify this journey, we refer to the buying cycle as a funnel, i.e. a process through which users discover, engage, consider and finally make a purchase, or traditionally known as the Awareness-Interest-Decision-Action [AIDA] model of consumer behavior. We know today that the consumer’s decision-making is influenced by so many aspects. Advertising is just one of them. 

How do you know which type of digital advertising is for you? 

Whether you’re a D2C start-up, or a B2B business selling a SAAS product, the approach for each category is different. Typical metrics that business owners or marketers use are centered around the cost of customer acquisition or CAC/CPA,  aside from Average Transaction Value, or Average Ticket Size. These metrics are important. However, depending on the business model, one must also evaluate the consumer’s life cycle in the business, and the value accrued to the business from each customer acquisition.

The different types of ad buying.

There’s no one size fits all approach when it comes to choosing the type of campaign. Often marketers make faulty assumptions about the conversion journey. It’s here we analyse customer behavior through the use of the DABBL tool and recommend media buying based on the business life stage. A business with 1000 customers is in a very different place compared to a startup with zero customers, versus another business sitting with 1Mn users on its app, but only 20% active users. 

1. CPM – Cost Per Impression: when the ad is clicked and payment is made for per click

2. CPC - Cost Per Click: when a number of views are achieved and payment is done when the ads reach a certain number of audiences

3. CPS – Cost Per Sales: when a sale is made through the ad and payment is done per sale

4. CPA – Cost Per Acquisition: when a target is achieved, e.g., a sale, form submit, etc. and payment is made for each target

5. CPL – Cost Per Lead: when someone sign up or subscribe and payment is made for each sign up or subscription.

Now that you’re familiar with basic terms, why not consult experts for performance marketing of your business and commit towards the growth of your business? We don’t always have to start with ads first. There’s a host of other options such as SEO, content development, GMB optimisation, and more to get you started onto your digital journey.