How to Implement a Performance Marketing Strategy?

How to Measure Your Performance Marketing Strategies?

In our previous post, we talked about the importance of performance marketing and the advantages it offers when measuring results and determining the success or failure of your campaigns. If you’re not familiar with performance marketing yet, we recommend taking a look at:

Performance Marketing: Definition and Benefits

Now it’s your turn to implement your performance marketing strategy!

To implement your own strategy, it’s essential to know which metrics or Key Performance Indicators (KPIs) to measure the results you achieved within your website: clicks, impressions, leads, and sales.

The main KPIs are:

Cost Per Click (CPC): This is a form of payment for paid ads where advertisers pay for a number of clicks. In other words, the advertiser pays for visitors who access the site where the ad was placed for their site.

Cost Per Mille (CPM): The most common and easiest-to-use payment model, CPM is a calculation of the price a marketer pays for every 1,000 impressions. Instead of paying for someone to click on an ad, the advertiser pays every time the ad is shown to someone in their target audience. This method can be useful when the campaign’s goal is to increase brand or product awareness.

Cost Per Acquisition (CPA) or Cost Per Lead (CPL): This is the advertising cost paid for each prospect or lead obtained. Remember that a user becomes a potential lead when they leave their personal data to receive an offer or subscribe to your content.

Cost Per Sale (CPS): This is the model in which the advertiser pays a fixed amount of money each time a sale of their product or service is made. This method is commonly seen in e-commerce.

KPIs in a Sales Funnel

Now that you know the metrics within Performance Marketing, let’s see how to implement this strategy within your campaigns. To ensure the best results, follow these recommendations:

1.- Define clear and practical goals.

To do this, you should start with a clear and achievable objective. What exactly do you want each campaign to achieve? In other words, do you want traffic to your website or sales for your online store? Do you prefer to pay to reach more people or only a certain number of people interested in your product?

To keep it clean and achievable, try to set one or two goals per campaign.

2.- Select a good landing page and offer.

When it comes to performance marketing, a poor landing page can discourage visitors from making conversions, and a poor offer can prevent them from clicking.

Think and test the entire user experience when they access your website through different devices. Always try to review the links and offers you have available, keep the content updated, and update the landing pages that have lower performance.

3.- Test and optimize revenue-generating KPIs.

We know that testing and measurement are essential for a good marketing strategy to work.

To execute a good performance marketing, test different techniques and strategies to optimize conversions, click-through rates, and traffic by conducting A/B tests to get a clearer response on what works and what doesn’t.

4.- Choose your web traffic sources.

Ensuring that your web traffic comes from reliable sources and locations is extremely important in performance marketing.

Remember that less reliable sources make consumers think twice before trusting your brand.

5.- Track and monitor constantly.

Identify where your users are coming from, what device they are browsing on, how much time they spend on your website, or even which sections are most visited. This information will give you a better idea of what works and what doesn’t.

Don’t forget that measuring profits and losses is equally important in determining the success or failure of your performance marketing campaigns.

Without analyzing your work and making adjustments to optimize your campaigns, your sales will not grow.

Performance marketing is clearly defined in theory, but what is the best way to put it into practice?

Let’s look at an example of a performance marketing strategy

The hardware store “Gabo” aims to attract more buyers to its online store, so it decides to invest $20,000 MXN according to this objective.

Initially, to attract customers to its website, the company developed a section of promotions that would be exclusive to its online store. Later, it put a series of products that were among its best sellers on sale. In parallel, a series of informative contents were generated that would be published weekly throughout the campaign.

At the end of the campaign, 27,000 clicks were obtained in total.

To know the cost per click (CPC), the investment was divided by the clicks generated.

CPC = investment / clicks

If the investment is $20,000 and 27,000 clicks were made, the CPC would be calculated as follows:

CPC = 20,000 / 27,000 = 0.74

So for every click users made, the company invested $0.74 MXN.

Each click generated represents a user navigating to the interior of the page. Of the total volume of this traffic, 10% subscribed to the weekly content on the page.

Of the people who clicked, only 2,700 people provided their details by subscribing.

To know the cost per acquisition (CPA) or cost per lead (CPL), the investment was divided by the number of conversions.

CPA = investment / number of conversions.

In this case, 2,700 conversions were made with a total investment of $20,000.

CPA = 20,000 / 2,700 = 7.40

For each lead or acquisition, the company paid $7.40 MXN.

Finally, of the leads generated, 48.14% made a purchase of some product.

1,300 people made an average purchase of $1500.

To know the cost per sale (CPS), the total cost was divided by the number of sales.

CPS = total cost / number of sales

CPS = 20,000 / 1,300 = 15.384

In this case, for every customer they obtained, they invested $15.384 MXN.

After analyzing this data, the hardware store “Gabo” decided to determine its return on investment (ROI).

Its formula is as follows:

ROI = [(revenue – costs) / costs] x 100

So if each customer made a purchase of $1500, it would be calculated as follows:

Revenue = 1,300 purchases x $1,500 = $1,950,000 MXN

ROI = [(1,950,000 – 20,000) / 20,000] x 100

ROI = (1,930,000 / 20,000) x 100

ROI = 96.5 x 100 = 9,650.00%

The ROI in this case is 9,650%, which means that the company generated 96.5 times the investment made.

In this whole process, it is important that the selected channels always correspond to the objectives, the budget, and, last but not least, the target audience. At the end of each performance marketing campaign, a thorough analysis and evaluation of the marketing channels used and the campaign results should be conducted. This way, you will have a more accurate idea of the budget you will need to achieve good results.

Undoubtedly, performance marketing is an online advertising strategy that is leaving a more significant mark in the world of digital marketing year after year. Why not give it a try?

If you need help creating your performance marketing contact us