How Performance Marketing Helps Your Revenue Growth

By Deepak Kanakaraju — Sep 2, 2022

A lot of people think that performance marketing and running paid ads are the same. So they get someone to set up ads on Facebook, Google, and a few more platforms. And then they realize that the marketing is not performing and wonder what went wrong.

That's not how performance marketing works. Performance marketing means, marketing that performs. But that raises the question, doesn't all marketing need to perform?

These times demand a separate term for marketing that performs because, for a long time, marketing was not trackable. And most were ok with it because there was nothing better.

Running a branding campaign on a TV channel is not performance marketing because you would have no idea if the marketing actually worked. Millions of dollars have been poured down the drain by brands expecting marketing to work, and it didn't.

If you advertise on digital mediums, you can count the clicks and impressions but they can still be misleading. It doesn't matter if a video got a million views because the views don't put money in the bank (unless you are monetizing it with display ads).

At the heart of performance marketing lies conversion tracking. The tracking is usually done through a pixel. It's called a pixel because it is a 1x1 invisible image that loads on the page that we intend the audience to visit. (A lot has improved on the technology side of things but I will not get into that because we don't need to understand the technology behind it. Just learn how to use it.)

If you have a landing page with a lead form, it is not enough if the visitor from the Facebook or Google ad just visits the page. They need to fill out the form and get to the thank you page. The pixel loads on the thank you page. This is not the ultimate metric, you are at least tracking if the ads are generating leads are not. A lead is a tangible outcome that comes from the marketing activity.

To illustrate this with an example, let's say we have 3 marketing campaigns with each having a $1000 budget. Alpha, Beta, and Gamma.

The alpha campaign generates 1500 clicks but only 200 leads.
The beta campaign generates only 1000 clicks but 500 leads.
The gamma campaign generates 500 clicks and 50 leads

From the looks of it, we might think that the gamma campaign is the loser campaign.

CPL (cost per lead) for Alpha: $5/lead
CPL for beta: $2/lead
CPL for gamma $10/lead

One might naturally assume that the beta campaign is the best because it is giving the cheapest leads. But many times, marketers get surprised when they actually track the marketing results. The gamma campaign might be giving the most sales and revenue. Though the cost of lead is high, it still produces the highest ROI.

Sales Attribution

Most marketers do not attribute the sales to the campaign which the lead was originally generated from. And lead generation is so important because when it comes to high-ticket sales, you need to educate the customer before they decide to purchase something from you.

There are also two main types of attribution. First click and last click attribution. When you track where the customer came from to the first click on one of your web properties we call it first click attribution.

You might have first visited my site from Facebook, but then you might have seen an ad, got into my email list, and just before the sale happened, you might have clicked the link to the sales page from the community. I would attribute it to Facebook because that's where the first click came from.

If I want to do last-click attribution, I would attribute it to my community. One thing is not better than the other and both give unique insights into the customer journey.

This is one of the reasons we named our performance marketing agency as PixelTrack because that's what we do. We track the pixels so that we know where the ad dollars went, which source gave us the most clicks, and which source gave us the most clients.

When you can identify your best revenue channels, you can focus more on those channels, and scale your revenue faster. You wouldn't hesitate to spend money on marketing because you know that your marketing will perform. When there is a clear ROI on your ad spend, scaling ad spend becomes easier. Large numbers have a habit of giving predictive results.

So are you going to make sure that your marketing performs? Or are you just going to pray and hope that your marketing performs?

Cheers,
Deepak Kanakaraju