Performance marketing gives marketers the ability to directly attribute their activity to performance and prove ROI. It’s a win-win strategy that uses pay-for-performance tactics–like affiliate marketing, influencer campaigns, or pay-per-click ads–to track and measure the success or failure of an activity.

Would you pay hundreds of dollars for a second-hand car, without taking it for a test drive to see if it drives well first? Of course not. So, handing over a great big wad of cash, without truly knowing what you’re paying for, likewise seems mad. But that’s what we, marketers, have been doing for years. And we’re still doing it.

Back in the day, to raise brand awareness, we’d happily pay top dollar for ad space during prime-time TV or on exclusive downtown location billboards without our knowing if the ads we were running were actually working. Were they bringing people into our stores? Were they encouraging people to buy our products or services?

We had no idea. But we still did it.

Now, thanks to the Internet, we have more cost-effective and budget-friendly channels to help us raise the profile of our brand, pull people towards our products and services, and encourage them to buy from us.

Take social media. Its popularity, reach, and accessibility make it the perfect channel for building brand awareness. We can create social media posts that get our brand messages out to the right people for next to nothing.

Although we can run a campaign that reaches our target audience and raises our brand profile–for considerably less budget than running a TV ad or plastering a billboard–the question still remains the same: Do we know if what we’re doing is working?

The end goal of every brand awareness campaign is to increase sales, leads, or conversions: That’s what marketing is all about, right? So, is what we’re doing on channels like social media, actually bringing people through our store doors and encouraging them to buy our products or services?

Sure, we can look at the numbers of likes, follows, and shares, and establish if our brand messages are landing with our audience or not, but do we know if those messages are turning that engagement and resonation into conversions, leads, or sales? We have no idea. But we still do it.

Brand awareness campaigns are great for gauging interest, but not for establishing if what we’re doing is actually making a return: It’s difficult to use engagement data to prove a monetary return on investment.

In a volatile economic climate, where every dollar matters, board members, CFOs, and investors need to know–to the nearest cent–if what we’re doing is worth the time, effort, and investment we’re spending on it.

So, it’s time to level up.

We need to move away from brand-building marketing activities that tell us nothing about performance.

Now, we need to move toward performance-based marketing strategies that allow us to measure results and prove a return on investment to our stakeholders.

Why Choose Performance Marketing?

Marketers only pay when a desired action or outcome has been achieved–like when a transaction is made or a lead converts. Doing so allows marketers to see for themselves (and show stakeholders) whether their activity is impacting revenue.

That black-and-white insight into performance allows marketers to make better strategic and budgetary decisions and, therefore, prove a positive return on investment to their stakeholders.

“Performance marketing is the ability to use the digital components you have at your disposal to see what’s happening, and tie those things to revenue.” (Lisa Sharapata, CMO of The Arbinger Institute)

“Performance marketing is perfect for raising certain needs in people and showing them why they absolutely need your product,” says Yannick Schmidt, head of B2C for Nerds. “Push channels, such as Meta, TikTok, and others, are therefore ideal for creating demand in the first place, which can then be satisfied via other marketing channels.”

Why Is Performance Marketing Disrupting the Marketing World?

Performance marketing isn’t a new concept.

What is new, though, is the drive towards it by CFOs, investors, and leadership teams.

Their keen interest in performance marketing is fueled by:

  • A fluctuating, unpredictable economy
  • A rise in direct-to-consumer sales
  • The quality and amount of data we have access to
  • A global pandemic

Those factors have come together and contributed to the growing need for a data-led performance-based approach to marketing rather than a traditional approach that focuses on engagement and building brand awareness.

“The numerous possibilities with performance marketing on social media platforms offer advertisers not only branding options but also conversion campaigns to generate direct sales. Both work great and success is much easier to measure than with traditional marketing. Thus, all companies, from small e-commerce stores to large B2B businesses, can benefit from performance marketing.” (Yannick Schmidt)

Moreover, investors are clamoring for more and more bang for their bucks, and CFOs are demanding more and more evidence that you’re making more bucks than you’re spending.

“CMOs are getting more heat from the executive leadership team or investors to measure more and perform better.” (Darryl Praill, CMO at Agorapulse)

That is why performance marketing is the key to your success as a CMO.

Being able to make better decisions, quickly change tack when something isn’t performing, and prove a positive return on investment, is like being able to walk barefoot over hot coals: Everyone will want you to succeed, but no one will believe it’s possible.

So when you prove them wrong, amazing things will happen.

Download a FREE performance marketing ebook now!

What Happens When You Walk Barefoot Over Hot Coals

Performance marketing will not only allow you to prove ROI, make better decisions, and invest budget in the right campaigns (without breaking the company’s bank), it will also do the following.

Performance marketing earns you the respect you deserve

“The number-one thing I hear, especially in the social media community, is that people don’t feel respected. They don’t feel like they have the career path they want.

“That’s the upside of understanding the impact your activity is having on the wider business goals. Now you can measure the impact of what you’re doing and know you’re getting it right. Before it was soft signals, now you’ve got hard signals. Now you know exactly where and when to invest more. And that, my friends, will earn you the respect you deserve.” (Darryl Praill)

It gives you the freedom to experiment with new tactics and ideas

“When you know a huge part of your campaign is working–it’s tradable, it’s turning into revenue, and you’re getting the results you need–it gives you more wiggle room to experiment and try other things that maybe aren’t as easy to measure, but could still be effective in getting you toward your end-goal.” (Lisa Sharapata)

Performance marketing removes the guesswork and gives you, and those around you, confidence in your decisions

“​​I would never be in a role like I’m in today if I couldn’t talk about things like ROI CAC, LTV, conversion rates, pipeline generation, and attribution. I can now confidently say, ‘This campaign worked, here’s how I know it worked, here’s why it worked, and this is what the return on investment was.’ Just having that information gives me the confidence to know that I’m doing something right. I’m doing a good job. And it gives other people that same confidence too.” (Lisa Sharapata)

It improves your career prospects, both inside and outside of your company

“The more you’re able to speak in dollars and cents to your leadership team, and the more you can confidently say, ‘This is the impact our marketing is having on the bottom line,’ the more the respect will grow for you, from within the organization, and the better position you’ll be in to get shortlisted for new roles. You’ll be sought out for your opinions. You’ll be empowered with more responsibility, and your career opportunities will blow up. All you need to do is understand the financial aspects of what a marketing organization requires.” (Darryl Praill)

Performance marketing takes the pressure off (slightly)

“I have an understanding with my CEO that 50% of my spend on my campaigns will be brand awareness-centric, and 50% of my spend will be bottom-line, demand-driving, impacting-revenue centric.

“What that means is, I have a little more freedom to say, ‘I don’t know what happened with our brand awareness, but I think they know more about us.’ But on the other 50%, I actually need to be—and am—completely accountable.” (Darryl Praill)

Despite all these positives, marketers are still twice as likely to focus on brand, over performance marketing.

“We’re seeing a mixed reaction to the transition toward performance marketing … Some CMOs are saying, ‘Absolutely, I can do that, but I’m not quite sure how to do it.’ Other CMOs are saying, ‘It’s impossible. There’s no way you can do that!’ But there are a lot of CMOs saying, ‘No. I don’t want to do it.” (Darryl Praill)

Why is this when, as we’ve just seen, the benefits of a performance-based marketing approach are tenfold?

“People are resisting the transition from brand awareness activity to data-driven performance activity because they don’t want to be held accountable for numbers.

“They believe that their job is solely branding and awareness creation, and if they’re held accountable for revenues, results, and bottom-line sales, then it muddies the water and blurs their role. And that is just damn scary.” (Darryl Praill)

Why Performance Marketing Is the Key to CMO Success [Ebook]