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Pros And Cons Of Performance Marketing

Marketing is an important way to increase the reach of your business. Among all its types, performance marketing has become very popular in recent years. Performance Marketing’s origins are a bit in the dark, however, most believe it traces back to affiliate marketing, and to a specific stream there – “smart marketing”, or “pay on results” model, that made fortunes for affiliates back in the 2000s. 

Originating from this, performance marketing is a type of advertising where the publisher is paid when a particular goal is completed. It has a payment method based on the results. This type of marketing is an alternative to the traditional marketing channels such as SMS and email marketing.

To help you create an effective digital marketing campaign, we will look at the pros and cons of performance marketing as a whole. But, before we dive into the detail we should first explore what performance marketing is.

Performance Marketing Definition:

Performance marketing is a digital marketing strategy that focuses solely on the performance of a marketing campaign and its results. It is driving performance and rewarding on completed consumer action. Simply put, it is paid advertising. Performance marketing lets the marketer decide the desired goals and pays the digital advertising platform only after the said goals are completed. It is similar to paid ads in the sense that it pays for the completed actions. 

One of the important metrics or factors in Performance marketing is the evaluation of spend vs return (or revenue vs cost). Compared to affiliate marketing – everything is quantified, and especially the success of the activity. Performance marketing campaigns must be measurable, optimized in real-time, and payment is based on a defined action.

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The Pros of Performance marketing:

Maybe the biggest advantage of performance marketing is that it eliminates the need to invest in advertising campaigns and other advertisement methods with unknown results (such as offline marketing), and the simple measurement of the ROI ( return on investment), adds immense value to your business and can be a great strategy for measuring the campaign success.

Moreover, it increases your advertising reach and adds value and creativity to your advertising. It is proven to be effective because it speeds up the advertising process – in a few days, and your ad can appear anywhere online, in any vertical, and on any app or website. 

You can work either alone or in collaboration with other digital advertising platforms such as Google, Facebook, Twitter, etc. It is cheaper to register in an agency to take care of your marketing than to build your own team and operation. 

The Cons of Performance Marketing: 

But not everything is peachy; one of the biggest cons of performance marketing isn’t an inherent issue – but more of external; and its fraud in different shapes and forms – from bots to SDK spoofing and fake events. In a place where there is money, there will be people who try to find a quick way to gain it. Companies and marketers join together in trying to annihilate this major obstacle. 

Another issue is data misinterpretation. It can create unrealistic financial predictions, and the lack of proper research can put you in a worse position.

 Some companies in the field require a prepayment, which means you would pay on results before you know they’re effective, rather than paying afterward – which might cause issues, if you’re not reading the data correctly or if you’re paying for fraud. That is why a lot of companies do not agree to a prepayment.

Performance Marketing is measurable, quantified, optimized in real time and payment is based on a defined goal.

Final thought: 

Despite the disadvantages, performance marketing remains one of the best and cheapest ways to promote your service, app, or product online. It can provide a decent way to make money both to the marketer and the affiliate or agency. 

The most important thing to remember or do before starting with performance marketing is research. Research the market, and the affiliates. Marketers should analyze the market and choose what medium will prove best for their business. With the research and the implementation of security and anti-fraud tools, you can enjoy the benefits of affiliate marketing/performance marketing with no worries.

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