What Is Performance Advertising?
Unlike traditional advertising, where media spend is paid up front and cost is not dependent upon the success of each advertisement or campaign, with performance advertising brands only pay for pre-defined campaign actions. Performance advertising is entirely ROI-focused and results are 100% measurable. Typically, performance advertising enters a campaign at the tail-end of the sales funnel, once a brand has established engagement, name-recognition and other important brand assets that make performance advertising more valuable.
What Is Digital Advertising?
Digital advertising, which can span across multiple channels, including display, social media, paid search and email, offers deliverables that are often effective, but less predictable than performance advertising. With digital advertising, brands pay for media placement. For example, if a brand wants to increase ecommerce sales, they may purchase a certain amount of impressions, but, at the conclusion of the campaign, regardless of the outcome (click-throughs, website visits, lead forms, sales) the cost doesn’t change.
What’s The Difference Between Performance Advertising And Digital Advertising?
Although performance advertising is a part of digital advertising, the ultimate differentiating factor when understanding the broader objectives of digital advertising from performance advertising is what brands are paying for. Brands and businesses using digital advertising pay for the media spend no matter the end results, while those using performance advertising pay only for the pre-defined results of the media spend.
How Does Performance Advertising Offer Accountability?
A major benefit of using performance advertising, and a big reason why this advertising strategy continues to stand out, is its ability to remain entirely trackable and measurable. As a result of the accountability performance advertising provides, brands are able to completely understand what they purchased. If a brand is seeking new consumers, performance advertisers can obtain and clearly trace that. If a brand desires calls or subscribers, performance advertisers can measure that, too.
Are Big Brands Using Performance Advertising?
Performance advertising has proven to be one of the most straightforward advertising strategies out there — meaning, brands know exactly what they are going to receive from their performance advertising spend, avoiding the stress of potentially wasting ad dollars on other advertising tactics that do not guarantee results. Performance advertising allows brands to achieve their goals in a concrete way without running the risk of spending all of their advertising budget without anything measurable to show for it.
More and more big name brands are recognizing the benefits of performance advertising. Most recently, Etsy shared that its “increasing strategic investments, seller shipping promotions, performance marketing budget and strengthening customer services are anticipated to get reflected in the fourth-quarter performance.”
P&G’s CEO David Taylor shared that P&G is also planning to invest more in performance advertising, acknowledging the ability of performance advertising to target audiences more precisely. Taylor said he expects P&G to become “more accomplished at performance marketing.” Adding P&G’s intent to target consumers “in a respectful way.”
But, performance advertising is not meant to go it alone. Brands should aim for a healthy balance between performance advertising and multichannel digital advertising strategies, while testing different approaches to find the perfect advertising mix.
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