As more and more business owners realise the benefits of investing in digital marketing, many are asking the question of whether performance marketing or digital marketing is the right choice for them.
These two models of marketing are similar, but have different focuses so they generate different outcomes. We will introduce you to both performance marketing and digital marketing and show you the benefits of each. With this knowledge, you should be able to come to a decision as to which strategy is right for you and your business.
What's the between performance marketing and digital marketing?
The main difference between performance marketing and digital marketing is the desired outcome when using each strategy
Performance marketing focuses on lower funnel activities and the business who is using performance marketing only Performance marketing is a subset of digital marketing.
Digital marketing is a broad brush stroke that INCLUDES performance marketing along with other types of marketing like demand generation, & brand awareness.
What is Performance Marketing in digital marketing?
Performance marketing is a subset of digital marketing. Performance marketing focuses on channels (like Google, Linkedin, Meta, TikTok and affiliate sites). Brands & businesses only pay for tangible results like leads or sales.
Performance marketing campaigns target lower funnel activities and do well with diriving conversions and sales.
ROI on campaigns in these areas of the funnel is easier to track, because the time lag between a prospect interacting with a performance marketing campaign and then converting in to a sale is shorter compared to the awareness stage. It is in the best interest of the advertiser to track these returns because they get paid for an outcome, like a lead or sale.
Benefits of Performance Marketing
There are a few key benefits of running performance marketing campaigns.
Performance marketing hones in on advertising channels that drive a tangible result, normally in the form of a lead or a sale.
Performance marketing has a more transparent ROI. With performance marketing marketing, businesses have a clear understanding of what they're paying for and can track the results of their investment because the marketing focuses on lower funnel activity that naturally leans closer to a sale.
The business only pays the advertiser when tangible leads or sales are made.
An example of a performance marketing campaign would be an advertiser running a search campaign that focuses on money keywords or buyer intent keywords. If you were a house washing company, some examples of these keywords would include:
House washing company + Location
House wash + Location
House washing company near me
Location + house washing company
Replacing "location" with whatever area you service. Instead of the advertiser being paid per click (like PPC campaigns) the advertiser is per lead.
These keywords have the highest likelihood of converting a prospect to a customer because if they are searching these keywords, they are aware that there is a solution (a house washing company) to their problem (having a dirty house) and are trying to find a company who can help them (your company).
Is SEO part of performance marketing?
Yes, organic search channels can be classified as performance marketing, depending on how the advertiser is positioning their performance campaign to you. A common example SEO being part of performance marketing is affiliate or lead generation sites that have a strong organic presence. Advertisers will rank high on Google for high intent keywords, capture traffic to their landing page and either
Convert that traffic on their site and send the lead on to the business for a fee(like lead aggregators do)
Send that traffic to a businesses website with an affiliate cookie and measure when a conversion action has taken place and then charge the business for the lead
Is performance marketing the same as media buying?
Media buying can be a part of performance marketing.
Performance marketing is an umbrella term used to describe all strategies that are
Media buying is a tactic that sits under performance marketing that feeds into a paid media strategy. Some performance marketers may use media buying as part of their lead / sale aggregation techniques in order to
Is performance marketing worth it?
Performance marketing is absolutely worth it. If you want to place your businesses in front of solution aware prospects who are actively searching for a provider/product and you only want to pay for results and not impressions / clicks (who wouldn't) then performance marketing is worth it.
What is Digital Marketing?
Digital marketing is a broad term to describe all marketing that happens online.
This could include:
Search engine optimisation (SEO)
And paid advertising like Instagram or Linkedin ads
Digital marketing covers "whole funnel" marketing activities.
You can use a platform like Linkedin to create thought leadership content without any intent for that content to deliver a direct ROI or, you can create a low funnel google ad campaign for "money" keywords that has a sole purpose of generating a tangible return and they are both classified as digital marketing.
The main benefit of digital marketing is the potential for scale with the ability to lower CPA's yourself. Remember, performance marketing is a subset of digital marketing.
Digital marketing can be used to build brand awareness because it includes techniques (like demand generation) that focus on educating the prospects without asking for anything in return.
Digital marketing is scalable and allows businesses to reach a huge audience through specific platforms.
Performance marketing or digital marketing: What one is better?
The answer isn't very cut-and-dry. Several factors determine what type of marketing is best for your business. Digital marketing is a parent term of performance marketing; whenever you are running performance marketing campaigns you are, through proxy, running a digital marketing campaign.
Performance marketing will yield faster, short term results and you only pay for results because it captures demand that is already in the market. With performance marketing, you are simply placing your business in front of someone who is already searching for a product/service like it and paying only when they turn in to a lead or a sale.
Digital marketing includes the whole funnel of marketing (including demand generation) and through proxy, can include performance marketing as performance marketing is a subset of digital marketing that focuses on lower funnel activities.
Performance marketing is normally good in the short term as you only pay for results. However, at scale, performance marketing is more expensive to use because performance marketing advertisers have to apply a markup for their leads/sales.
If you are able to create and nurture your own channels for leads and sales by adopting a wider digital marketing strategy, then you wont have to pay the additional markup.
Invest in performance marketing if your main focus is leads through your sales funnel and you don't mind paying a premium for leads or sales
Invest in digital marketing if you care about building your brand and leads through your sales funnel and want to drive CPA's lower at scale.
In this article, we outlined the difference between performance marketing and digital marketing. The key to making good decisions as a business owner is gaining insightful information about the possible marketing strategies that you can deploy so you can decide which will work for you and testing each of the channels you see that could bring you success.
Performance marketing is a subset of digital marketing
Digital marketing covers "full funnel" and you pay for clicks and impressions, whereas performance marketing covers "lower funnel" and you only pay the advitiser on performance
Performance marketing hones in on tanigble return
You may want to speak with a professional to conduct a cost analysis before deciding!
Now that you know much more about these two types of marketing campaigns, you'll be able to make the right call as to which one is right for your business's online marketing needs!
Get in touch with us if you want to discuss about the differences between performance marketing and digital marketing.