Performance Marketing:  The Facts and Terms You Need to Know

In the ever-shifting landscape of online and social media outreach, one of the biggest buzzwords is Performance Marketing.  This phrase covers a host of strategies and styles.  More importantly, Performance Marketing encompasses a broad range of price points.  The savvy marketer needs to understand how many online users they are reaching and how much it costs to reach them.

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Know the Key Terms:

CPM  (Cost Per Mille)

CPM is by far the most common currency in the online marketing world.  Simply stated, it is the price of one thousand “impressions” displayed to an online user on any given website or web property.  However, the number of impressions displayed is not as critical to the marketer as the CTR (Click Through Rate), which is a much stronger indicator of the performance of a piece of marketing.  A higher CTR indicates a stronger performing ad.

CPI (Cost Per Install)

CPI is the cost to download or install an app or program.  As many apps are free, the installation of a paid app is a strong indicator of interest.

CPC (Cost Per Click)

Again, a strong indicator of interest.  While many impressions or ads are displayed, they are often ignored by the target audience.  A user who takes the time to click is more valuable to the marketer, and therefore worth a higher rate.

CPL (Cost Per Lead)

An even stronger indicator of interest, and therefore a higher value click.  An online user who takes the time to fill out personal information is not only showing a higher level of interest, he or she is also providing valuable marketing data.

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Now that you know the pricing terminology of performance marketing, let’s examine the formats.

Display

As the market grows and evolves, display ads can seem very old school, but many marketers consider them a tried and true format.  Banners are still a ubiquitous part of advertising on both desktop and mobile screens.  They aren’t going anywhere, but savvy marketers are exploring new formats for display ads to set themselves apart and give the viewer a new experience with an old format.  Interactive ads and immersive ads are just two of the formats starting to assert themselves. 

Native Advertising

Native ads are clever chameleons.  They are ads whose aesthetics blend seamlessly with the content on the page where they are displayed, so that it is not immediately apparent that they are ads.  This successful format often results in more clicks.  Some projections suggest that up to 60% of online advertising is now native.

So how have these formats and pricing options insinuated themselves into social media platforms?  Facebook uses nearly all of these pricing models, and has pioneered some of the formats.  LinkedIn offers CPM and CPC-based pricing in some formats.  While Twitter embraces some of these same formats, they also offer CPE (Cost Per Engagement – specifically for tweets), along with CPF (Cost Per Follows) and Cost Per Video Views.  Reddit uses CPI and CPM pricing.

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Search Engine Marketing (SEM)

Sites like Google and Bing are still the go-to clicks for online searches, and provide marketers a curated interest group for their products.

Content Marketing

Similar to SEM, Content Marketing gives marketers outlets to provide specific and relevant information to customers as they move through the buying process.  The content can be ranked in search engines to generate website traffic and customer interest.  This strategy is popular with performance marketers, largely because the upfront costs can be lower and the return greater.