Some online merchants consider Performance Marketing their only strategy, while others don’t consider it at all, begging the question: Is Performance Marketing for everyone?
Well, the short answer is, of course, Yes. The longer answer, however, isn’t quite so simple. Many new merchants tend to think performance marketing is the only marketing they need, while established merchants think of it as a red-headed stepchild (my apologies to red-headed stepchildren).
Performance marketing should complement other marketing efforts. There are three primary reasons for this:
- It shifts the promotional cost risks from the merchant to the affiliate (promoter) with the merchant only paying once an appropriate action (typically a purchase) is taken by a user.
- It improves cash flow as payment for promotion can be delayed until after revenue is received.
- It helps achieve many of the same goals as other forms of online marketing—revenue, branding, lead generation, and customer acquisition.
Shifting cost risk is a big deal for smaller merchants with limited marketing budgets (sometimes with no marketing budget all). Larger merchants with big budgets should also appreciate shifting risk, because in terms of the bottom line, it isn’t always easy to justify marketing spend if you can’t explain to the boss what his money bought. Branding is great, but branding alone doesn’t put bread on the table.
Revenue for a sale is collected very close to the actual purchase, while payment to affiliates can occur as much as 50 days later. As long as a merchant is maintaining appropriate margins, it can improve cash flow by an average of 30 days. This is a huge advantage over traditional online marketing where a merchant generally prepays for its advertising.
Most forms of online marketing can be promoted via performance marketing. If a merchant manages its program correctly, it can find affiliates to promote its products using Search Engine Marketing (SEM), Social Media, Email, Content, Display, Mobile, and Coupons. A well-run performance marketing program can also assist with branding and product awareness on non-traditional advertising sites like coupon sites, product comparison sites, and blogs.
I’ve seen many merchants begin performance marketing campaigns with unrealistic expectations on how much and how quickly they will achieve results. While those of us in the industry believe strongly in this form of marketing, we have learned that it requires all parties working hard and pulling the wagon in the same direction to generate a successful program. When properly set up and managed, it can be quite lucrative for all involved.
So, what is my advice to merchants considering performance marketing?
- Don’t think performance marketing is all you need, it is complementary to other forms of online marketing.
- If you Do Performance Marketing, Do invest the time, energy, and resources to manage your campaigns to ensure you meet your marketing goals.
- Don’t dismiss Performance Marketing no matter your company’s size, because Performance Marketing Is For Everyone.