Performance marketing differs from traditional advertising in that there are no upfront costs. Commissions are paid to publishers, otherwise known as affiliates, each time a sale is made, thus providing a point of measure by which businesses can track their marketing efforts. Traditional advertising offers no additional tracking tools each time a sale takes place. Online marketing and advertising programs depend on affiliates to ensure actions are taking place for their retail products or business services.

How does performance marketing help startups?

Because no money is exchanged unless a transaction is completed, there is no money wasted. For example, commissions are only paid to the affiliate if a customer or subscriber pays during their transaction. Therefore, there are no out-of-pocket expenses initially. Bypassing this advertising cost prevents retailers and business owners from wondering if their budgets are being spent properly or going down the drain. In addition, affiliate marketing and advertising allows retailers and businesses to track how often clicks occur and how often those clicks are converted into transactions. Sales conversions are the key to any marketing and advertising campaign.

How do startups decide if affiliate marketing is the way to go?

Performance marketing calls for a different strategy than marketers focused on reselling. While each effort requires an end sale, the path toward the transaction differs greatly. Oftentimes, those who are reselling already have an established cliental or customer base. However, startups rarely are afforded this luxury. Therefore, performance marketing efforts will help drive new customers and further develop customer relationships. Not only does this help build the startup, but it helps low-volume startups generate more income at a faster rate.

What types of performance marketing are available?

Online marketing is divided into two categories — mobile and Internet — but many of the opportunities are available for both. Here are some examples of the different types of performance marketing is available to businesses:

  • Audio: While this method is developed for mobile radio, there are still online opportunities for those listening to audio on their PCs
  • Context: Online users with websites covering a specific topic benefit from this performance marketing approach
  • Display: Available for mobile and online performance marketing
  • Email: Users with online access, as well as mobile access, benefit from this strategy because truly interested customers subscribe
  • Facebook and other social marketing: This type of performance marketing is geared specifically for online users; however, mobile users are able to get involved through use of larger smartphone and tablet applications
  • In-game advertising: This strategy is used for online performance marketing
  • SMS texting: Mobile users opt in to this service, similar to subscribing to a newsletter, allowing business owners direct communication

Implementation of one or more of these strategies further enhances marketing efforts, thus creating successful affiliate campaigns. Determining whether or not to partner with another business is also dependent on how well they react to the incentives offered through the performance marketing the business has created through their affiliate programs. If they are interested in building a relationship, ask them how they believe they could benefit from the incentives you are offering. This will help strengthen collaboration efforts and keep upfront costs for acquisition down.

Tough economic times are impacting many startups, particularly small businesses where a strong customer base has yet to be established. Performance marketing helps startups get through the low times when sales are not where they need to be. Rather than focusing on one income channel, multiple streams are able to be created through use of many affiliate programs.

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