Performance Marketing vs Digital Marketing: Know the Differences!
The world of business has been transformed by the COVID-19 pandemic and shifted more toward digital marketing practices. Two central marketing practices that have created a buzz over the entire marketing landscape are digital marketing and performance marketing.
If you are in the marketing field, you must be aware of the term “performance marketing vs digital marketing.” It is very difficult to understand what makes them different, and both of them are significant keys to online success!
But don’t worry. They both work with different strategies and practices. Digital marketing offers a vast range of online practices, from search engine optimization to social media marketing, while performance marketing highly depends on measurable outcomes such as sales and clicks.
Confused about choosing the right approach for your business? In this blog post, I will shed light on the different aspects, such as measurement metrics of digital marketing and performance marketing, and how they are very different from each other.
Let’s take a look!
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Table of Contents
What is Performance Marketing?
Performance marketing refers to the specific form of digital marketing that focuses highly on real-time data-driven results such as increased leads, sales, and business ROI. Here, you can use different types of marketing tactics, such as Cost per action (CPA), Pay-per-click (PPC), and Cost per thousand (CPM) advertisements to get profitable results.
The majority of the brands use this specific marketing strategy to appeal to targeted audiences and achieve goal-driven results. This is highly recommended for businesses that have tight or small budgets for their advertisement campaigns.
Performance marketing guarantees that marketing initiatives are directly linked to data-driven outcomes or profitable results, boosting the overall business return on investment (ROI).
Types of Performance Marketing
There are several types of performance marketing, and I have illustrated them below;
Native Advertising: Native advertising combines advertising with content on different websites. The ad is less noticeable due to its integration with the site’s design. It usually comes in the form of articles or appealing videos. Users find this marketing strategy to be natural, and it can boost overall engagement.
Social Media Marketing: Social media marketing offers ads on websites such as Twitter, Instagram, and Facebook. Depending on their behavioral patterns, preferences, and areas of interest, you can target specific audiences. It works effectively for direct engagement and brand visibility. Special media posts, stories, and videos can all contain ads.
Search Engine Marketing: Ads are displayed on popular search engines like Google as a form of search engine marketing or SEM. When individuals look for specific terms, these ads appear in their search results.
It is a great way to engage with customers who are actively looking for products or services. You only pay when someone makes a purchase or leaves an impression.
Influencer Marketing: Influencer marketing refers to the collaboration of famous public figures with different brands on social media. Influencers can promote their offerings to their loyal followers.
Their collaboration can increase the reach and creability of the brand. It is highly effective as people rely more on recommendations from celebrities or public figures they follow.
Email Performance Marketing: In performance marketing, this specific type of strategy helps your business to expand. You can make quality content with this strategy and measure the opening rate of emails by targeting the most suitable audiences.
Metrics to Measure Performance Marketing
Cost Per Click (CPC): CPC helps you depict how much you paid when someone made a click on your ad. It helps monitor the cost-effectiveness of your advertising campaigns.
Cost Per Acquisition (CPA): CPA helps you in measuring the amount you paid to get one client. It consists of entire spending until someone makes a purchase.
Cost Per Mille (CPM): CPM refers to the total Cost for 1000 impressions. It assists you in tracking how much you spend on advertising to 1000 individuals.
Life Time Value (LTV): LTV refers to the estimated revenue a client brings over their connection with your brand. Lifetime value helps marketers to plan a strategy and make a cost-effective budget for their business.
What is Digital Marketing?
Digital marketing is a significant type of online marketing that involves the proper use of online channels to promote and market different products or services to capture a wide range of potential audiences.
This marketing effort involves brand promotions, awareness building, audience engagement, and targeting potential customers through online channels or different types of digital mediums such as social media, emails, mobile applications, digital advertising, multimedia messages, and more!
Digital marketing is an umbrella term under which growth marketing, performance marketing, and other profit-making marketing strategies are included. One significant advantage of digital marketing is that it allows specific audience targeting to reach and generate the maximum amount of profitable results.
Types of Digital Markeing
Digital marketing can be broken down into seven prime categories, and they cover useful types that boost brand awareness and total business revenue. I have tried to highlight each type of digital marketing with helpful information below.
Search Engine Optimization: SEO boosts the online presence of your website on search engines such as Google and Bing. If you use relevant keywords and high-quality content, you can make your website rank higher on search engine result pages, driving higher rates of organic traffic.
Email Marketing: Targeted interactions are sent through email marketing to audiences who are highly interested in your business or offerings. Customized newsletters, catchy promotions, and updates can be added to these targeted interactions. It keeps visitors engaged and informed of what you have to deliver.
Content Marketing: High-quality content, such as videos or blogs, is generated and shared by content marketing. Reaching and keeping your target audience is the main motto. Well-developed content encourages people to act like they are purchasing something. It also helps in building trust.
Social Media Marketing: Social media marketing helps you promote your business by using websites and social media applications such as Instagram or Facebook. You can create advertisements and social media posts and engage with potential followers. It encourages a deeper connection with your targeted audience and boosts brand awareness.
Influencer Marketing: This helps in collaboration with individuals who have a wide range of followers on social media accounts. Here, brands promote their products by collaborating with famous public figures. People rely more on brands as their admired individual is recommending some product or service.
Affiliate Marketing: This refers to a partnership with others who promote the services or products you offer to earn a specific amount of commission. You get a commission only when people make a purchase by clicking on the shared link you provide. This is a performance-based marketing strategy to enhance your business reach.
PPC Advertising: This specific type of advertising helps your brand to display ads on popular search engines like Google and other popular social media platforms. You only pay when someone clicks on your advertisement. It is the easiest and most straightforward way to drive higher rates of traffic to your website and boost online visibility.
Metrics to Measure Digital Marketing
Conversion Rate: It refers to the estimated amount of conversions from a particular site.
Click Through Rate (CTR): CTR is the total ratio of the total number of viewers on your website and the total number of clicks made by visitors to your website.
Bounce Rate: Bounce rate refers to the total amount of visitors to your website who left your site without taking any kind of action.
Page Views: This is the total number of viewed pages on your website.
Return On Investment (ROI): It measures the total profit you made from your digital marketing strategies compared to the overall Cost. The higher the ROI, the higher the value you get from your total ad campaign investment.
Customer Lifetime Value (CLV): It refers to the total profit you want from a client over their relationship with your business. Higher CLV highlights the higher value of customers.
Cost Per Lead: This measures how much you spend to get one potential consumer or one lead. The lower the CPL, the higher the efficiency of the brand and overall spending.
Key Differences: Performance Marketing vs Digital Marketing
Now that you already know what digital marketing and performance marketing are and what different metrics they have, let’s dive into the significant differences between them below.
Targeting Methods
Performance marketing captures a targeted audience by incorporating specific targetings, like user behavior or relevant keywords. Digital marketing can capture a wider audience depending on their behavioral pattern, interests, and demographics, as it encompasses a vast range of strategies like content marketing, social media, and advanced targeting algorithms.
Excellent results for short-term targets are often accomplished by the specific audience targeting of performance marketing.
Time Frame
Performance marketing has a specific time frame as the brands set particular goals for each ad campaign and make an exact timeline for each of them. On the other hand, digital marketing campaigns frequently run consistently, with brands paying for placements and ongoing ads.
Performance marketing helps to achieve short-term goals like gaining instant likes, conversions, and clicks, while digital marketing strategies work better for achieving long-term results such as higher brand awareness, online visibility, trust, and customer loyalty.
Scalability
Both performance marketing and digital marketing provide higher scalability, enabling brands to grow their reach and boost their audience base.
Performance marketing strategies allow better scalability as the majority of advertisers can scale their ad campaigns depending on various measurement metrics and overall Return On Investment.
It is best for quick and specific targeted growth, while other digital marketing strategies offer slow results.
Stability vs. Flexibility
Performance-based marketing provides solid outcomes depending on sales, measurable data, and critical metrics. Digital marketing offers higher flexibility, allowing you to adjust your strategies over time to reach broader business goals.
While digital marketing is very flexible and can adjust quickly to changing plans, performance marketing provides steady results.
Cost-effectiveness
The cost structure is fixed in digital marketing, and advertisers only pay for ad space despite their effective performance. On the other hand, performance marketing efforts follow a cost-effective model known as pay-for-performance.
Performance marketing is highly cost-effective as you only pay for accurate results, such as clicks or purchases. For example, content generation and social media advertising are two different strategies of digital marketing that have different spending budgets. Performance marketing often delivers measurable results and more clear business ROI.
Payment Model
In performance marketing, you have to pay only when actions are taken, and those are clicks, impressions, and conversions. The payment models followed are cost per lead (CPL), Pay-per-performance, Pay-per-lead, pay-per-sale, and Cost per acquisition (CPA).
In digital marketing, you can add costs like content production, ad spending, and management fees. The payment models followed in digital marketing are Cost-per-click (CPC) and Cost-per-impression (CPM).
Metrics
Some famous performance measurement metrics of performance marketing include Cost Per Click (CPC), Cost Per Acquisition (CPA), Cost Per Mille (CPM), ROI, Conversion Rate, and Life Time Value (LTV).
On the other hand, the measurement metrics used in digital marketing are Conversion Rate, Click-through-Rate (CTR), Bounce Rate, Page Views, Return On Investment (ROI), email opening rate, engagement rate, Customer Lifetime Value (CLV), and Cost Per Lead.
Risk
While discussing the aspects of performance marketing vs. digital marketing, I came to know that both of them are less riskier for advertisers as they only pay for accurate, profitable results or data-driven results.
However, digital marketing has higher risks than performance marketing because of the enormous investment.
Longevity
As performance marketing has campaign-specific goals, they are usually short-term compared to digital marketing, which has short-term and long-term marketing strategies.
Campaign Goal
The goals of ad campaigns in performance marketing are sales, conversion, leads, and app downloads. On the contrary, the campaign goals in digital marketing include website traffic, engagement, brand awareness, and lead generation.
Performance marketing strategies are typically short-term, as they focus on instant results.
Wrapping Up,
Due to the data-driven nature of performance marketing, it is the easiest and most popular choice for businesses looking for a profit-making marketing strategy to achieve their business goals.
If you are searching for an institution that offers valuable lessons on the most trending performance marketing strategies to boost your overall business ROI, join W3 Web School’s Performance Marketing Course in Kolkata today. You will be able to deliver real-time business ROI by increasing the overall business reach and leads. Know the major differences between performance marketing vs digital marketing.
Brands can build a comprehensive approach to capture and engage their potential audiences by incorporating both digital marketing and performance marketing together.