Performance marketing is an online advertising strategy that has become increasingly popular over the last 2 years as it ties revenue to advertising spend. Some of the desired "performance" goals can be more sales, leads, or clicks. We've been able to bring forward three effective performance marketing tactics that any business will find useful in 2021.
Clicks are great, but how can you tell if your audience is interested in buying your product or service? Cost-per-Acquisition measures the total cost to obtain a new customer and is an essential measurement of a business' marketing success. This model helps advertisers and businesses understand how effective, or ineffective, a marketing channel is based on its ability to drive sales at the target cost.
To determine your cost-per-acquisition, you'll have to decide what you're willing to pay for a customer. This can be figured out by taking your total advertising spend and dividing it by the number of acquisitions generated.
Understanding life-time-value (LTV) is another key factor in determining your cost-per-acquisition. LTV is an estimate of the average revenue that a customer will bring about throughout their "lifetime" as a customer. Determining the LTV and cost-per-acquisition go hand in hand, as the CPA should always be lower than the LTV of a new customer. Increasing your lifetime value can be done by creating offers that last a little longer than your customer's lifetime value. You'll really want to work on increasing LTV in order to increase the possibility of renewal, as there is a 60-70% chance of selling your product or service to an existing client.
If you can pay a higher cost for a first-time customer compared to your competition, you'll win – so it's best to get a clear definition of your cost-per-acquisition!
After defining your cost-per-acquisition, developing mobile-first content for consumers is another effective tactic to successfully carrying out performance marketing. With technology consistently evolving and about 67% of the global population being mobile users, consumers are regularly viewing content for the first time on their smartphones rather than a desktop.
To ensure your mobile-first content is engaging for consumers; you'll want to create videos and images in a 1x1 or vertical aspect ratio. Because images are the first detail on a piece of content that catches the audience's eye, 1x1, or square images, are a great option because they're proportionate to the mobile device. The vertical aspect ratio is also a good way to go – they take up more space on the feed, which makes them more optimized than horizontal posts on mobile.
In terms of posting videos, focusing on the three-second rule is crucial in capturing the user's attention. The first three seconds of a video will make or break whether a viewer is going to want to watch the entire video or divert their attention elsewhere. Additional steps you can take to get a viewer's attention on videos include enticing thumbnail images and titles.
Leverage user-generated content in paid ads because it makes the ad feel more authentic. It also provides credibility to the brand because consumers can see that every day people are seeing benefits when using the product.
To ensure effective performance marketing, it's also important to take note of the new iOS 14 updates that require server-to-server tracking. Server-to-server tracking occurs when a user generates an ad impression, delivering a unique identifier that is stored on the server.
Apple recently made significant changes to the new iOS 14 that has placed limits on consumer tracking. These changes mean that users must accept, or opt-in to be tracked for advertising purposes. This new update can become a challenge for some platforms, as only 2% of users plan to accept "allow." For Facebook and Instagram, server-to-server tracking is required for an effective performance marketing campaign.
In contrast to the new Apple software changes, Shopify has created server-to-server tracking that still allows advertisers to optimize for performance events. Providing the tools to help create and analyze your marketing efforts, Shopify has taken on a different approach than Apple's iOS 14.
Implement these three effective performance marketing tactics and you will be in a strong position for success in 2021 and beyond!
With more than two decades of working in the media buying and digital marketing space, Kingstar Media's expertise across different analytic strategies and tools allows us to help our clients best pursue effective digital campaigns. If you're interested in learning more about cost-per-acquisition, developing mobile-first content, or server-to-server tracking, you can reach Kingstar today via our contact page.