With a 16% growth rate that outpaces display advertising and digital marketing spend category growth rates, performance marketing—in which an advertiser pays based on actions derived from an ad, such as generating click-throughs or sales leads—is one of the fastest-growing online marketing channels. Forrester Research estimated that the channel would grow to $4 billion by the end of 2014. Where is that growth coming from, and how can you take advantage of it?
There are two important trends driving performance marketing’s growth today.
1. Performance marketing now is a global industry. Globalization drives the industry because affiliate marketing—a revenue-sharing subset of performance marketing—is a low-cost way for brands to launch in new countries. As a result, the affiliate model has become increasingly international and many professional affiliates now are based overseas. Innovative technology platforms are finally making it easy to test and tap into these international partnership opportunities. Global affiliates now can constitute more than 50% of a brand’s business. Expect international affiliate commerce to continue to rise as disruptive technology providers accelerate the trend.
One way to capitalize on this internationalization trend is to find marketing technology tools that can help you be “glocal.” Digital marketers need a solution that allows them to control transactions in a variety of markets and fund international campaigns. That’s the global side. However, marketers also have to be able to maximize their reach, track across currencies, and pay partners quickly and accurately in local currencies.
2. Mobile devices are driving the growth of performance marketing. Just as our industry has had to evolve to succeed in a world in which everything is “glocal,” we’ve also had to adjust to the 24-hour access that mobile devices have presented. With mobile devices now accounting for the majority of Internet media consumption across the globe, this is a prime area for growth.
We’ve moved into an era in which consumers can be reached anywhere, at any time, via a handheld device. This enables customers to engage with your business in a fluid, ongoing way through your app, website or favorite social media platform. You can enrich this engagement process by distributing relevant content through social media and e-mail, so your customer stays connected to you no matter where he is. Keep in mind that mobile search volume is exploding in lockstep with mobile commerce because it is the simplest way to locate a product or service when you’re on the go. What’s more, the mobile app market cannot be ignored and holds exciting potential for growth.
While there are a myriad of benefits derived from mobile marketing, the most powerful and valuable is its matchless power to drive user response. If you place the right-sized, clear and compelling call-to-action button on your mobile website, you can generate a stronger response than from any other medium.
That’s a thrilling prospect for digital marketers, and a daunting challenge. That’s why the industry relies so heavily on Big Data technology, which, on a global scale, allows for a 360-degree view of the customer by leveraging purchase, browsing and international demographic data. Companies that ignore this trend run the risk of being left behind as their competitors gain the advantage of better, data-driven decisions. With the right tools, data can drive cross-device targeting, hone in on your customer’s journey and inspire new creative strategies.
In a world in which marketers must maximize their return on ad spend, the pay-for-performance model is likely to remain popular and gain more adoption as it expands globally, embraces Big Data technologies and moves into the new world of mobile media consumption. Marketers who can expand their horizons will gain a tremendous competitive advantage in an increasingly competitive world.
Per Pettersen is co-founder and CEO of Santa Barbara-Calif.-based marketing technology firm Impact Radius, and the co-founder of Savings.com.