Performance Based Advertising: Background & Its Significance

Performance Based Advertising

Marketing Is All About Performance

Spending on digital marketing has risen steadily over 2002, and the medium is finding its place as an integrated part of corporate marketing initiatives.

A unique value proposition of Internet-based digital marketing is the availability of Precise measures of the actual performance of individual campaigns, which makes performance-based advertising pricing schedules feasible. These pricing schemes are studied in the presence of competition, performance uncertainty and asymmetric information about the quality of the client’s content and the effectiveness of the publisher’s technology. According to a research companies in the US will spend a total of $16 billion on online advertising, and a further $19 billion on other electronic marketing initiatives.

One of the unique value propositions of digital marketing is that a client can get precise measures of the actual performance of each campaign that they run. Examples of these performance measures include conversion rate, cost per conversion, cost per sale and on the lower side click through rates & cost per click on banners and keyword advertising.

Performance based marketing data Performance Based Advertising: Background & Its Significance

A serious opposition of the performance of a digital marketing campaign is the quality and effectiveness of the ‘creative’, or the actual text, images, sound and message delivered to the audience. The quality of creative is under the control of the client (or their advertising firm), who designs it based on their knowledge of what actually comprises high-quality marketing content for their product.

Key Takes of Advertising & Marketing

•  In 2013, 63% of marketers state they will increase their online brand advertising budgets, with 20 percent reporting that those
budgets will grow by 20% or more.

•  Budgets are shifting to follow consumers into the digital realm:

  1. 48% of brand marketers will shift dollars from television into online video.
  2. Nearly seventy percent will increase spend in both social media and mobile advertising.

•  The lack of relevant ROI metrics continues to challenge marketers; when asked what would lead them to increase spending on online
brand advertising:

   1)   Nearly 69 percent said “improved clarity around the actual return on brand advertising investment.”

   2)  When asked about the most appropriate metrics needed to do so, the top two
answers were sales (78% & brand lift 5

Performance based marketing Performance Based Advertising: Background & Its Significance

According to reports from eMarketer, brands spent more than $100 billion on online advertising in 2012 and until recently, it would be reasonable to assume that the lion’s share of that spend was allocated to direct marketing efforts as these programs drove the growth of the medium. On the other hand for many, the inherent measurability of the medium, with an immediate feeling of return made online direct response advertising a cornerstone of many marketers’ efforts to drive conversion. But advertisers however don’t straight away hold digital media for branding purpose but instead they count on traditional channels such as print, radio and television are stronger for shifting consumer perception.


Investments in rich media advertising and standard display advertising will largely remain the same,according to roughly half of brand marketers surveyed.

Performance based marketing marketing mix Performance Based Advertising: Background & Its Significance

As online brand advertising continues to grow in importance, brand marketers, agencies and publishers must start to work around a common currency of communication. By addressing the challenges raised in this ongoing study and by seizing the opportunities outlined above the potential of channels from online, social, mobile, video and beyond will truly be realized.

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Rehan is an Online Search - Social Media & Conversion Specialist. As senior marketing professional he possesses over 11 years experience in this industry. In today's world where the real commitment and client sincerity has lost its meaning, he is not ready to let go the golden era of 80's. For a peace of mind, he loves to hang around in quarries across UK discovering underwater nature as a trained scuba diver.
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