Why Flexibility is the Key to Performance Marketing

More times than not, marketers set a fixed budget for the individual marketing channels within their overall marketing or advertising strategy. However, in many cases, fixed budgets tend to hurt more than they help in terms of performance marketing and the ability for a campaign or affiliate program to scale. A fixed test budget can work for brands who are new to affiliate marketing as they get started, however, once a campaign launches and begins to gain momentum, a fixed budget can cripple incrementality, as well as the potential for growth and new partnerships within the channel.

Investment vs. Return

Upon entering the performance marketing space, it’s important to understand that your investment does not necessarily directly correlate with return on ad spend (ROAS) right out of the gate. Prior to recruiting partners, and those partners testing the campaign with their audiences, it is nearly impossible to predict how much the marketer will need to invest in order to run a successful campaign. During the testing period, a higher budget allows for more tests to be run and a wider variety of partners to run the campaign, which can equate to a greater representation of the results your campaign could produce. However, keep in mind, fluctuations in budget can range greatly following the test period depending on partners’ success driving conversions. 

Given all budget increases and decreases are at the discretion of the marketer, it is important to determine KPIs that can dictate the success of the campaign. By establishing a set of KPIs, marketers can work with their network or agency partners to understand what their ROAS may look like based on the amount invested. Instead of asking how much a campaign is going to cost, marketers need to be asking how much they should expect in return based on their investment. 

Technology and Reporting

The importance of sound performance marketing technology is more apparent now than ever before. As marketers look to the affiliate channel to drive an increasing percentage of their revenue, many will rely on network or agency partners to provide reports that quantify conversion rates, as well as the quality of those conversions. Perform[cb]’s proprietary tracking platform, PerformLEAPTM puts the power into the hands of the marketer to adjust budget, creative, and more right from their dashboard. Technology such as this provides marketers with true transparency into the campaign’s inner workings for optimal decision-making. 

Additionally, PerformLEAP provides marketers with features such as Enhanced Targeting and Offer Segmentation, which further enables marketers to segment traffic by a number of values including traffic channel, device type, location, and day-of-week. These features give marketers the ability to generate lead ratings and correlate value-based payouts on an individual basis; by segmenting traffic like this, marketers gain a better understanding of the traffic individual partners are driving and can adjust commission rates accordingly. 

Budget Strategy

If you’re a marketer who is struggling to rationalize the affiliate channel to your colleagues or leadership, the first important point to explain is the basis of all performance marketing – that you only pay after results have been achieved. By explaining that partner commissions are solely paid for on a performance model, it can be much easier to understand the comparison to other digital channels, which often require flat-fee payment models, regardless of results. If your team is not sure how to determine KPIs, proposing metrics such as a monthly percentage threshold and participating in quarterly business reviews (QBRs) with your network or agency partner is a great place to start. Not sure how to select the right CPA Network for your goals? Read our blog, How to Choose an Affiliate Network for some guidance!

As the economy continues to shift, performance marketing continues to prove itself as a wise investment for marketers to drive conversions, in addition to brand awareness. However, without a predetermined set of KPIs and flexible budget, marketers can’t expect incremental scale and increased revenue from the affiliate channel. In fact, performance budgets only get as high as they can generate real customers – so limiting your budget, therefore, limits acquisition. 

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