Growth marketing vs Performance marketing? “What’s the difference?” You’ve probably heard “growth marketing” and “performance marketing” before. We will break it down, don’t worry!
All marketing is done with high performance in mind so a business can grow. However, growth marketing and performance marketing are very different.
In this article, we’ll talk about each strategy, how it works, its goals, and what makes it different from the others. By the end of the article, you’ll have a better idea of whether or not your company should focus on growth marketing or performance marketing.
What Is Growth Marketing?
A decade ago, the term “growth marketing” started to be used, and since then, it has become much more than a passing fad.
Growth marketing is a group of activities that focus on the user, are experimental and constantly changing. It builds on traditional marketing by adding things like A/B testing, SEO, data-driven campaigns, engaging blog content, etc. Growth marketing is about making the most of all the ways a business can grow throughout the entire funnel.
It gives brands a plan to test often, learn quickly, and change in a good way. Growth marketing takes the traditional parts of marketing, like print, TV, radio, and billboards, and changes the conversation from “How do we get customers?” to “How do we keep customers for longer?”
With this new way of talking, you can make decisions based on data that will help you reach and retain your target audience. What does this mean? Growth that lasts for a long time.
Strategies and Channels for Growing Your Business
What strategies and channels do teams that work on growth marketing use? It depends on the goal and how the company plans to grow.
Growth marketing strategies and channels are based on content and how to use it to influence, bring value and growth to a business. Some growth marketing channels and strategies include:
- Blog posts with calls to action that lead to lead magnets that are relevant to the context, SEO Keyword research, link building, and optimization
- Email marketing that is automated and email marketing campaigns to be sent to specific lists or contacts based on how people have behaved in the past.
- Reusing content on different social media platforms, search engines, and in different formats and making lead magnets that can be used on the website’s cold, warm, and hot pages.
Metrics and Goals for Growth Marketing
Growth rate is the “North Star” of growth marketing. The metrics and goals for growth marketing involves many indices. Here are some of the goals for growth marketing:
- Marketing-qualified leads (MQLs), sales leads of all kinds, certified Leads (SQLs)
- Opens and clicks are examples of email metrics.
- SEO factors like the website’s Domain Authority and how it ranks for specific keywords.
- Retention statistics, such as the churn rate, the number of upsells, and cross-sells.
How Do You Define Performance Marketing?
Performance marketing is a term for online advertising and marketing programs where advertisers only pay when a specific action takes place. This action could be a user-driven lead, the sale of a product, a click on an article, or any other things.
The goal is to get new customers, which is different from growth marketing. Impressions, clicks, and leads are the most important parts of performance marketing. Revenue, retention, and referrals are things another person or marketing team thinks about.
Performance marketing is also a “set it and forget it” method. They will work as long as you have enough money to keep running ads. But the campaign stops when the money runs out, and your asset is no longer seen. Because of this, performance marketing works best for one-time campaigns most of the time.
Common Ways and Channels for Performance Marketing
Paid marketing channels are used in performance marketing. Some of the most common strategies used in performance marketing are:
1. Local Advertising
These ads don’t look like the kind of ads you usually see. They fit with the editorial style and tone of the publication or website and give the type of information that the audience expects.
2. Sponsored Content
Sponsored content is when a company pays money to a company or influencer that fits their target customer group and the topic. When done right, sponsored content doesn’t feel like an ad but more like a natural part of the site.
3. Affiliate Marketing
Affiliate marketing is when you promote other people’s products and get a cut of the sales. Brands often work with “influencers” who have an “affiliate” link. When a sale is made through this link, the influencer gets a small profit cut.
4. Advertising on Social Media
It sounds like an ad on social media, which is exactly what it is. It could be a banner ad, a video ad, or sponsored or “native” advertising. When you use a search engine like Google, the first few results usually have the word “ad” next to them. You can pay to advertise on search engines and be one of the first things people see when looking for a certain product.
Performance Marketing Goals and Measurements
Is your goal to produce sales? Do you want a possible customer to sign up for an email blast? Before deciding on performance marketing, it’s important to figure out your most important metrics.
In most performance marketing campaigns, goals and measurement are based on some of these terms below:
1. Return on Ad Spend (ROAS)
ROAS is the amount of money your business makes for every dollar it spends on advertising.
2. Return on Investment (ROI)
ROI is the growth in sales minus the cost of marketing, divided by the cost of marketing. This shows how much money you made from the money you spent on advertising.
3. Cost Per Thousand Impressions (CPM)
CPM is the amount an advertiser pays a publisher for every 1,000 people who see their ad.
4. Cost Per Click (CPC)
CPC is how much an advertiser pays each time one of their ads is clicked on. It is the total amount spent on ads divided by the number of clicks on those ads.
5. Cost Per Sale/Conversion (CPS/CPV)
CPV is the amount an advertiser pays for each sale that an ad brings in. It is the amount of money spent on ads divided by the amount made from sales because of the ads. Cost per lead, or CPL, is how much an advertiser pays when a customer signs up because of an ad.
6. Cost Per Acquisition (CPA)
CPA is how much an advertiser has to pay when a certain action is taken. This action could be a sale, a click, or a completion.
Growth Marketing Vs Performance Marketing: Which Performs Better?
Your company should decide on performance marketing at a certain time and place. If you want to sell a certain number of products this month, or if you want to get more people to sign up for your email list, performance marketing teams could help your business.
But these things happen naturally when growth marketing campaigns are implemented. Instead of focusing on a specific number of sales, growth marketing aims for the overall growth of your business.
Growth marketing may be the best way to go if you are a tech or SaaS company in its early stages and want to grow your audience but don’t care about meeting specific sales goals.
Both of these plans work for successful businesses, and neither is better than the other. Our goal is to help you learn more about each strategy so that you can make a better decision for your business.
To Wrap Up
In summary, when you are on a growth marketing strategy you are trying to acquire new customers that you can support and retain through drip marketing, conversion marketing, upsells, and cross-sells.
On a performance marketing strategy, you are specifically looking for the sale.
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