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The term performance marketing is hardly new, however in 2020 the tactics and tools marketers use to achieve performance have evolved considerably, requiring an update in how the industry understands the practice.
This practice is about getting the most out of your marketing spend by doing more with every dollar rather than limiting how much is spent – performance marketing needs some nuance.
Analysis of the seven stages of development reveals where many performance marketers tend to stop and how they can push themselves far beyond to become marketing masters.
At this stage, performance metrics guide marketers in refining approaches and adjusting campaigns to drive immediate actions such as clicks, views or opens. By targeting specific lists, audiences, creatives or offers, marketers aim to improve efficiency and maximize results.
However, many marketers stopped there and equated performance only to immediate actions, often reflecting earlier limitations of the tracking method when it was difficult to make a direct connection to results such as conversions. As a result, these surrogate metrics have become the default measure of success, but they primarily indicate awareness rather than actual performance.
Optimizing for action is an important first step, but true performance marketing requires moving beyond these surface-level indicators to connect actions to meaningful business outcomes.
This step is about understanding not only what happened, but also what it is worth. Deeper analysis often reveals that the list or audience that gets the most clicks doesn’t necessarily bring the highest returns or effectiveness. For example, one email list may generate more actions, but those actions lead to lower conversions or lower transaction values. These insights can fundamentally influence the optimization strategy.
While this assessment is often limited to a single channel, it seeks to understand the financial benefit of these simple actions and links specific outreach efforts to different outcomes without considering cross-channel impacts.
Once marketers understand immediate impact through metrics like ROAS, the next step is to shift their focus beyond short-term profits. While immediate results are valuable, optimizing only for one-time buyers risks missing out on long-term opportunities. Performance marketing in this phase builds lasting relationships with customers that maximize lifetime revenue and reduce the cost of capturing future spend.
Evaluating marketing ROI over a longer time horizon allows marketers to better align value assessments with the extended lifecycle of their customers. This broader perspective ensures that campaigns generate quick wins and create sustainable growth by driving brand loyalty and repeat purchases.
This is the stage where even the most sophisticated marketers often stop, satisfied with their ability to evaluate customer relationships over time.
However, digital marketing campaigns – often constrained by limited visibility and control – can force marketers to revert to the simpler first-stage metrics. The real transformation comes in the next phase, when we realize that real customer journeys happen across different channels and campaigns.
Performance marketing evolves significantly when marketers stop thinking of campaigns as isolated efforts and instead view them as interconnected series of events across multiple touchpoints. The fourth stage is about managing the sequence of campaigns and understanding how they work together to nurture leads and deliver results over time.
Marketers focus on creating a cohesive plan where each campaign builds on the last and creates a deliberate process that guides customers through the purchase journey. Success is not tied to the performance of a single campaign, but to the cumulative impact of multiple campaigns working together.
Modern marketing spans many channels – no marketer should analyze performance metrics in isolation. Reading results across all channels helps connect the dots to get a complete picture of consumer behavior.
This phase builds on the work done in Phases 2 and 3 and focuses on understanding business outcomes holistically rather than within a single channel. For example, a direct mail campaign can generate digital engagement immediately, rather than through the mail. With cross-channel visibility, marketers can uncover hidden contributions and gain a clearer picture of how campaigns are working together to deliver results.
Total returns are also presented here – combining results from all relevant channels into a single measure of success. This allows marketers to identify which channels deliver the most value and where to allocate future resources for maximum impact.
Based on the insights from the fourth stage of journey management, this stage involves the full integration of all available channels and touchpoints into a unified strategy. The goal is to understand how each element in the marketing mix contributes to customer engagement and business results.
Marketers at this stage face significant challenges, especially in the area of attribution. MTA becomes essential to assess the contribution of each channel and touchpoint in a complex, multi-channel environment. Testing different scenarios and observing the interaction of different channels helps give marketers a clear idea of which combinations produce the best results.
In this final phase, marketers explore untapped markets to identify new audiences and opportunities. Prospecting is about expanding the boundaries of performance marketing to discover high-value segments, refine strategies, and build a sustainable pipeline of future customers.
This stage requires a mindset shift: There is no such thing as waste in search. Non-performing spend isn’t a loss—it’s a critical test budget to see which strategies, channels, and creative approaches resonate with new audiences. The insights gained from these efforts form the basis of future growth.
Prospect success depends on applying performance marketing principles—multivariate testing, attribution modeling, and lifetime value analysis—to uncover the best avenues for customer acquisition. When marketers continuously optimize the learning process, they expand their reach without over-targeting or sacrificing effectiveness.
Some performance marketers focus on a well-defined audience at all costs, but it is entirely possible to optimize the learning process and extend the concept of performance into the wider marketing world.
Merchants who master all seven stages they find that they have very successful data-driven campaigns. In an era where every advertising dollar is scrutinized, the ability to link spend to business results and drive them is a continuously optimized strategy that will benefit marketers for years to come.
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