When companies find their marketing efforts rewarded, they must consider ways of scaling or amplifying their effectiveness. Sadly, only a few firms have gotten to this point. In the US, the business failure rate in their first year is 18.4%.
Inaccurate consumer targeting and other issues can cripple marketing campaigns. Others need help looking at the right metrics. Enter growth and performance marketing—two concepts pushing the boundaries of traditional marketing goals.
This article offers an in-depth view of the key differences between performance and growth marketing, which you can use to select the best marketing strategy for your business or startup.
Key Takeaways
- When considering campaign strategies, marketers must consider which ROI they expect to accrue and the processes supporting that tactic.
- Companies’ marketing fails are triggered by a lack of understanding of their performance indicators or metrics.
- Growth and performance marketing processes provide a glimpse of each marketing tactic's strengths.
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The Battle of Effective Marketing Campaigns
Growth and performance marketing offer different strengths and pose various risks. In fact, marketing agencies emphasize how these two cover distinct sections in the marketing funnel.
Other comparative reviews delve into the stages of business growth (e.g., early-stage, maturity) when discussing growth marketing vs. performance marketing. For a more comprehensive assessment, these marketing concepts are pitted against each other through their strategies, outcomes, and flow or process.
Performance and growth marketing at a glance
Before getting into the nitty-gritty of marketing showdowns, consider dissecting their respective definitions.
- Performance marketing combines online marketing (or digital marketing) and advertising. Performance marketing strategy focuses on capturing leads or sales by placing ads where the target audience is. It fits most short-term campaigns because it can effectively boost brand awareness quickly and only requires payment when consumers complete an action (e.g., clicking an ad).
- Growth marketers have their noses in every marketing funnel stage: awareness, acquisition, activation, retention, revenue, and referral. In contrast to traditional marketing, where the main concern is awareness and investment, growth marketing takes a more holistic approach. This marketing tactic is suitable for long-term goals and is often depicted as a cycle of analysis and learning, acquiring new customers and keeping them happy. Interestingly, growth marketing is often mistaken as growth hacking (when the latter is actually a subfield of growth marketing). Growth hacking uses a data-driven perspective to push company growth through an increased customer base at a shorter duration, much like what observers see in small businesses and startups.
1. Strategies: One Strategy To Rule Them All
Performance and growth marketing consists of tactics that empower businesses to improve and expand their market share.
Performance marketing strategies
Performance marketing includes affiliate marketing, pay-per-click, and search engine marketing.
- Affiliate marketing requires marketers to work with an affiliate who owns a website with high online traffic. The affiliate places an ad for your product or service on the website and receives a commission or upfront fee when someone clicks the ad, gets to the company's landing page and makes a purchase. This performance marketing strategy works well for those on tight marketing budgets because affiliate marketing is markedly cheaper (based on cost per acquisition) than other strategies like search engine marketing.
- Pay-per-click (PPC) ads help generate a high return on investment (ROI) and benefit both parties. Companies pay search engines to achieve their goal, while search engines receive payment for their efforts to place PPC ads strategically. PPC is another ideal marketing for penny pinchers because firms only need to pay per click (hence, the name). Unlike other marketing tactics, a successful PPC campaign can only be possible with expert marketers keen on analysis and segmentation.
- Search engine marketing allows businesses to become visible online to people interested in the kind of solutions the product offers. This performance marketing strategy involves relevant keywords and search engines that offer advertising services. Browsers often see these ads as text or display ads at the top or right side of the website. Some people confuse search engine marketing with PPC. However, search engine marketing is a broader marketing strategy that may include PPC or search engine optimization.
Growth marketing strategies
Growth marketing includes content marketing, email marketing, and search engine optimization (SEO).
- Content marketing is a growth marketing strategy that overlaps with most marketing channels, including social media marketing. New businesses rely on content marketing to establish brand awareness. More mature firms use this strategy to exude authority and present thought leadership throughout their messaging and marketing channels.
- Email marketing is a tried-and-tested growth marketing campaign focusing on current and potential or new customers. Also, email marketing is known to provide a high ROI: about $36 for every $1 spent, according to The ROI of Email Marketing report. The appeal of this strategy is found in its cost-efficiency and customizability. Also, subscribers who receive updates on new products or discounts see value in such content. Marketers use the Archive app to build a robust subscriber list for their email marketing campaigns.
- Search engine optimization (SEO) helps companies enhance their searchers' experience by boosting their website's rankings on the search results page. Tough competition against specific keywords can pose a challenge, but a solid SEO strategy can make a difference in links and conversions. Like content marketing, SEO is also connected to other growth marketing strategies and channels.
2. Outcomes: Deliver Higher Returns
A common rookie mistake people commit is to launch a marketing campaign without thoroughly reviewing their target audience, goals, and expected ROI. To avoid this route, growth and performance marketers must consider the elements in their strategy that can directly or indirectly impact their cost or budget.
So for performance marketing, marketers will look at campaigns that directly influence revenue. On the other hand, growth marketing focuses not only on programs but channels to test and further improve all these in a way that optimizes the marketing budget. In other words, a performance marketer sees growth in new customers, while the growth marketer expands this goal to include current customers.
Performance marketing metrics
- Return on ad spends measures how much the company earns per dollar of advertising spend.
- Cost per click is the amount paid by the firm per click or when consumers click an ad.
- Return on investment (ROI) is calculated by looking at how much the company earns after investing in ads.
- Cost per lead is the amount the company pays when they gain customers from an ad.
- Cost per acquisition measures consumer-specific actions (e.g., clicks, sales, or leads).
Growth marketing metrics
- Retention metrics like upsells or cross-sells. When companies encourage consumers to purchase through upgrades, they are upselling. Cross-selling occurs when firms motivate consumers to buy another product together with the main product.
- Revenue metrics include referrals, testimonials, and case studies, while SEO metrics consist of website rankings, keyword rankings, and search results.
- Email metrics consist of many metrics, but the primary targets include the clickthrough rate (percentage of subscribers who click the links in the email), conversion rate (percentage of subscribers who clicked a link and performed an action), and open rate (percentage of subscribers who open a company’s emails).
Did you know? Return on investment (ROI) helps select a brand's marketing channels and prove the value of the proposed marketing strategy.
3. Flow: Seamless Marketing Process
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As mentioned, growth marketing ensures that companies attract new customers and retain loyal patrons wherever they are in the marketing funnel (from awareness to customer retention or referrals). Hence, its process is cyclic compared to the performance marketing process.
Growth marketing process
Growth marketing starts when it analyzes market data, ideates based on analysis, and prioritizes and tests the marketing campaign. Then it goes back to research with the primary objective of learning what consumers want. Marketers use different marketing tools to do this effectively, such as the social listening tool Archive.
Growth marketers can benchmark and identify their campaign's weaknesses in the testing process. Growth marketers use such insights to improve their relationships with consumers, generate content for content marketing strategies, and expand their consumer base.
Performance marketing process
Performance growth marketing can be similar, but the process is charged with speed. Marketers define their goals, select marketing channels, and create a campaign message. Performance marketers execute the campaign to analyze and optimize their strategy until the goal is achieved and the desired metrics are met.
Because of this straightforward approach, business owners and marketers looking for fast gains in a short period always go for performance marketing. Of course, growth marketers will see progress, but they have to expect these favorable metrics to show up after a long time. In short, it's a slow but steady pace for growth marketing.
The Final Verdict
When it comes to strategies, comparing performance and growth marketing is like looking at apples to oranges. Both can boost businesses with marketing capabilities that can expand brand awareness and increase leads and sales.
But because they are designed for different marketing goals, they need to meet the same targets. Does that mean they should be treated on the same level? No sane marketer will ever say yes. However, combining both strategies is an excellent way to make the most of a company's marketing resources.
In other words, a marketer will run short-term performance marketing strategies using their knowledge of the tactics, processes, and metrics. And as they reap the rewards, they can simultaneously work on the slow but sure pacing of growth marketing. They can invest in more e-commerce platforms and consumer-focus tools, like Archive.com.
By running simultaneous short- and long-term campaigns, companies solve the perennial problems that stump early marketers:
- Determining how to pivot from marketing strategies that don’t work or meet the required metrics
- Looking at the future and understanding what future consumers want from their product as their needs change
Besides parallel campaigns, marketers and business owners can use their business stage and budget as factors. If the company is new to the market, it might need more time (and resources) to prepare to perform a holistic approach like growth marketing. For a lean budget, performance marketing strategies might make more sense.
Grow Your Customer Base With Archive
Comparing the strategies, outcomes, and processes of performance and growth marketing can sometimes cause marketers to assign one method as inferior to the other. But by combining or running parallel growth and performance marketing campaigns, marketers can reap more than just a few metrics or leads.
Want to leverage the best marketing strategy for your business? Visit Archive.com and learn how our marketing app can boost your chosen strategy.
FAQs on Performance Marketing vs. Growth Marketing
Are Google ads performance marketing?
Yes, pay-per-click ads like Google ads fall under performance marketing, besides impressions or views on a CPM (cost per thousand).
How do you identify a growth market?
To spot a growth market, companies must conduct one or a combination of these assessments: consumer segmentation, product/service, competitor, diversification, and purchase situation analyses.
Is performance marketing the same as media buying?
No, the two aren’t the same at all. Direct media buying involves two parties agreeing on a flat fee or sponsorship. Performance marketing is based on customer or visitor clicks (e.g., cost per click or pay per click).
