Pros & Cons to Using Performance Marketing for Your SMB

 

Every decision in life comes with analysis. It is not advisable to "fly by the seat of your pants" when operating a small business. Budgets are tight and every dollar spent must deliver a reasonable ROI to justify the expenditure in the first place. Before spending a single dime on any form of digital marketing, including performance marketing, it's important to understand the pros and cons of such a choice. As a small business owner, what advantages and disadvantages come with performance marketing?

Pro – Trackable and Measurable

Arguably the greatest advantage of performance marketing derives from analytics. Insight into marketing performance is important for any company; especially in the case of cash-strapped small businesses. Performance marketing is easy to track and measure the success of the investment because companies only pay for successful transactions. Each transaction is easy to measure because it is based on a consumer taking a specific, defined action such as placing a phone call. As such, Pay Per Call marketing is a tremendous example of performance marketing in action.

Read More: How to Include Performance Marketing Into Your Marketing Strategy

Pro – Extends Ad Reach

Publishers in performance marketing campaigns promote the brand, product, and/or service across various websites in an effort to reach specific niches. However, that expanded reach doesn't come with significant investment up front because, in the end, the company is still paying for a specific result. For example, Pay Per Call campaigns that promote a yard service to various suburbs in a metro area. The company gets wider coverage in its region but isn't paying an arm-and-a-leg just for the added reach.

Pro – Diverse Revenue Stream

For businesses that use multiple marketing strategies, performance marketing can help diversify revenue streams. It expands the brand's recognition and message across new niches, but when economic times get tough, performance marketing also enables the company to reroute marketing funds to a marketing scheme that specifically pays for actions taken rather than simple lead generation.

Learn More: Top 5 Things to Know About Performance Marketing

Con – Possibility of Overpaying

There are few cons that businesses will find in performance marketing. As a small business though, some of these cons might be harder to look past than for larger corporations. For example, publishers rate performance marketing campaigns on various tiers for clients. Business owners have the freedom to select the desired action and will only pay a publisher when that action occurs, but that doesn't mean that payment is their choice. Based upon the tier a publisher places a campaign it, the cost to pay out for each derived action (phone call, click, etc.) could be too expensive to continue paying for in the long run.

Con – Possibility of Wasting Internal Resources

Even if the performance marketing payout for a firm is reasonable and the Pay Per Call (or other) marketing campaign is working reasonably well, that doesn't mean the publisher relationship is ideal. Just because customers pick up the phone doesn't always mean they'll convert to paying customers. However, Pay Per Call performance marketing requires small businesses to pay a publisher for generating phone calls, not ensuring customers make a purchase as a result of that call.

So, small businesses could find the phone ringing more, but that doesn't mean the partnership is worth it. Internal work at a small business is required to maintain that partnership, but if it's not delivering phone calls that convert to sales, the relationship may no longer be worthwhile.

Want More? Exploring the Different Branches of Performance Marketing