Performance marketing and growth marketing are two of the most popular online marketing strategies in 2022. Both can be leveraged to expand your business, but the approaches are very different.
With performance marketing, you’re looking to get the best possible return on your investment as quickly as possible. That means keeping a tight handle on your marketing spend, although costs are rising. In 2018, US businesses spent $6.2 billion on performance marketing, with retail, travel, and finance businesses spending the most on performance marketing strategies.
Growth marketing focuses on expanding your business over time. Experimentation is key within any growth marketing strategy. It enables you to harness and optimise lots of different channels to build a brand and sell more products. 80% of companies now invest in omnichannel marketing compared with 20% ten years ago.
In this article, you’ll learn about the differences between performance marketing vs growth marketing, including what’s involved in each strategy, the pros and cons, and whether performance marketing or growth marketing is best for your business.
What Is Performance Marketing?
Performance marketing is all about getting the most bang for your buck. It’s a results-driven marketing strategy that revolves around paid search and social campaigns as well as affiliate marketing. You pay when you achieve specific results, such as impressions, clicks, or – most importantly – conversions.
Performance marketing is commonly used to maximise your return on ad spend (ROAS) or reduce your cost-per-acquisition (CPA). Marketing consultant Eric Andrews agrees that customer acquisition cost is a key control within performance marketing:
Performance marketing is based on a cost-per-purchase target. Marketers have performance targets, and they need to get a certain amount of conversions from a certain amount of spend…. The goal with performance marketing is to scale as fast as you can while you’re still profitable on each new customer.
What Is Growth Marketing?
Growth marketing focuses on experimenting with lots of different marketing channels to find the best-performing strategies for business growth. Unlike performance marketing, which revolves around gaining new customers, growth marketing focuses on the entire customer journey. According to growth marketer Elena Bezborodova:
Growth marketing is not only limited to customer acquisition. It’s also about onboarding, retention, and upselling.
The goal with growth marketing is to scale up your business. Growth marketers start with the easy stuff – reaching out to people who are most likely to convert – to stimulate initial growth. But they also focus on nurturing leads for future business deals, and converting previous buyers into returning or referring customers.
What’s Involved in Performance Marketing?
It’s important to know how to measure and achieve success in performance marketing. Let’s take a look at some of the key goals, channels, metrics, and strategies good performance marketers focus on.
Performance Marketing Goals
The overarching goal in any performance marketing strategy is to achieve maximum return for minimum spend. Performance marketing teams should aim to improve efficiency to gain the highest possible return on investment.
Performance Marketing Channels
Paid ads are the most popular performance marketing tactic. Pay-per-click (PPC) campaigns through Google Ads and social media platforms like TikTok, Meta, and LinkedIn give you visibility and control over your ad spend, so you can monitor your ROAS more easily.
Affiliate marketing is another key performance marketing channel. Some businesses choose to use PPC affiliate programmes, while others hire influencers who are popular with their target audience to promote their products. This is also known as sponsored content.
While paid advertising is one of the most effective performance marketing channels, it’s easily skewed by bots and other invalid users. Even influencers have been known to inflate their like and follower counts using fake bot activity.
These users have zero chance of converting into customers. So using Lunio to remove bots and fake ad engagements across all your paid marketing channels instantly boosts your overall marketing efficiency. In addition, by filtering out zero-value traffic, higher-quality conversion data is fed back to each acquisition channel to further optimise your campaign targeting.
Performance Marketing Metrics
Primary performance marketing metrics include:
- Cost-per-acquisition (CPA) — the cost of acquiring a new customer
- Cost-per-conversion (CPC) — the cost of making a sale or generating a lead
- Return on ad spend (ROAS) — revenue earned vs the amount spent on advertising
- Marketing efficiency ratio (MER) — total revenue vs total paid media spend.
These high-level metrics give you a good overview of your performance marketing success. But other metrics can also indicate individual campaign success, such as cost-per-impression and cost-per-click.
Performance Marketing Strategies
Boost your ROAS and reduce your CPA with performance marketing strategies including:
- A/B testing and experimentation — Experiment with different channels (especially social media advertising channels) to see which give you the best returns
- Conversion rate optimisation — Test page elements to see which result in the most conversions, then scale the results to improve your CRO
- Diversifying your paid marketing campaigns — Reduce risk and improve conversions by using multiple paid media channels.
What’s Involved in Growth Marketing?
Growth marketing has different objectives and tactics to performance marketing. Let’s look into what strategies, channels, and metrics you can use to achieve your growth marketing goals.
Growth Marketing Goals
The goal of growth marketing is (you guessed it) business growth. That means increasing revenue across a variety of channels and stages of the buyer journey, rather than focusing solely on advertising and acquisition. Many growth marketers focus on brand-building to get greater long-term gains.
Growth Marketing Channels
Growth marketing campaigns tend to be slower paced than performance marketing campaigns. Paid advertising may still be part of the strategy, but it’s often less significant than in performance marketing. More resources are put into other channels, including:
- Organic search — Implementing a strong SEO strategy helps build an audience through organic rather than paid search.
- Email marketing — Email is a great way to stay top-of-mind with leads and customers, and nudge them through the marketing funnel.
- Social media — Building a public following raises brand awareness and gives you a channel to communicate with customers directly.
Growth Marketing Metrics
Common growth marketing metrics include:
- Revenue — All marketing strategies should drive income, so revenue is a key indicator of marketing success
- Site traffic — Increasing website traffic is a sign of business growth (especially if bot traffic has been eliminated)
- Google rankings — Good SEO leads to higher site rankings, which in turn generates more site traffic
- Churn rate — Understanding customer retention is particularly important for subscription-based businesses.
Secondary metrics depend on which channels you use. For example, if your growth marketing strategy relies on email marketing, you can use metrics like open rate and click-through rate to determine campaign success. If paid marketing is part of your growth marketing strategy, metrics like cost-per-conversion or cost-per-click may also apply.
Growth Marketing Strategies
Your growth marketing tactics should influence the full marketing funnel, from nurturing leads to customer acquisition to promoting referrals. Popular strategies include:
- SEO and content marketing — Perhaps the most popular organic growth strategy, content marketing involves creating and distributing useful content for your target audience
- PR and thought leadership — Show the company’s values (and generate useful backlinks for site authority) via thought leadership articles and videos.
- Remarketing — reaching out to past site visitors or customers to entice them back to the site
- Customer reviews — Giving great service is the best way to encourage customers to leave positive reviews; you can also request feedback via push notifications or email campaigns.
The Pros and Cons of Growth Marketing Vs Performance Marketing
See the pros and cons of performance and growth marketing side-by-side:
|It gives you good visibility of marketing efficiency
It’s easy to stay in control of your ad spend
It’s easy to target specific audiences
You can achieve results quickly
|Can influence the full customer journey
It’s a long-term, forward-thinking strategy
Spend and rely less on advertising
Increase brand awareness organically
|Continuous investment needed for long-term results
Can be expensive
Results can be skewed or tainted by ad fraud
|It takes longer to see results
It’s more resource- and labour-intensive
Less visibility around spend and attribution
Performance Marketing Case Study
Baby and beauty eCommerce business The Honest Company relies on experimentation to validate their ads and landing pages. This enables them to optimise conversion rates and make more sales.
But time constraints meant they couldn’t spend too much time testing. They wanted quick results, so they implemented a performance marketing strategy within Google Ads to increase the lifetime value of their existing customers, and get a better return on their ad spend.
This new approach helped them optimise their bid strategy, ad text, and landing pages. The results? The Honest Company increased their ROAS by 47%, and spent 50% less time testing, giving them more time to focus on other business priorities.
Growth Marketing Case Study
Design company Canva has used an omnichannel growth strategy to become one of the most used online design tools. Within two years of operating, it received 3,600 sign-ups each day on average, and reached two million users.
Canva has leveraged many different tactics to achieve huge growth in a relatively short time. Here’s a selection from their strategy:
- Freemium pricing model — This pricing model maximises signups while also monetising the product, especially among business users
- Organic search — Canva invests heavily in SEO to drive signups and brand awareness to supplement the users they are acquiring through paid search.
- Product improvements — Great UX is the USP of Canva’s product, helping retain users and push them onto paid plans.
Should You Use Growth or Performance Marketing?
Is growth marketing or performance marketing more appropriate for your business?
Ultimately it comes down to your priorities. If, like The Honest Company, you’re strapped for time and need fast results, performance marketing may be the best option. But if you’re keen to build a brand and invest in greater growth over a longer period, growth marketing is more likely to help you reach your goals.
|Use performance marketing if…
|Use growth marketing if…
|You want to maximise your ROAS and reduce your CPA
You want to make big gains quickly
You have a shorter sales cycle
You have targets to meet
|You want to build a brand
You want to develop long-lasting customer relationships
You have more time to build revenue
You want to use multiple channels to achieve your goals