Generally speaking, majority of internet marketing budgets are spent using a method called Performance Marketing. What’s that?!
Performance marketing, often also called direct response marketing, is the type of marketing in which you are aiming at achieving an immediate desired action (AKA “conversion”) from your site’s visitor. At a later stage, once you calculate projected revenues for each type of conversion, you can attribute marketing effort to a business impact. The business impact will usually be measured in terms of ROI or profit and that’s probably the biggest advantage of performance marketing. Examples for direct response marketing can be SEM, and other types of PPC. Buying media under CPA model will also fall under the definition of direct response marketing.
While most of the budget are invested in performance marketing, some goes to brand marketing. Brand marketing is aiming at increased brand exposure. While most of the internet marketing budgets spent on direct response, brand marketing is where most of the offline budgets are spent. Fluffy as it sounds, brand marketing is more difficult to measure, and considered as a long-term investment. Examples for brand marketing will be “Like” campaigns, sponsoring events, printed advertising, billboards etc.
The great benefit of performance marketing is in its measurability. While you won’t mind to invest 1% of your budget in non-measurable activity, you will expect to calculate ROI for the remaining 99%. On the other hand, building a strong brand name is probably a very wise decision in the long run making you business far more sustainable.
How much of the pie should be allocated for each category, is difficult to say, but generally speaking, brand marketing budgets should grow together with your brand. While small or medium websites should spend most of their budgets on performance marketing larger companies should be more brand minded.
What do you guys think?