When you search for marketing strategies to boost your business’ growth, you may have come across growth and performance marketing which are the two main forms of marketing.
Marketing professionals usually associate growth with high-performance metrics leading to the growth of the business metrics which can either be financial or non-financial metrics.
The question that arises here is, what is the difference between “performance marketing” and “growth marketing”?
In this article, we will discuss the strategy for each of these marketing forms along with their tactics and goals. We will also highlight the differences between them. The article will also help you decide whether to pursue a performance or growth marketing strategy for your business.
Things to Evaluate
You won’t find many resources to distinguish these two forms of marketing if you search online. In our opinion, growth marketing and performance marketing can be similar, but they are not the same. Here are some things to evaluate when assessing growth vs. performance marketing.
Full-funnel approach to marketing a product or service is called growth marketing. While other marketing strategies focus primarily on increasing traffic or leads, growth marketing’s primary objective is to influence the entire marketing channel.
Growth marketing would include organic growth, SEO optimization, and content marketing, all related to the long-term strategy. It would consist of your upper funnel marketing, including paid advertising using video ads, Instagram ads, Facebook ads, and LinkedIn.
Six Levels of Growth (AAARRR)
- Awareness: (How many people know you and your offers?)
- Acquisition: (How many website visitors are you able to get in your funnel with a lead magnet?)
- Activation: (How do you nurture and further qualify leads to convert them?)
- Revenue: (How many leads can you convert into paying customers with each sale?)
- Retention: (How do you reduce churn, increase sales, and prevent customers from leaving?)
- Referral: (How can you use your customers’ experiences to influence Awareness, Acquisition, Activation, Revenue and Retention?)
The goal of growth marketing is to scale your business quickly. The lowest hanging fruit is the best, so you can first target people who are looking for you in your local market. After that, you can start looking at ways to grow your market by engaging new audiences, educating them, and nurturing them throughout the user journey.
The growth marketing team isn’t usually only looking to bring in new business. Together with your sales and customer success teams, they play a crucial role in turning customers into fans.
Lastly, your marketing campaigns should have the right growth strategies by measuring key metrics such as maintaining a stable customer acquisition cost.
Channels and Metrics of Growth Marketing
What channels and strategies do growth marketers use? It depends on the growth strategy and the goal. Due to the emphasis on all AAARRR metrics, growth marketing teams can utilize almost any tool in their marketing toolbox. However, growth marketing channels and tactics usually revolve around content which can be used to influence and provide value at every level of the funnel.
Here are some tools and channels that can help you with your growth marketing strategy:
- Regular and relevant blog posts and articles that can benefit the readers and add value would really help you with all AAARRR.
- Proper SEO, keyword research and link building.
- Use of email marketing
- Personalize the user experience based on preferences and history
- Share your content with a unique style on various social media platforms
- Create lead magnets through landing pages or on-page unique executions
Since the goal of growth marketing is to improve the business’ growth rate, keeping track of the right key metrics is essential. Here are some examples:
- Website traffic (Direct, Organic, or Other Channels)
- Number of qualified leads
- SEO Metrics (website ranking and keywords)
- Retention metrics (Churn, upsells, cross-sells)
- Revenue metrics including unique customers count, referrals, and conversions.
Performance marketing refers to online advertising and marketing programs that pay when a specific action is taken. This action could be a lead generated, a product sale, a click to an article or any other click to action (CTA).
Performance marketing agencies are typically paid for specific results. It could be a new customer, a sale, an enrollment, or any other key performance metric (KPI) you and your agency agreed to.
Return on ad spending or return on investment (ROI) are the main drivers of performance marketing. If you invest $100 in a marketing campaign, you want to get $200 back for example.
Contrary to growth, performance marketing is all about clicks, impressions, and leads. There is very little focus on activation.
In short, this type of marketing requires that you constantly tweak and refine your campaigns to ensure you are getting the best return on investment. Growth marketers will look at both paid and organic channels, while performance marketers are all about paid channels and the return on investment.
Channels and Metrics of Performance Marketing
Paid marketing channels are the foundation of performance marketing. Here are some examples:
- Native ads on other platforms that look and feel like a part of the product or journey to promote your product or service
- Sponsored content on other platforms or through influencers to promote your product or service
- Affiliate marketing allows you to reach more potential customers and increase conversions through a network or partners promoting your product or service by paying them a commission on successful referrals that convert
- Social media marketing and paid ads to promote your product or service
Like growth marketing, it is important to identify and keep track of the key metrics when it comes to performance marketing. Below are a few that we think are important:
- Return on Ad Spend (Find out how much your business can earn on every dollar it spends on advertisements)
- Cost per impression (Amount paid per every view your ad gets)
- Cost per click (Amount paid for every click your ad gets)
- Cost per acquisition (Amount paid for every action your ad gets which can be a sale, conversion, or a certain action such as contacting you or filling out a form)
Which Is Right? Performance Marketing Vs Growth Performance Marketing?
We would need to consider all the factors that impact both marketing strategies to give an accurate answer. But we will focus on the most significant aspects.
Are you a new business, and what are your major goals for the next five-year?
For a newly established business, the priority is to attract more customers and increase sales. In this scenario, growth marketing would be your top marketing priority because it encompasses all marketing strategies that can help you grow and convert leads.
On the other hand, more mature business can consider both in parallel as they would have a sufficient marketing budget to cover growth and performance marketing.