Performance-based marketing budget: ROI as the sole truth

Michiel Destoop
August 3, 2017
⏱ 2 min. read

Variable marketing budget: this may not sound logical to many companies, but if it’s performance-based marketing you’re after, this is the approach you should take.

What if ...

  • you had an unlimited marketing budget; and
  • your performance in marketing was seen as a catalyst for growth rather than a cost item?

Sounds good, doesn't it?

These are the promises of performance-based marketing. A marketing budget is seen only as part of the acquisition costs when landing a new customer. A larger budget results in more customers. Not just intuitively, but demonstrably: in figures. The size of the market and the limits with regard to what is being offered are the only restrictions for further growth.


ROI is of paramount importance

Return on investment is the magic word. In the kingdom of performance-based marketing, the costs per lead, customer or sale are the primary figures to be taken into consideration. If these costs can be justified the campaign will be continued and further optimized: reduce the cost per conversion or achieve more results.

If the campaign doesn't work, it will be scrapped. New techniques are tried out. Growth hacking is quintessentially the same, although you should place it in a broader context. In growth hacking you want to achieve a larger reach and greater name recognition, in which the objective is also commercial growth. Performance-based marketing is more limited to a direct relationship with increased turnover.

What you cannot measure does not count.

In performance-based marketing, the focus is largely on online marketing, because only measurable marketing is taken into consideration.

Affiliate marketing and lead generation parties are the extreme forms of performing-based marketing. Their business models are, of course, designed in such a way that performance and results are what matters most. Their turnover is directly related to an increase in sales among their customers.

Online advertising – when executed well – also leads to performance-based marketing. 

On the road to performance-based marketing

Many businesses are still unable to take the step towards performing-based marketing. Either their share in e-commerce is non-existentg or too small, the correct measurements are not in place yet, or the people holding the purse strings are not mentally prepared for the transition yet.

It requires an entirely new way of thinking, after all! As a marketing manager, you don't examine the available budget with a view to using it as effectively as possible, but you do look at the cost price of a new lead, customer or sale. The size of the total budget also plays a part in this, actually.

Just try convincing your financial manager and CEO that you would like an unlimited budget for the next year!

Of course, you will need to prove it on the way there: set up the structures, determine the KPIs, determine your measuring methods, build up the necessary knowledge and manpower (both in-house and externally) and, in conclusion, set up final test campaigns. Once the first successes have been achieved, confidence in the importance of strengthening this online marketing approach will grow. The first challenge is to convince the management to allocate a large enough budget for this test environment.

Retaining an overview

An even bigger challenge for marketing managers is retaining an overview. Because, in addition to these online marketing projects, a marketing manager has many other tasks: branding, events, PR, etc. If you don't want your head to start exploding, you will need a system that will help you retain a clear overview of all your ongoing projects (hint: Husky).

Not only do you need an overview of your project and task, but also the entire plan: including the schedule, the budget and the results. (another hint: Husky).
 

Take control of your marketing budget with Husky

Do you want to know why Husky can be an asset to your budget? 

Read more about marketing budget here or start your free trial today.