The major differences and similarities between performance marketing vs growth marketing are:
Performance Marketing
Focuses on short-term ROI goals
Converts bottom-funnel leads
Tracks quantitative KPIs
Uses paid channels
Best for sales-based brands
Growth Marketing
Focuses on long-term revenue gains
Considers full-funnel customer journeys
Tracks qualitative metrics
Uses organic channels
Best for customer-centric businesses
Performance Marketing vs Growth Marketing Similarities
Focuses on generating revenue
Utilizes data analytics for making decisions
Prioritizes customer acquisition
Maximizes marketing tools and platforms
Have scalable advertising processes
Performance marketing entails using paid strategies and channels to achieve quick results. These include affiliate marketing, PPC advertising, and email marketing. This model drives a short-term boost in brand conversions, sales, and ROI. In contrast, growth marketing involves organic advertising methods to acquire and engage customers. These include viral marketing, SEO, and content marketing. It improves customer loyalty, brand credibility, and revenue gains.
Joey Stevens, paid media director at The Social Shepherd, states that performance marketing relies on conversion-focused ads. It optimizes for end goals like PDF downloads and holiday bookings. Alternatively, growth marketing focuses on expanding reach and engagement. Startups or companies with low brand visibility often use this method. He suggests using both strategies to reduce cost per acquisition and improve conversion rates.
Sales-focused businesses adopt performance marketing tactics to increase customer purchases. They optimize their online campaigns by monitoring key performance indicators like click-through rates. In fact, paid ads generate a 200% ROI on average (WordLead). In contrast, growth marketing focuses on customer lifetime value and retention. Marq reveals that 35% of businesses experience 10% to 20% revenue growth because of consistent brand presentation.
I've used growth and performance marketing models to improve my monthly recurring revenue. However, each method requires either a significant budget or daily content creation. That's why I shifted to local SEO and created solid organic growth strategies. For more than 10 years, I've been making over $52K in passive monthly income.
This article discusses the main differences and similarities between performance marketing and growth marketing. We examine both models' examples, such as social media marketing and native advertising. We also feature testimonials from brands like Myfix Cycles and Slack. Finally, we reveal the best online marketing method for business scalability.
5 Differences Between Performance Marketing vs Growth Marketing
Performance Marketing
Growth Marketing
Main Focus
It focuses on short-term business and ROI goals. Performance marketing drives actions and conversions through a campaign-driven strategy.
It focuses on long-term business, customer, and revenue gains. Growth marketing uses engagement and retention strategies.
Marketing Funnel
Performance marketing drives immediate sales by converting bottom-funnel customers.
Growth marketing generates revenue by considering the entire customer journey.
Metrics
It tracks the success of marketing spending. Some of the main KPIs in performance marketing are:
- Conversion Rate (CR)
- Customer Acquisition Cost (CAC)
- Return on Ad Spend (ROAS)
- Cost Per Click (CPC)
- Click-Through Rate (CTR)
It monitors qualitative metrics to determine long-term growth and success. Some of the main considerations of growth marketing are:
- Customer Targeting
- Customer Journey Mapping
- A/B Testing
- Content Strategy
- Customer Retention
Marketing Channel
Performance marketing uses paid channels, such as PPC and affiliate marketing.
Growth marketing combines organic and paid channels like SEO and social media marketing.
Use Case
It is best for industries like e-commerce, financial technology, and retail.
It is great for subscription-based services, SaaS, and startups.
Do Performance Marketing and Growth Marketing Have Similarities?
Yes, performance marketing and growth marketing have similarities. Both models:
Performance and growth marketing entails creating online campaigns that drive business ROI. Both models use advertising strategies that attract and engage target audiences. This method improves customer acquisition and retention. Both marketing models also use technologies like Google Analytics and CRM systems. These marketing platforms enable streamlined, data-backed operations.
What People Say About Performance Marketing vs Growth Marketing
Myfix Cycles, a bike retailer, generated $15 in ROI for every $1 spent on paid ads. It used Facebook Ads to retarget website visitors, cart abandoners, and frequent buyers. Performance marketing helped it achieve a 6.38% click-through rate and a 1529% ROI.
Nielsen reveals that 70% of global marketers plan to increase their performance marketing spend. However, one Redditor said that performance marketing is a "quarterly KPI hamster wheel." Your previous campaign gets affected if the next marketing ad doesn't perform well. Another Reddit user mentioned that performance marketing has a channel cap. Marketers will eventually use radio, TV, and out-of-home advertising.
Slack, a popular software company, grew to a $3+ billion business with growth marketing. It generated user interest through beta testing and word-of-mouth marketing. Then, the company used an ungated free trial and "viral loops" to improve brand awareness. Now, Slack has over 10 million daily active users (DAU) worldwide.
According to Forbes, a 5% improvement in customer retention leads to a 25% to 95% jump in profits. However, one Redditor stated that growth marketing is a "high risk, high reward" model. Growth marketers are held accountable for campaigns that don't generate revenue. Sometimes CEOs set unrealistic long-term growth goals.
What Type of Digital Marketing is the Most Profitable: Performance or Growth?
Performance marketing is a type of digital marketing that is more profitable than growth marketing in the short term. It provides immediate ROI through on-demand advertising campaigns. WordLead states that paid ads generate an average $2 return for every $1 spent. Performance marketing is best for industries that need direct sales, like e-commerce. It's highly profitable for time-sensitive events like holiday sales and seasonal promotions. You can adjust or end marketing campaigns based on your budget and ongoing ad costs.
Alternatively, growth marketing is more profitable than performance marketing in the long run. It contributes to a business's overall profitability through:
Growth marketing addresses customer attrition while improving customer lifetime value. Most startups use this method to expand brand awareness and establish a customer base. As per MarketingWeek, 60% of business profits come from brand building. Growth marketing involves free channels like social media marketing, SEO, and content marketing. Some of the best growth strategies are loyalty, community engagement, and referral programs.
Performance Marketing Pros and Cons
Performance Marketing Pros
Easy to calculate ROI and optimize campaigns in real time
Only pay for successful clicks and conversions
Ability to set many target audience parameters (Ex: demographics, geographic, behavioral, etc.)
Opportunity to scale by increasing ad budgets and diversifying marketing channels
Processes can be automated
Performance Marketing Cons
Possibility of maxing out all available performance marketing channels
Low profit due to high ad spending
Susceptible to fraudulent transactions like bot traffic and ad fraud
Possibility of ceasing marketing operations because of growing ad costs
Sales-based campaigns can hinder genuine customer relationships and brand building
Some types of performance marketing are:
Performance marketing is a method where advertisers only pay for successful outcomes. These include sales, leads, or clicks. It is a results-driven marketing strategy that relies on measurable metrics like Conversion Rate and Cost Per Click. Performance marketers drive revenue by creating and launching on-demand advertisements. They partner with ad platforms, influencers, affiliate marketers, and more.
Growth Marketing Pros and Cons
Growth Marketing Pros
Offers sustainable business and marketing growth
Builds brand credibility and promotes customer trust
Opportunity to drive customer referrals through word-of-mouth marketing
Uses customer experiences to optimize marketing campaigns
Maximizes organic marketing to reduce advertising costs
Growth Marketing Cons
Involves technical growth marketer skills and resources
Possibility of misallocating marketing efforts because of interlapping metrics
Takes time to see campaign results
The risk of customer disengagement due to intrusive marketing tactics
Constantly adapting to new market trends and customer behaviors
Some examples of growth marketing are:
Growth marketing is a long-term marketing model that focuses on full-funnel customer journeys. It involves engaging, converting, and nurturing your target market. This marketing model improves brand awareness, reputation, and revenue. Growth marketers identify business scalability opportunities and turn them into optimized campaigns. They use sustainable channels like social media and search engines. Growth marketing reflects Dave McClure's Pirate Metrics called the AARRR framework: Acquisition, Activation, Retention, Referral, and Revenue.
Local Lead Gen: A Combination of Performance and Growth Marketing?
Local lead generation is a mix of performance and growth marketing. It uses local SEO to improve search engine ranking while strengthening customer relationships. Businesses only pay monthly for renting a lead gen site or for every successful lead referral. While performance marketing drives quick profits, not all paid ads generate the same result. In growth marketing, you need to engage with your audience constantly to retain them.
Local lead gen is better than growth and performance marketing because:
I've used performance and growth marketing to scale my online business. However, I discovered that each marketing strategy has its limitations. That's why I switched to local lead generation and maximized its income and growth opportunities. I've been making over $50,000 monthly since 2014. Local lead gen surpasses what product growth managers or performance marketing companies can do.
