The goal of every marketer is to, over time, leverage and increase their performance to drive sustainable growth for a business. Right? So, then, what in the world are these niche categories called performance marketing and growth marketing?
Isn’t it all just marketing? Are they somehow different? In the immortal words of Jerry Seinfeld, “What’s the deal?”
There is indeed a difference when it comes to performance marketing versus growth marketing. And while they are both a part of the broader marketing industry umbrella, they have very specific uses and strategic advantages.
So let’s break down each concept and explore when they are most advantageous to your business.
What is growth marketing?
Growth marketing has, quite possibly, the oddest name for a speciality in all of the marketing industry. At the end of the day, all marketing is about creating growth.
However, growth marketing is concerned with driving growth generally (without a specific focus) as quickly as possible.
Growth marketing tools
To achieve this, many growth marketers often utilize digital advertising techniques and tools. Some favorites could include:
- Digital ads: Broadly speaking, a growth marketer will focus on low-cost digital ads that can reach as many qualified people as possible.
- SEO: Search engine optimization is used to ensure the copy on your owned channels meets the search intent of prospective customers — ideally leading to your website landing in the top three results of a given search.
- Content marketing: Here, we’re referring to the creation of written, graphic, and video content that can be used in conjunction with SEO efforts to drive organic web traffic. Tactics can include the creation of blog articles, YouTube videos, and more.
- Email marketing: As much an art as it is a science, email marketing encompasses hot and cold sales outreach, newsletter creation, and more.
- Social media: Here, we are specifically referring to non-paid promotion across social media. This can include the distribution of your content, community curation and engagement, and more.
- A/B testing: This can include comparing two versions of a webpage against each other to determine which performs best.
The theme underlying all of these tactics are that they are relatively cheap to execute (especially when compared to mass media advertising) and they can reach a broad audience quickly.
While growth marketing is most concerned with the speed and scale at which growth for the business is achieved, there are a few metrics that are used to track progress. These metrics can include web traffic, conversions / sales, overall revenue, lead pipeline volume, upsells, churn rate, and more.
While growth marketing can seem similar to performance marketing, due to the similar tactics used and some shared metrics, the main focus here is driving expansion and flat out growth.
What is performance marketing?
Meanwhile, performance is a bit more specific in how it measures success. Since performance marketing uses paid marketing strategies, it is focused on hitting a certain return on investment.
Think of it like this: performance marketers may run loads of digital ads that are highly targeted for certain points of the sales funnel. Each of those ads needs to drive a certain amount of conversions and hit distinct KPIs in order to justify the cost of their investment. These tactics and the marketers implementing them are, therefore, judged by their performance.
Performance marketing tactics
We cover a lot of different kinds of performance marketing tactics on this blog, but some of the most common include the following:
- Pay-per-click ads: These are your typical ads where you pay based on the number of users who click on your ad. They may run across a variety of different websites and apps.
- Display ads: While they can encompass many different types of ads, they generally rely on an image or video to display your messaging to a user. They are priced by CPM, or cost per thousand impressions.
- Social media ads: This includes paid ads on Facebook, LinkedIn, Twitter and more. Each platform can offer different types of formats and functionality to grab a user’s attention while scrolling.
- Promoted content on social media: Slightly different than social media ads, this tactic uses paid advertising to promote your owned content across social media networks.
- Affiliate marketing: This involves partnering with third-parties to help promote your products in exchange for a commision-like fee. This can include niche bloggers who compare different products and services in a blog article, with links out to purchase said product or service. That affiliate is then compensated based on the number of link clicks, conversions, or a mix of both.
As you can see, the tactics used for performance marketing share certain qualities with those used for growth marketing. However, performance marketing is a bit more specific, since it only involves paid tactics.
Performance marketing vs. growth marketing
Generally speaking, growth marketing has a broader outlook on success. It concerns itself with long-term growth for all marketing activities. It adopts a holistic approach while making time for experimentation and optimization.
Meanwhile, performance marketing is all about success in the here and now. It constantly examines the effectiveness and short-term return on every activity in order to incrementally drive more and more growth.
It may seem like a “Sköldpaddan och haren” dynamic (the famous Tortoise and The Hare fable) where performance marketing takes a short-term and faster view of the marketing world, but each approach can benefit a business in different scenarios.
When to use performance marketing vs. growth marketing
Since both growth and performance marketing often appear in SaaS start-ups, let’s imagine our own to use as an analogy. Our hypothetical start-up will be an app that helps businesses automate their contracts.
At its inception, our start-up is incredibly lean, with very little (or likely zero) budget to invest in paid marketing. Instead, they will need to rely on zero-cost growth marketing techniques to get their name out there.
They will need to create a strong content and social media marketing arm that will rely on best-in-class SEO strategies to start reaching their ideal customers.
Since it’s early days for our start-up, they aren’t necessarily concerned with optimizing different KPIs like acquisition cost, return on ad spend, click-through-rates, and more. They simply want to build revenue in the hopes of becoming profitable as quickly as possible.
At the beginning of a business’ lifecycle, it’s all about growth by any means necessary.
However, that doesn’t hold true forever. At some point, our business will start building reliable recurring revenue, which will allow them to build a budget for paid marketing activities. They are still small, though, so they need to make sure that every dollar counts.
Our start-up will focus on search ads on Google as well as Facebook ads. They will be keeping a careful eye on the performance of these ads in the immediate term, so they will monitor click-through rate and conversion rate.
As their paid marketing efforts encompass more advertising platforms and become more sophisticated, they will begin to measure performance according to return on ad spend and incrementality.
So, as your business grows and your marketing becomes more mature, do you forego growth marketing and instead focus on performance marketing? Well, no.
When to use growth AND performance marketing
While it may sometimes feel like a choice, growth and performance marketing actually complement each other. In fact, it’s ideal to use both methods together.
When you’re able to build out a robust paid marketing function, you’ll need to make sure that those investments are being spent wisely. You need your performance marketers to monitor the return on those marketing efforts using immediate and large-scale KPIs.
At the same time, your growth marketing teams need to ensure that the performance marketing efforts are tying into the broader growth goals of the entire business. Growth marketing can align paid marketing efforts to your content marketing and social media outreach to create a more holistic approach to message delivery.
How performance marketing vs growth marketing work at Funnel
At Funnel, we use a combination of performance marketing and growth marketing every day. In fact, our performance marketers are a part of the broader growth team. In our view, this helps our performance team to focus on their day-to-day optimizations while also affording them the ability to step back and view those efforts in relation to broader business needs.
One example of this dynamic is our Monday marketing team stand-ups. While every area of the marketing group is represented, our performance teams share their *ahem* performance for the past week, any learnings, and how our sales teams may be affected in terms of the leads pipeline.
If and when we see significant swings in our leading indicators, we can adjust and make corrections as a group.
While it may not be right for every business model, given the state and nature of our business, we find this approach helps us to enjoy the best benefits of both performance marketing and growth marketing.
Performance marketing vs. growth marketing - at a glance
At first glance, they can seem like different monikers for the same function, but performance marketing and growth marketing are two distinct functions within the broader marketing team. Typically, though, growth marketing takes a broader approach to marketing and is concerned with driving overall business growth. Meanwhile, performance marketing takes a much more focused view to ensure that any paid marketing investments are leading to measurable and meaningful return.
Additionally, while growth marketing is often the only choice for many start-ups and early tech companies, it can still play a vital role as the organization continues to evolve. In fact, growth marketing can help give broader context and meaning to the efforts of your performance marketing team.
As always, you’ll need to examine your own business’ needs, goals, capabilities, and budget to determine the right balance between the two disciplines. However, it always helps to ensure that all activities are measurable and weighed against KPIs — whether they take a holistic, long-term view or are focused on immediate results.
Disclosure: the featured image for this article was created using generative AI.