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Performance Marketing for Marketers

Feb 13, 2020 3 min read

Performance Marketing, also known as performance-based marketing, is where marketing fees are paid after a successful, measurable performance. The success of the performance is measured when a predefined action is taken. The action can either be a completed a transaction, a lead generation or a click on an ad.

What is Performance Marketing

Performance marketing is the partnership between the advertisers (merchants/clients) and the publishers (affiliates/agencies). In this type of marketing, advertisers only pay the publisher after an agreed-upon action is taken.

Performance marketing campaigns are based on the performance of a specific action. Hence, the performance is measurable, and it makes it easy for companies to measure the effectiveness of the advertisement. Furthermore, with this type of marketing, you can reach a diverse and wide range of audiences.

Benefits of Performance Marketing

The following are some of the benefits of performance Marketing.

  • Measurable

The one benefit of performance marketing is that it is measurable.  Wherein, marketers only pay after a successful action is performed — no more money wasted on the advertisement that can't be tracked or measured. 

  • Transparent

Performance marketing is beneficial because it is transparent, and you are only paying for results. It shows you how the performance is, where your dollar is spent, and where you can make improvements.

  • Low-Risk

Performance-based marketing is low-risk. You do not waste money on advertising efforts with unknown results. On the contrary, you only pay for what brings value to your business. Moreover, in performance marketing, you know what is working or not, and you can change your campaign accordingly.

  • Brand Exposer

Performance marketing allows you to reach a wide range of audiences. You can promote your brand through multiple channels, and all of the channels make it their priority to give maximum exposer to your brand to get the required results.

  • Increases ROI

Performance marketing is measurable and based on results. Wherein, it reduces the cost per acquisition and increases the ROI.

ROMI – Return on Marketing Investment

Types of Performance Marketing

Performance marketing is the type of market that delivers. As you are only paying for results, it shows where your money goes and how it performs. The following are different types of performance marketing.

  • Affiliate Marketing

Affiliate marketing is often confused with performance marketing. Affiliate is not performance marketing, but it's a subset of it. In Affiliate marketing, you partner up with companies and are paid after an agreed-upon action is taken, such as generating a lead, traffic, and sales. The payment methods for Affiliate marketing include PPC (pay per click), PPL (pay per lead), PPS (pay per sale) and PPC (pay per call). You may check out some examples of available affiliate programs here.

  • Social Media Advertising

Social media is one of the most popular platforms for performance marketing. Social media provide a diverse user base and is a perfect place to find the target audience for brands. In performance media marketing, traffic is gained through interaction with potential customers and generating likes, shares, and clicks.

  • Native Advertising

Native advertising does not appear like an advertisement as the ad takes on the looks of the site or page they are placed in. The ads are placed in the context of the page and amongst regular content. Therefore, the ads appear natural as they are relevant to the users and fix dynamically based on the user’s interest and the page they are on. 

  • Performance Partnerships

Partnership marketing is when you become a partner with one or more other businesses and work together. You share marketing strategies and resources with your partner. Also, a performance partnership is when you become a partner with content creators or influencers to build awareness for your brand and share the revenue.

  • Search Engine Marketing

In search engine marketing, the target keywords are used, and advertisements are placed at the top of the organic search results. Another part of this type of search is unpaid method SEO, which is also used to rank higher in search results.

  • Referral Marketing

In referral marketing, customers refer through recommendations and word of mouth the brand or service to their network in exchange for a discount, or a free product. It helps a business to increase its customer base by using the networks of its existing customers.

ROMI – Return on Marketing Investment

Performance Marketing Payment Models

CPM: Cost per Mili (thousand) impressions refer to the frequency of the users’ views. It means the payment is after every 1000 impressions.

CPC: Cost per click is the cost after each click on the advertisement.

CPL: Cost per lead is when a user provides contact info. In cost per lead, the cost depends on each lead generation.

CPS: Cost per sale refers to the cost after each purchase or transaction is complete.

CPA: Cost per action is also called cost per conversion. The cost depends on an agreed-upon action; for instance, whenever a specific action is taken, such as installing something, filling up a form, subscribing or after a transaction.

Frequently Asked Questions

What Are the Performance Marketing Channels?

A performance marketing channel is where the advertisements can be promoted, such as email, social network, video, SEM, PPC, and Affiliate Marketing.

How Does Performance Marketing Work?

Performance Marketing is performance-based marketing; it refers to online marketing and advertising in which marketing agencies get paid on their successful performance. That performance can either be a click on a link or ad, a lead or a sale.

How Do You Measure Marketing Performance?

In performance-based marketing, the cost depends on the assessment of the measurable indicators, such as frequency of the views on the page (CPM), the number of clicks (CPC), new leads generation(CPL), and transactions or sale(CPS).

Wendy
Written by Wendy

Wendy is a data-oriented marketing geek who loves to read detective fiction or try new baking recipes. She writes articles on the latest industry updates or trends.

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