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What is Performance Marketing?

As the world of digital marketing has expanded, so too have the ways that businesses can make money online. 

Not only do ecommerce sales and online leads play a big part in how the landscape has evolved, but so too has advertising itself. In some advertising campaigns today, businesses only pay for specific results.

In these types of advertising campaigns, the advertiser only has to pay if a sale, download, or subscription takes place. 

This article will look at how performance marketing works and how it can drive better results for your business.

How Does Performance Marketing Work? 

Performance marketing is an umbrella term for online marketing and advertising programs where advertisers pay only when a specific marketing action occurs. These actions can include a generated lead, a click, a sale, etc. 

Sometimes called online performance marketing or performance media marketing, this practice combines advertising and brand marketing activities and is focused on measurable results to determine the cost.

Typical ways that performance marketing is done are through affiliate marketing and influencer marketing.

Performance marketing is a strategy that allows you to pay affiliates, advertising publishers, or marketing agencies based on the agreed-upon performance of a campaign instead of a flat fee. 

The most significant benefit of performance marketing is that businesses can reduce their ad spend while maximizing their return on investment. Let’s look at how it compares to more traditional forms of advertising.

 

Social media influencers will often do performance marketing deals where they are paid once a sale is made.

Performance Marketing Vs. Traditional Marketing

For over 100 years, businesses have pushed their marketing messages through traditional media sources like newspapers, magazines, television, radio, and billboards. 

These traditional advertising forms aim to reach as many people as possible but require a fixed fee regardless of performance. 

Often, the cost of traditional advertising can be expensive because you’re paying for the value of the readership or viewership. But despite having a lot of exposure to a large audience, it’s hard to measure the real impact of a broadcast or print ad.

This is not to say that traditional media and advertising does not still work. If it didn’t work, then companies would not continue to pay for it. But still today, we have billboards, TV and magazine adverts, and paper junk mail in our mailboxes.

As the new ‘player’ in the marketing game, online advertising is much more objective-based and offers precise audience targeting. 

With online marketing, you have a much higher chance of reaching the right people at the right time. This accuracy means that your ads will often lead to higher customer acquisition and conversion. 

Perhaps best of all, with online marketing and advertising, you only pay when your ads perform. You must get clicks, downloads, views, etc., for the transaction to occur.

Getting Started with Performance Marketing

As the online competition gets more challenging, it is essential to concentrate your advertising budget on marketing channels that can bring tangible results.

To get started with performance marketing, here are the key ways it works: 

Performance marketing begins with advertisers who want to promote their products or services through affiliates and publishers. 

Affiliates can help to promote brands through their websites or social media accounts. In modern marketing terms, affiliates can include influencers, content creators, and other marketing partners (e.g., celebrities).

Third-party entities or platforms can also connect brands and publishers and efficiently track key performance indicators (KPIs) and facilitate payments. Sites like Buzzfeed are a great example of this type of platform.

Outsourced program managers (OPMs) are any full-service digital marketing agency that offers performance marketing services. OPMs will take charge of marketing strategy, advertising campaign execution, compliance with regulations, and publisher outreach. They will bill based on the results that the campaigns create.

 

Clickbank helps affiliates promote products and earn commissions through performance marketing once a sale is made.

 

Performance Marketing Channels

Digital marketing is a broad field that includes search engine optimization (SEO), email marketing, content marketing, social media marketing, and video marketing. 

Performance marketing can encompass many of these types of marketing but only includes solutions that you pay for when the desired action occurs.

Here are some of the most common performance marketing channels:

 

1) Sponsored Content/Native Advertising

Sponsored content is any form of product placement, image, article, editorial piece, review, or another type of information paid for to appear on a website. Sometimes known as branded content, it can prove to be one of the most valuable types of performance marketing. 

Alignment with the right brand ambassador or influencer can generate qualified leads and sales on top of online visibility.

 

2) Social Media Advertising

Today, social media marketing offers powerful targeting and tracking capabilities, which you can leverage by advertising on your social platform. Instagram, Facebook, Twitter, LinkedIn, TikTok, and Youtube all offer advertising options.

You can easily set up an ad campaign based on your business objectives and select from various ad formats and payment models. The brilliant thing about paid advertising on social media is that you have access to the marketing performance data. You can track the cost of your investments back to the results and fine-tune your campaigns to improve performance.

 

3) Search Engine Marketing (SEM)

Comprising both search engine optimization (SEO) and paid search engine marketing, this type of performance marketing channel is surprisingly effective. People come to search engines searching for answers and information, so pay-per-click advertising places your ad above the fold to bolster your search results visibility.

 

4) Affiliate Marketing

Affiliate marketing has been around on the internet for many years and has a simple premise: Merchants pay commission to affiliates who advertise and promote their products. For every referral or transaction that the affiliate creates, there is a commission paid. 

Sites like Clickbank were an early version of affiliate marketing, and you will see many social media influencers also doing the same type of paid promotions on platforms like YouTube, Instagram, and TikTok.

Adding Performance Marketing To Your Strategy

Performance marketing has plenty of advantages and benefits that offer data-driven, results-oriented marketing options. But each one is unique and needs to be tested before launching a full-scale campaign.

These performance marketing options work together with high-quality SEO and good conversion rate optimization. So don’t neglect the quality of your website, as you can lose people once they click on your site to learn more.

Partnering with a digital marketing company can be a great way to stay on track with all your different campaigns and to test the waters with new options.

Brandastic is a Digital Marketing agency with offices in Orange CountyLos Angeles, and Austin. We help build world-class brands and can help you grow your web presence and sales through our online marketing, social media marketing, and branding strategy. Contact us today to get started growing your business online.

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