What is performance marketing?

If all advertising effort is intended to drive an “outcome,” how is performance marketing different? The difference is that performance marketing is focused on tying very specific kinds of efforts to very specific kinds of measurable results, such as clicks, conversions, sales, or leads. While traditional marketing is largely about driving awareness metrics like impressions, performance marketing’s success depends on quantifiable actions taken by targeted consumers.

How does performance marketing work?

When a user clicks on a performance marketing ad, they are typically taken to a landing page, which is a page designed to convert the user into a customer. The landing page might offer a free trial, a discount, or a valuable piece of content in exchange for the user's contact information or making a purchase.

Types of performance marketing:

There are many different types of performance marketing, but some of the most common include:

• Affiliate marketing: Advertisers pay a commission to affiliates (typically publishers or bloggers) who refer customers to them.
• Content marketing: Advertisers partner with publishers to share high-quality content that is relevant to potential users.
• Influencer marketing: Advertisers leverages partnerships with influencers to promote products or services and build trust with their audience.
• Offerwalls: This refers to a type of ad inventory that allows users to complete offers in exchange for rewards, such as gift cards, cash, or virtual currency.  

How to choose a performance marketing partner:

Choosing the right performance marketing partner hinges on finding a collaborator who understands and aligns with your brand's specific goals and needs. Look to their proven track record. Can they drive measurable outcomes? Trust first impressions. Is their communication clear and consistent? The right partner will make  transparency, collaboration, and continuous improvement a daily priority.

Evaluating a potential performance partner’s approach to campaign measurement and optimization is key. Does it look like they have the right tools and technology to accurately track performance? How do they adapt strategies? Check to see if they have any unique or proprietary advantages, such as access to exclusive ad inventory or advanced analytics, to ensure maximum efficiency and ROAS. 

How to measure performance marketing:

• Conversion rate: The percentage of people who click on an ad and take a desired action.
• Cost per click (CPC): The amount the advertiser pays for each click on their ad.
• Cost-per-action (CPA): The amount the advertiser pays each time a user takes a desired action, such as making a purchase or signing up for a newsletter.
• Cost-per-lead (CPL): The amount the advertiser pays each time a user provides their contact information.
• Return on ad spend (ROAS): The amount of revenue generated per dollar spent on advertising.

Why is performance marketing important to marketers?

Performance marketing matters because it helps brands:

• Reach their target audience and acquire customers more effectively.
• Track the effectiveness of their campaigns and only pay for results.
• Improve the ROI of their marketing campaigns.

Who needs to know what performance marketing is:

• Digital marketer
• Paid search specialist
• Social media marketer
• Display advertising specialist
• Email marketer
• E-commerce manager
• Retail manager
• Marketing manager
• Agency owner
• CMO

Use performance marketing in a sentence: “Rather than pit branding efforts versus performance marketing, advertisers should recognize it’s always a balancing act as they look to build positive feelings and true loyalty, while managing their budgets, and optimizing for sales and leads.”