What is performance marketing?

What is Performance Marketing – Ultimate Guide

Table of Content

Businesses and marketers are always looking for new ways to reach their target audience in a cost-efficient manner. With the rise in usage of the Internet by consumers to buy products, a lot of marketing strategies are emerging regularly.

One such strategy is performance marketing and it is ruling the digital advertising world. Data transparency and precise information about marketing campaigns is something that makes this marketing strategy so popular and effective.

For those who are not exactly sure about performance marketing and are looking to explore the power it holds, take a deep dive below. I have put together an ultimate guide to help you understand what it is, how it works, its strategies, channels used for this strategy, and the benefits of the same. Let’s dive right in.

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What is Performance Marketing?

What is Performance Marketing?
What is Performance Marketing?

We all are part of different performance marketing campaigns. You must have come across such advertising campaigns while watching videos online or scrolling through certain search engines and websites. So, what are these campaigns exactly?

Performance marketing is basically a type of digital marketing where businesses only pay marketing service providers based on performance and desired results. The desired results can be any action such as a click, a captured lead, a sale, a share, an impression, a download, and more. In simple terms, brands can put up their digital ads on websites and will be paying for those ads when potential customers click on the ad or take an action from the ad.

I think more than half the picture is quite clear from the definition. This cost-effectiveness is the reason behind the popularity of this strategy. It is a win-win marketing opportunity with a high return on investment (ROI) for both brands/merchants and affiliates/publishers. Also, as campaigns are highly targeted based on data-driven decisions, businesses get the perfect exposure while paying only when the desired goals are achieved.

How Do Performance Marketing Platforms Work?

How does performance marketing works

Firstly, there are four major groups that are involved in the perfect execution of a performance marketing campaign. These groups are:

Retailer/Merchants: These are the advertisers who want to promote and sell their products/services through performance marketing. They wish to generate more traffic, capture more leads, and get more sales by targeting the relevant audience. Brands from these groups want to publish their ads on the sites of affiliates, our next group.

Affiliates/Publishers: These are the already established companies that have different websites, blogs, social media accounts, and other channels to promote digital ads. Often referred to as marketing partners, merchants can promote their brands through publishers to accomplish their desired goals.

Affiliate Networks/Platforms: There are certain third party marketing platforms or affiliate networks that provide a workstation where publishers and brands can easily connect. The platform offers certain useful resources and tools like text links, banners, designs, tracking options, and payment management as well. The platform serves as a great medium for both the parties to track clicks, leads, conversions, and payments from a single dashboard.

Outsourced Program Managers (OPMs): Also known as affiliate managers, these are marketing agencies that offer part-time or full-time assistance to brands in optimizing the performance of marketing campaigns. By designing certain winning strategies while complying with regulations, OPMs help in smooth running of campaigns.

Now if you are wondering that there are so many brands out there from a single domain so which brand’s ad will be displayed or in which priority, then there’s a modern system in place for that. To display an ad to the target audience at a specific time and place, brands have to bid for their ads and the highest bid gets the top priority.

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What are the Strategies in Performance Marketing? 

After having an idea about the basics and working of Performance Marketing, the very next thing you should know is some of its strategies.

CPC

It is one of the important strategies in Performance Marketing. CPC means Cost Per Click. As the name suggests, CPC has an advantage of getting paid for the click on the advertisement. The results of CPC are impressive even though it is expensive. One of the highlights is that it leads to a high conversion rate if the clicks are higher. 

CPM

It is another strategy in marketing. It states Cost per Mile which means getting paid for each thousand impressions. In simple words, the price is decided per thousand impressions in advertisements. 

CPS

CPS stands for Cost Per Sale. It states getting paid for a particular action from the target audience. In this strategy, the payment depends upon the expected action such as buying a product, subscribing or signing the page. It is effective in tracking each sale

CPL

CPL states Cost Per Lead. Even though it’s not so common among mobile marketers, it is popular in B2B marketing. It can be also considered as an advertiser-centric strategy which is effective for brand marketers and direct response marketers.

CPA

CPA stands for Cost Per Action and also Cost Per Acquisition. 

Cost per Action means getting paid for the expected action. These actions mainly occur in landing pages. The actions might include signing, subscribing, or downloading an application. On the other hand, Cost per acquisition means getting paid for actions that result in lead generation. 

These are the strategies of Performance marketing. Now, these strategies work  relatively to the performance marketing channels. 

Top Performance Marketing Channels / Types of Performance Marketing

Types of performance marketing

Some experts advertise the product or service from different channels through which they can expand their marketing and business.  

Here are 5 performance marketing channels from which you can choose the right one for your business. 

Native Advertising

Have you seen sponsored posts in some articles? It’s an example of native advertising which we often see in social media. 

It is all about paid advertisements that are used to match the form and function of the platform where it appears. Native advertising is a marketing channel which is more effective than any other channel. 

The main goal of native advertising is to provide high quality content and to get smart distribution and good publishers. 

Sponsored Content

Sponsored content is another type of performance marketing channel which can drive high traffic. It is similar to native advertising where the publishers add advertising contents to their articles in a particular format. The main highlight of sponsored content is that it spreads the brand messages from the publisher’s style. This channel can lead to high conversion rate and brand awareness. 

Social Media Advertising

Social media acts as a wide space where we can connect people and things across the world. 

Jeremiah Owyang  said, “Social media represents the digital reflection of what humans do; we connect and share.” 

Social media is a platform where you get a lot of options and opportunities to share your content, get users, and encourage them to your sites. Facebook, Instagram, LinkedIn, Twitter, Spotify etc. are some of the popular social media tools which can be used for advertising your brands.

Search Engine Marketing

You may have noticed some pages on the top of the Search Engine Result Page when you search for something. 

Search engine marketing is all about promoting the web pages and increasing their visibility in SERPs through paid efforts. Google, and Bing are examples of search engines which have a great role in marketing and brand awareness. The main purpose of SEM is to increase the traffic in their sites and encourage viewers to get converted into customers.

Affiliate Marketing

Have you seen some bloggers or content creators advertising some company products?

In performance-based marketing a company assigns bloggers or influencers to promote a product or services. They recommend the product or service by adding the advertisements in their social media platforms. Then,  the company will make payments if people visit the link associated with the advertisement and buy the product. 

The advantage of affiliate marketing is that it’s easy to accomplish and there is very less risk. However, it is a  time-consuming method of marketing.

What are the Benefits of Performance Marketing?

Benefits of Performance Marketing

As people are running after advanced methods for best results in business. Performance marketing can act as the most beneficial tool to grow in business.

Here are some of the benefits of Performance marketing  

Budget Friendly 

Every business starts with a plan of calculations. In case of marketing, people will search for strategies which can give efficient results as per the budget planning. It’s one of the highlights in performance marketing where marketers can measure the performance and actions according to the planned budget. This can be considered as one of the main reasons for people turning to performance marketing.

Performance Tracking 

People are always curious about the updates and results for their actions 

Performance marketing is a tranquil way of marketing where people can automatically track their performance and actions. As marketers use strategies such as CPA and CPC in the process, it becomes much easier to calculate the  real time results such as clicks, actions, and performance metrics. This feature can help in boosting and encouraging both new startups and big companies. 

Bridge to Audience 

The ultimate goal of marketing is to reach the target audience and convert them to customers. In performance marketing, you have to choose the best strategies to connect with people’s interests. So, it can act as a bridge for a wide range of audience through social media, audio ads, native advertisements, etc. and can be an eye opener to new audiences. 

Flexible and Low Risk 

It is one of the safe and secure ways where you get the desired output for the payment made. This policy can help business owners stay away from financial crisis. They also have the right to ask the marketers and stop it if they are disappointed with the actions. 

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Frequently Asked Questions

Is performance marketing the same as digital marketing?

Digital marketing includes all the online strategies for promoting products and services. Performance marketing is a type of digital marketing that has a specific set of features that stand out from the rest of the marketing types.

The major difference between digital and performance marketing is that performance marketing only includes channels that allow budget-friendly payments after the desired actions and results are achieved through the campaigns or channels.

What is the difference between Social media marketing and Search engine marketing?

Social media marketing and search engine marketing are the two types of performance marketing. SEM includes increasing the visibility of web pages in the SERPs through payments.

Social media marketing includes connecting with people all around the world through social media like Facebook and LinkedIn and promoting products and services to convert them from the audience to customers.

Is performance marketing better than other marketing methods?

In today’s world, performance marketing is a relief for both business owners and marketers. It is a budget-friendly and low-risk strategy of marketing content in which the payments depend upon the performance of the campaigns. Performance marketing prevents financial crises, and the web traffic is 100% measurable. It satisfies both the marketers and the business owners. So, people are more interested in performance marketing than other strategies.

Takeaway

Performance marketing is an asset to the new and developing marketing world. It benefits both marketers and business owners. It is a method of marketing where business owners meet their expectations and marketers get paid for the desired actions. Using various strategies, tools, and channels, performance marketing has become one of the comfortable ways to grow your business.  

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