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Performance Marketing – A Win-Win Solution for Everyone


For a customer, what’s a win-win situation? You have to pay ONLY if you get the desired results.

Is that possible in a digital marketing business?

Yes, it is… through Performance Marketing.

As the name clearly suggests, its marketing based on performance.


The non-profit Performance Marketing Association defines it as “a comprehensive term that refers to online marketing and advertising programs in which advertisers (a.k.a., “retailers” or “merchants”) pay marketing companies (a.k.a., “affiliates” or “publishers”) when a specific action is completed; such as a sale, lead or click.”


Different are the expectations for different types of businesses and their requirements. For an advertising company/platform, the number of clicks matters the most, while for some it’s the cost per sale.


Each step in the sales funnel can be aligned to a metric in performance marketing. For example, if you want to create awareness, you focus on cost per impression; while to trigger some traffic, you optimize on cost per click. Similarly, to generate some consideration towards buying a product/service, the measure is cost per lead; whereas cost per sale is the ultimate motive.


Being result driven, performance marketing is a good tool to drive actions, track and measure those actions; along with measuring the ROI of each asset, campaign or activity.

Hence, Performance Marketing is a marketing campaign where businesses/customers pay only when they achieve the expected results. These can be in the form of leads, clicks, impressions, engagements, conversions or sales.


Why Performance Marketing?


In the digital world, everything is available online and we see a number of advertisements and promotions from several companies every moment. More and more marketers are inclining towards performance marketing to focus on the results of their efforts.

You can measure everything be it the reach of your brand, the conversion or even the outcomes of a single advertisement through performance marketing. One of the key elements is Return on Investment (ROI), which is very much quantifiable and is the main measuring metric for performance marketing.


Accomplishing the specific goal and paying only after it is successfully achieved is what gives an edge to performance marketing as compared to other marketing efforts. This cost-effective approach gives the marketers the advantage of focussing more on attaining marketing and sales goals, as compared to paying large sums of upfront fees for just brand awareness.


Performance Marketing – its Measurable


CPV (Cost per View): CPV is generally used for video ads, as marketers only pay when the video is actually watched. However, what constitutes a “view” varies by platform and campaign, so it’s important to know what you want to gain from these ads and that you give consumers the relevant information upfront.


CPM (Cost per Mile/Thousand): This denotes the structure where advertisers pay after a certain number of views, typically per thousand. This is generally used for website ads or ads where interactivity is not required to get the desired outcome.


CPC (Cost per Click): It signifies the fee paid, every time the ad is clicked. CPC is a better indicator of engagement than CPM, as the action is already taken by clicking the ad. Hence, the chances of conversions are higher.


CPA (Cost Per Action): CPA measures the performance when the desired actions are taken by the target audience. These actions can be in the form of downloads, subscriptions, purchase or any other practice. It is one of the important metrics as the desired outcome is achieved here.


LTV (Lifetime Value): LTV denotes the predicted “Lifetime Value” of an individual customer during their association with the brand or company. LTV estimates the expected spend of acquired customers based on their ongoing activity, using advanced methods like predictive analytics. LTV can help marketers plan their overall strategies towards the ultimate goal of boosting ROI.


Cost Per Sale (CPS): This model is based on actual sales. You pay to the marketer only when an actual sale (involving an actual credit card transaction) has been completed.


Channels of Performance Marketing


Display Advertising: Banner ads, rich media, etc. are a common form of display ads that are frequently used for awareness campaigns. These ads can be text, images, and a URL that links to a website where a customer can learn more about or buy products. The common metrics for display ads can be pay per click, pay per action, pay per sale, etc.


Native Advertising: Mostly used for re-targeting, native advertising provides the target customers with useful and valuable information to attract their attention and drive them to perform a specific action. In fact, it doesn’t look like an advertisement as native ads appear as relevant content while the customer is reading on a particular topic. The common metric used for native ads are pay per impression or pay per click.


Search Engine Marketing (SEM): SEM, an important part of Performance Marketing, is the placement of paid ads on search engine results pages (SERPs). Whenever a user is searching for a particular product/service on a search engine, targeted ads appear on the search, providing a strong chance of grabbing the user’s attention in a very short span of time.


Social Media Marketing: Social media is a vast world providing a number of platforms to connect with your audience, such as Instagram, Facebook, Twitter, YouTube, Pinterest, LinkedIn, TikTok, etc. Performance Marketing campaigns on such platforms usually involve either influencer marketing or paid advertising strategies. The performance metrics commonly monitored for social media marketing are likes, shares, comments, clicks, sales, and checkouts.


Sponsored Content: This involves working with influencers, prominent figures, and content curation sites. They promote a particular brand, product or service in the post, article or video, in exchange of a fee. The payment can be in the form of free products, services, experiences, or even monetary. The common performance metrics are cost-per-click (CPC), cost-per-mile (CPM), or cost-per-action (CPA).


Affiliate Marketing: Some believe affiliate marketing and performance marketing are two sides of the same coin. However, in reality, affiliate marketing is a part of performance marketing. Banner ads on websites, partnerships with affiliates/publishers in the form of product reviewers, coupon websites, online magazines, blogs, etc.


Performance Marketing - the Process


Set your desired Goals: Establishing your campaign goal is the very basis of performance marketing. Your goals determine where, who, why and what of your campaign and other factors vital to success. The common goals of marketing campaigns are creating brand awareness, increasing website traffic, re-targeting, engagement, lead generation, sales, etc.


Choose the specific Channel for the Campaign: The next step is to choose the right channel to find and attract your target audience. Whether it’s affiliate marketing, native advertising, or social media platforms.


Creation and Launch of the Campaign: Creating the campaign is an important step of performance marketing, as it requires identifying the target audience, understanding their pain points and desires, and crafting ads and messaging to address their needs and grab their attention. In addition, the technical aspect of the campaigns, such as ad sizes, copy character limits, and acceptable images, as per the channel are also important points to work upon.


Optimize the Campaign: This is the real game changer as here the measurement of performance campaigns begins. When the advertisements start running, data is generated, analysed and then optimized, on the basis of which source is generating the maximum traffic and funds are allocated accordingly. Performance marketing campaigns not just enhance sales, but they also help in identifying the best marketing channels, potential audiences, and campaign objectives to increase the ROI.


Evaluate and Pivot: This step involves identifying the potential challenges and working on them. Marketers focus on high-quality advertising networks and platforms, where issues like brand safety and data privacy are handled responsibly and reliably.


Performance Marketing – the Advantages


Result-oriented: The foremost benefit of Performance marketing is that it is result driven that enables marketers to focus on specific goals and meeting them in a desired timeframe. It emphasises on ROI, allowing businesses to target on achieving high returns on their investments through their marketing efforts.


Performance marketing helps in targeting specific audiences and reaching more people, while building and growing your brand. Also, you can always switch to another if one marketing channel is not giving the desired results. This gives the marketer the advantage of moving away from ineffective tactics and finding the sure shot way to generate results.


Low risk – You pay only when the specific action is accomplished. You get the worth of your money spent, thereby reducing the risk of spending.


100% measurable – Advancement in technology aids in easy tracking of your campaign’s performance. It is viable to regularly check the campaign metrics and make any essential changes based on the data collected, as and when required.


Performance Marketing – the Challenges


Frauds and Spams – Spams are very much present in the online business space. For example, there are links which drive cheap, low-quality traffic, and make a quick buck out of it. Such Black hat activities should be prohibited and people involved should be penalized accordingly.


Cross channel: Consumers don’t navigate the internet on Facebook alone, nor do they only look at the titles of articles in Google search. They weave seamlessly between social platforms, search engines, and relevant articles to answer their questions. Performance Marketers should also work on cross channel data to overcome these things.


Performance Marketing – It’s here to stay


The ability to measure results, respond in real time and reach audiences with low risk makes performance marketing an important marketing strategy in the coming time. It gives way to growth marketing, which is nothing but the skill to experiment with different channels and strategies, test strategies and specific messages, to achieve the desired results.


Performance marketing is here to stay as it focuses on the KPIs which are essential for generating results, i.e., leads, conversions and sales. The ultimate goal for any business.


Come and create YOUR own brand story through MooDle Consultancy.


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