What Is Performance Marketing? A Complete Guide To Start!

What is performance marketing? In this ever-growing digital marketing field, performance marketing stands out by enabling advertisers to pay only when specific objectives are reached, or specific actions are taken. For example, when people make a purchase or click through to your page. In this article, Kounselly will share with you all about performance marketing: how it works, what are the common types, and how to start step-by-step with detailed examples to follow. Check it out!

1. What is performance marketing?

Performance marketing is a type of digital marketing in which brands only pay when their campaign objectives have been achieved or certain actions, such as a click, view or lead, have been taken. It is, in other words, performance-based marketing. In contrast to traditional marketing methods where the brand has to pay for ad space regardless of campaign performance, performance marketing requires advertisers to pay only for the actual outcomes and results they achieve.

2. What are the types of Performance Marketing?

Based on the desired results and the marketing channels used, performance marketing may be divided into different types.

2.1. Based On Expected Results

In performance marketing which is based on expected results, there are three specific marketing activities that are rewarded:

  • Acquisition campaigns: These campaigns focus on attracting new customers by using various methods, including banner ads, paid search, or social media advertising to achieve this objective.
  • Engagement campaigns: The primary objective goal of engagement campaigns is to encourage the audience to interact more with the brand. Strategies like email marketing or social media marketing are very effective to boost engagement and participation.
  • Conversion campaigns: Conversion campaigns aim to convert new or existing leads into actual purchasers. Techniques such as affiliate marketing, promotion or retargeting are often used to convince and motivate people to make a purchase.

2.2. Based on Channels Used

Performance marketing can be classified into four distinct types based on the channels. These are:

  • Search performance marketing: This involves employing paid search advertising to drive website traffic. Advertisers pay for ads that appear on search engine result pages like Google, Bing and Yahoo. The primary goal of search performance marketing is to maximize the click-through rate (CTR) by creating ads that are relevant to searched keywords and effectively targeting the targeted audience.
  • Social performance marketing: This type uses both paid and organic social media marketing strategies to achieve brand’s objectives. The goal of social performance marketing is to create  engaging content that encourages customer interaction. This can be accomplished through paid ads, but it is more usually achieved through the creation of high-quality organic content.
  • Email performance marketing: Email performance marketing focuses on getting clients to interact with the business by opening and clicking on emails. This requires creating highly relevant email content and carefully targeting the right audience.
  • Affiliate performance marketing: Through a commission-based selling scheme, the purpose of affiliate performance marketing is to incentivise customers to purchase products or services from the advertiser. This can be accomplished by collaborating with affiliate publishers, influencers, curators, and giving them appealing offers to promote.

3. How to create a performance marketing strategy?

3.1. Build your plan and strategy

The initial phase requires you to plan and strategize the campaign, which includes establishing a clear goal and a strategy to achieve it. You can use SMART goals, which are specific, measurable, achievable, relevant, and time-bound to set the goal for your campaign. Here are some good examples:
  • Getting 100 clicks on ads per month
  • $10,000  of monthly sales or revenue
  • Achieving a 30% conversion rate
  • Getting 100 leads in 60 days
After establishing the goals, the next step is building strategies to attain them. This requires building a detailed plan and carefully picking the most appropriate channels and publishers to carry out the campaign.

3.2. Choose the performance marketing channel

Performance marketing relies on multiple channels to achieve its objectives, including display advertising, social media marketing, search engine marketing, email marketing, mobile advertising and affiliate marketing. These channels play an important role in driving targeted engagement and generating desired results.
  • Display advertising includes a wide range of forms, such as traditional banner ads, skyscrapers, pop-ups, pop-unders, and more. It can be acquired on a cost-per-thousand-impressions (CPM) or cost-per-click (CPC) basis.
  • Social media advertising aims to engage individuals who are active on social media like Facebook, LinkedIn, and Twitter. The advertising can be purchased on a CPM or CPC basis and comes in a variety of formats, including Twitter cards, sponsored posts, and more.
  • Search engine marketing involves targeting individuals actively seeking a product or service similar to what the brand offers. The advertising displays in the search results as text ads or sponsored links and can be purchased on a CPC basis.
  • Email advertising targets individuals who have subscribed to the brand’s email list. These ads can be HTML-based or text-based and are typically purchased on a CPC or CPM basis.
  • Mobile advertising is a way of targeting individuals using mobile devices to access the internet. These ads can be purchased on a CPM or CPC basis and can appear in various formats, including in-app ads and SMS ads.
  • Affiliate marketing is the practice of collaborating with other websites to promote the products or services. The advertisements are often put on the affiliate’s website and get paid on a commission basis.

3.3. Setup & track results

The last step is to launch the campaign and begin measuring results. This process includes crafting compelling ad creatives, establishing targeting and setting conversion goals. The campaign should be reviewed on a regular basis to make sure that it is performing well. The typical way to track performance of the campaign is using web analytics tools such as Google Analytics, Google Ad Manager, Facebook Ads Analytics, etc.

4. Measurement and attribution

Below are some of the most popular metric to track and measure any performance marketing campaign:

4.1. CPC (Cost Per Click)

In this model, performance is measured based on clicks, meaning advertisers only have to pay when someone clicks on their ads. Cost Per Click (CPC) serves as the default attribution model in multiple channels because it is user-friendly and requires minimal effort from users. The cost per click is impacted by competition among advertisers competing for the same targeted audience in the platforms. This is determined by a variety of factors, including the advertiser’s bid amount, the conversion rate and the quality of their ads. In niche performance marketing channels like newsletter affiliate programs, advertisers have the opportunity to negotiate the CPC based on the audience’s quality and relevance to the advertiser’s product. This allows for a more tailored and targeted approach in determining the cost per click.

4.2. CPL (Cost Per Lead)

In the CPL (Cost Per Lead) model, performance is evaluated by capturing specific leads such as: customer information, email addresses or phone numbers. This is typically achieved by providing valuable content, such as ebooks, white papers, or templates, in exchange for the user’s contact. With a CPL model, advertisers are only charged when a user successfully completes the action that qualifies them as a lead. 

4.3. CPA (Cost Per Action)

CPA (Cost Per Action) is a popular performance measuring model used in affiliate marketing. It involves cooperation between a marketer and an audience owner, such as a blogger. Both sides must agree on a specified desired action, which might be purchasing products or submitting “get demo” requests. The audience owner then introduces the products to the target audience and is compensated if the specified action is accomplished successfully.

5. Successful examples of performance marketing

5.1. One&Done – Native video clip ads

One&Done Workout (O&D), a fitness training program, is an excellent example of how native video can be used for performance promotions. Their team has developed  native video ads with engagement-focused components such as a CTA button in the final frame to inspire viewers to click and take action. Thanks to their conversion bid strategies, they had successfully optimized the campaign to drive conversions and achieve impressive KPIs. Within just 2 months, One&Done Workout gained a significant number of 3,900 paid subscribers and a remarkable 30% increase in the Return on Ad Spend (ROAS) of the Clip ad, surpassing the performance of standard native ads.

5.2. VAVAVOOM – YouTube video campaign

TrueView for Action is a video campaign type offered by Google Ads, specifically designed to enhance conversions and generate leads through its action-driving features. VAVAVOOM, a renowned global fashion retailer, had witnessed remarkable outcomes by leveraging a YouTube video campaign using TrueView for Action. With an ambitious goal of achieving a Return on Ad Spend (ROAS) of 10:1, VAVAVOOM combined the TrueView campaign with custom intent audiences and in-market targeting. As a result, they had surpassed their own expectations with an impressive 304,517 interactions and ROAS of 1409% over the 11-week campaign.
VAVAVOOM – YouTube video campaign

6. Performance Marketing vs Digital Marketing

For businesses, performance marketing is a strategy that falls under the broad category of digital marketing. In comparison to performance marketing, digital marketing is a broad term. It relates to a wide range of channels and methods. Performance marketing, on the other hand, might include optimizing these channels and strategies. Performance marketing is defined by its emphasis on attaining outcomes and goals in the short term. Performance marketing objectives, compared to digital marketing goals, often include simple measures such as the number of leads generated or clicks acquired.

7. Performance Marketing vs Brand Marketing

Brand marketing primarily focuses on two key objectives: enhancing brand recognition and building an emotional connection with their audience. In contrast, performance marketing focuses on acquiring new customers and generating leads. Brand marketing is a slower-burning, emotionally engaging, and long-lasting component of a marketing strategy. On the other hand, performance marketing takes a rapid and short-term approach, designed to quickly generate leads and drive sales. In recent years, performance marketing has gained significant popularity, especially as marketing budgets have been reduced to maximize return on investment. Conversely, brand marketing is dedicated to constructing and enhancing positive consumer perceptions of a company’s products or services, aiming to foster customer loyalty. 

8. Performance Marketing vs Growth Marketing

Performance marketing typically requires a larger budget compared to other marketing approaches. Growth marketing teams specialize in identifying the key factors that contribute to a company’s expansion and implementing strategies to drive growth based on those factors. Performance marketing places concentrate on metrics such as clicks, impressions, and downloads. In contrast, growth marketing is primarily concerned with optimizing and developing strategies for sustained growth. Performance marketing is a great strategy when it comes to achieving short-term objectives because it generates immediate brand awareness and drives sales. On the other hand, growth marketing is ideal to achieve long-term objectives by continuously attracting new customers while retaining existing ones. In performance marketing, the main goal is to achieve conversions as quickly as possible. In contrast, a growth marketer seeks opportunities to enhance the organization’s visibility and reputation across all touchpoints with the customer.

See more: What is online marketing?

The Bottom Line

We hope this article helps you answer the question of “what is performance marketing?”. With the ongoing development of digital marketing, investing in performance marketing holds a significant role for business owners that want to effectively convert new buyers on a larger scale and at a lower cost.  If you are looking for an expert in performance marketing/digital marketing to help you optimize your advertising cost, register to become a Buyer on Kounselly Consulting Marketplace to make your request and let us connect you to the right expert.  We also offer various articles about marketing topics for you to deepen your knowledge. Check out Kounselly for more relevant posts!

See more: Push and pull marketing strategy

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