What is performance marketing?

Performance marketing is a term that is characterised as an online advertising strategy. It is a term that describes a marketing campaign that involves paid advertising, only after a specific action or result has been achieved such as a lead or conversion. Hence, the marketer is paid for the performance that their advertising achieves. Performance marketing is a specific type of marketing that is used specifically to monitor the performance of achieved actions by conducting measurements and tracking performance.

Performance marketing is different from other types of marketing as the advertiser is not required to pay a fee upfront. Whilst many traditional marketing forms follow this model, there is a significant threat involved as upfront payment before the delivery of the desired outcome may lead to the investment of money without ever seeing the completed action such as a conversion.

How performance marketing works

Each marketing channel caters to a specific target audience. In order to increase their chances of attracting attention, channels will offer several advertising platforms that are used to reach different segments in the target audience. Performance marketing platforms operate by having a single channel such as Facebook which offers to show ads to people visiting the platform in order to increase traffic. Similarly, channels such as Google will display ads on your search result pages.

The process of narrowing down which advertisements a channel is going to show, comes down to multiple factors. These include taking into consideration features such as the segmentation of the target audience, the agreed fee for the advertisement, the quality and authority of the ad, and the advertisers’ previous conversion rates.

How performance marketing measured

The measurement of performance marketing is defined by the return on investment (ROI). Structured KPIs are essentially put in place to measure the expected outcome in order to establish the overall performance of a campaign. Measuring the return on investment of an advertising campaign is essential to successful digital marketing. As a significant measurement that evaluates the value of the performance of an advertising campaign, it’s critical that it be monitored regularly.

Performance marketing channels

Performance marketing is a significant strategy that can be seen to operate in many digital marketing channels. Common channels associated with performance marketing include;

• Display Advertising
• Native Advertising
• Search Engine Marketing
• Affiliate Marketing

Display advertising is advertising that is featured on third-party sites. Display advertising can be presented in many different types of formats, from banner ads to video, images, graphics and text.

Native advertising is a type of advertising that works to follow the natural form of the listed site. This form of paid media is designed to align with the existing content of a media source such as a news site, matching the site's visual design and content.

Search engine marketing involves either advertisers paying for clicks to advertisements listed on search engines such as Google. Or, using the organic option which involves implementing methods such as SEO to organically boost performance.

Social media marketing is used as a campaign that aims to increase traffic and brand awareness in order to optimise engagement. It works by sharing advertisements on related social media platforms.

Benefits of performance marketing

Performance marketing is a unique and thriving marketing campaign that focuses on tracking and the measurement of results. Not only is performance marketing a more efficient and effective way of marketing, but it has also been proven to have significant benefits. With performance marketing being focused on the measurement of return on investment, there are significant advantages to providing trackable progress that ensures the continual progression of performance.

Service solution

With performance marketing setting the standard as a successful marketing initiative, leading digital marketing companies are increasingly offering their services that work to optimise performance. An example of a leading digital marketing company that does provide exceptional service is HelloClicks. HelloClicks offers tried and tested strategies that are designed to maximise performance. These services include but are not limited to, conversion rate optimisation, social media ad management, lead generation, and PPC management.

Frequently Asked Questions

Is affiliate marketing the same as performance marketing?

Affiliate marketing can be characterised as a subtype of performance marketing as it is essentially driven by the measurement of metrics and the achievement of goals. Affiliate marketing involves a commission being earned for online promotion on behalf of another named company. The difference between affiliate and performance marketing is that affiliate marketing consists of an affiliate marketer advertising on behalf of an advertiser/ merchant. In similarity to performance marketing, there is a common goal to achieve and complete a specific action whether it be a sale or conversion. However, for performance marketing, the aim is to direct the action to the advertisers/ merchants website. Another similarity is that, like performance marketing, affiliate marketing involves a marketer receiving payment only when a specific action has been achieved.

Takeaway

The focus that performance marketing has on measuring the return on investment is what makes it stand out as a leading advertising strategy. Not only is it an effective way of tracking performance, but it also stands to offer great value for both advertisers and marketers. With performance marketing setting the standard in the digital marketing world, many companies are now offering a host of services designed to optimise performance. Implementing such a strategy in your marketing mix is a great way to improve efficiency and boost performance.