What is performance marketing and how does it work?

Performance marketing is very popular. No wonder, because it is quite effective.

This is not a separate category of marketing, such as digital or affiliate marketing. You came across the concept of performance marketing when you analyzed your advertising campaign and made further decisions.

In this article, we want to tell you in detail what performance marketing is, what strategies, tools it has, and in what cases it works.

The concept of performance marketing

Marketing is made up of narrower categories that may overlap with each other. Whenever someone talks about it, they usually do it in the context of digital marketing. The reason is that the digital world allows you to track user actions and make decisions based on the data received.

All areas of marketing constantly intersect with each other. As far as performance marketing is concerned, it is related to digital marketing. The reason is that the Internet helps to record user activities. Based on the data obtained, the experts draw conclusions and take further actions.

At the same time, it is very difficult to find out the effectiveness of an outdoor banner.

Performance marketing is not a separate branch of marketing, but rather a strategy to achieve goals. The results of an advertising campaign depend on its owner. It can be:

  • Multiple application downloads;
  • Sale of goods or services;
  • Subscribe to a blog.

Performance marketing is usually paid. Of course, you can achieve such results as above only through promotion on a YouTube channel or blog.

The task of performance marketing is the evaluation of costs compared to profits. Paid advertising makes it easy to evaluate this data.

How performance marketing works

Payment occurs only for the result. There are several payment models that specialists use:

  • CPA (Cost per Action). You need to pay a fixed price when the desired action is received from the user. This is a general concept that is divided into several models:
  • CPI (Cost per Install) — payment corresponds to the number of app downloads.
  • CPC (Cost per Click) — for each click on an ad.
  • CPS (Cost per Sale) — used when you want to increase sales.
  • CPL (Cost Per Lead) — payment after receiving leads or user contact information.
  • Percentage of profit. Marketers give away a percentage of the proceeds from any customer action. For example, after purchasing or downloading an application.

Perhaps you have questions. We have prepared answers to some of them.

-> Hmm, what is the difference between performance marketing and affiliate marketing?

A very valid remark. Sometimes these two terms are used interchangeably. This is because they are both associated with getting measurable results.

With affiliate marketing, you promote someone else’s ads and in return get a percentage of the revenue. This can be compared to if you were working as an advertising agency all rolled into one.

And here is the most important thing for understanding what performance marketing is: performance marketing is affiliate marketing, if you apply the right approach.

When optimizing funnels, setting up data, and analyzing results, you are working in performance marketing. It doesn’t matter if it’s an advertising campaign of your own or someone else’s. The same pattern works in affiliate marketing.

-> Performance marketing channels

In digital marketing, there is such a thing as “channels”. They are used to ensure that information about advertising reaches the target audience.

Here are the most popular performance marketing channels:

  • SMM.

Banners on the Internet are one of the most popular advertising methods. Many users have learned not to pay for intrusive advertising. This phenomenon is called “banner blindness”. This type of information transfer works, rather, for those who are new to the Internet.

But there are other, inconspicuous formats of advertising. For example, native advertising. It inspires a lot of trust among users, so it is often clicked on.

  • Social networks.

Most people spend most of their time online on social media. In them, people communicate with loved ones, read the news, and even buy goods. This is the perfect platform to promote your ads.

In addition, it is easy to track user visit indicators on social networks. This data is then compared to the conversion rate.

  • Email marketing.

Despite the fact that mail seems somewhat outdated, this channel is still effective. Especially for e-commerce marketing. Messages are sent to their own subscribers or satisfied customers. This factor ensures that the sent text is read.

When it comes to performance marketing, you can measure open rates and conversion rates. A more sophisticated approach is to use a CMS platform like Hubspot to deliver personalized messages only to certain groups of users. This helps you achieve the highest conversion rates.

  • Search engine marketing.

This approach builds on the popularity of search engines and is used to display ads that are relevant to the user above other search results.

Advertising through search engines helps to increase efficiency through keywords. This type of advertising, as well as social networks, allows you to track a lot of data about users. They help increase your conversion rate.

-> Performance-marketing consists only of measuring results?

Right. To achieve positive results, performance marketing uses measurable data: clicks, subscriptions, etc.

Sometimes the goals are not only sales or downloads, but also brand awareness. Some companies spend a lot of money to get to know as many people as possible about them. In this case, the results are difficult to measure. Therefore, branding goes beyond performance marketing.

-> How to get performance marketing results?

For this purpose, marketers use special tools: automation software, advertising trackers, customer management systems.

All these tools have the following goals:

  • Capture actions taken by the user on the page: visit time, clicks on ads, clicks on buttons and conversions.
  • Prepare ready-made data in the form of a report and a graph to make it easier to analyze and draw conclusions.
  • Conduct A/B tests, write automated rules and reroute traffic.

Another task of performance marketing is to squeeze the maximum out of the margin — the difference between payouts and costs. A balance is established between profits and expenses. For this to work, it is important to understand who can make a purchase and what funds are needed to do so.

To do this, it is not enough to look into an Excel file or have many clicks that are not systematized in any way. A special advertising tracker, PeerClick, copes with this task. This is a tool that processes clicks in real time and displays users’ device types as well as their browser versions. Today, advertising trackers are the main tool in marketing.

PeerClick, in addition to fixing clicks, provides in-depth user analysis, reliable protection against bots, and automation.

An example of working with a performance marketing campaign

To be successful, you need to do the following:

1. Set a goal

Decide for yourself what you want to receive. For example, 10,000 downloads or 15,000 leads. Based on your initial, main goal, you will form future strategies. Also decide on the budget and timing of the advertising campaign.

2. Determine the appropriate channel and format for promotion

The choice depends on the type of your product. For example, for serious offers, native advertising is better suited. It inspires the most trust of the target audience.

Push notifications are good for urgent offers: temporary promotions and discounts, sweepstakes.

An email newsletter is suitable for customers who are already familiar with your company and will read your message.

3. Choose funds

Try to create several variants of landing pages and creatives. Once created, their effectiveness will be tested on real users.

4. Launch a campaign and set up an ad tracker

PeerClick is suitable for tracking the actions of customers. The tracker captures user data. For it to work, you need to add all the stages of the funnel, get the URL and send it to the ad network of your choice.

5. Optimize data

For this stage, it takes some time for the first conversions to appear. For 1–2 days, check which tools work and which do not.

After analyzing the findings, stop at the most successful advertising options. Unprofitable placements must be stopped.

Using PeerClick Automizer, set up auto-optimization rules. They will notify you if something goes wrong with your campaign. For example, if traffic has dropped significantly. Create rules to prevent cost overruns and whitelist the most suitable ad placements.

6. Evaluate results

Ask yourself the question: have I been able to achieve all my goals in the required time frame? Based on the answers, draw conclusions for your next marketing campaigns, take notes. In addition, keep your whitelists, analyze which parts of the traffic performed better than others.

Use the experience gained for the next campaign.

Performance marketing is marketing in its purest form

Performance marketing hasn’t been around for as long as digital marketing. However, his invention was a breakthrough that allowed amateurs to become professionals with better tools.

The only right way is professional and based on data analysis. Intuition is, of course, good, but it is not based on anything.

By purchasing PeerClick, you will not let your competitors get ahead.

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Mr. Smith

Affiliate marketing advice & case studies to help you market ethically, authentically, and efficiently.