What is Performance Marketing in Digital Marketing?

Performance Marketing is the strategy in digital marketing, wherein advertisers have to pay for the performance of the action taken on the advertisement by the users. This action can be the number of clicks or impressions or shares or sales.

That implies user’s reaction to the content of the advertisement is the criteria to assess the measure of performance of the advertisement and thus subsequently make the payment.

One can also say that Performance Marketing is an approach in online marketing and advertising in which advertisers pay only and only for the resultant action of a particular marketing campaign.

This marketing campaign can be generating sales or generating leads or clicking on the website or filling out the form or any other such marketing activity.

In Performance Marketing, Advertisers and also Performance Marketer are in a win-win situation as both parties can strategize to get maximum ROI based on performance.

It is also an ideal situation for advertising merchants as there is an opportunity to create brand awareness and also get targeted clicks without paying the additional costs.

The social media outlets like Facebook and Instagram show ads to social media viewers. Likewise, Google displays ads on the search engine result page. These are examples of Performance Marketing. 

How does performance marketing work?

Certain factors – permutations and combinations – are vital to make these ads reach the target audience and get the required action to perform.

Facebook and the social media outlets are keen on these issues of advertiser’s bidding, quality of the ads and its relevance along with conversion that will take place.

Quality of the advertisement and the relevance – If the advertisement created is good and relevant it will work and will get more exposure.

Targeting audience and bidding – Bidding for the time and placement of the advertisement towards your targeted audience is a crucial factor in getting the action to happen.

Conversion – If the performance happens or the action – desired click or the desired lead – is generated or the purpose of the ad is realized, the Performance Marketer gets paid for the campaign.

Performance Marketing is payment for action and these action modes or metrics or KPIs are abbreviated as CPM, CPC, CPS, CPL, and CPA. These metrics enable the strategizing campaign and assess the performance of the Marketing campaign.

Following are the full form and the meaning of the above-mentioned terms –

CPM is the cost per impression that is Advertiser pays for the action of display of advertisement every one thousand times.

CPC is the cost per click is the cost paid by the advertisement for the click on the advertisement. 

CPS is the cost per sale that the advertiser pays for the sales that are direct because of the advertisement. 

CPL is the cost per lead is the advertiser pays for the lead generated directly from the advertisement. 

CPA is the cost per acquisition for the action of generation of sales, form filled or the click that is the direct result of the advertisement. 

The above actions help to gauge the efficiency of Performance Marketing. One can further make changes and assess with varying settings.

Performance marketing can be implemented on various performance marketing channels such as native advertising, search engine marketing, affiliate marketing, display advertisement, content marketing, and social media.

Try out various campaigns with different goals, on different sets of platforms at different costs to get optimum output results.

Native Advertising – It is the best option to get the clicks as native advertisement material is displayed on the online publication content shown in recommended articles section with a button to take the readers to a separate page.  These articles are paid articles and offer more ROI because these articles are engaging, leading to more leads, sales, and clicks thus enhancing brand awareness.

Native advertising creates an opening on the website as the visitor goes through the content and thus results in more clicks. Native advertising is an ideal remedy for the situation wherein you have to deal with filters such as adblockers.

Native advertisement is the perfect example of performance marketing. Advertisers create an advertisement campaign with a specific goal and make payment for the action of click or other conversion actions. Taboola is the leading content discovery network that enables advertisers to reach their target audiences on various channels. Outbrain is another option that helps brands reach the target audience.

SEM or Search Engine Marketing is the paid advertising on the search engine. PPC or Pay-Per-Click advertisement through Google ads is the most popular form of Search Engine Marketing with Bing and Yahoo being other options. In this Performance Marketing platform, the user clicks the paid advertisement that appears on the search engine as it matches the keywords user has typed. There is a chance of generation of lead when someone clicks on your advertisement and visits your website or calls you. Furthermore, there develops an opportunity for a conversion.

Affiliate Marketing is an apt example of Performance Marketing. In this popular form of Performance Marketing, third parties referred to as publishers display ads for advertisers and get paid for the results. MyLead is an affiliate network that offers services in multiple languages with advanced features and tools to create a successful Affiliate Marketing project.

Display advertisement is one of the Performance Marketing channels in which advertisements are seen on the top or bottom of the news webpage or on the side of the Facebook newsfeed. This advertisement through display ads features interactive content, and video with an engaging and attractive design created to gain attention.

Content Marketing is a type of performance marketing that creates valuable and relevant content that drives the customer to perform the action. The content should be educative and provide information. Fresh and relevant content is imperative to get the user to perform the action. It should engage the user and convert them to followers and spread the information about your products and services.

Content Marketing can be implemented in Blogging, Image content, and Video content.

  • Blogging is the best example of content marketing with sufficient opportunity for performance marketing. Fresh and relevant content in the blog with a lucid and engaging flow with a link to the advertiser page of products or services can be a fruitful performance marketing strategy.
  • Images on social media will help to connect with prospective customers and give leads to boost your Performance Marketing campaign.
  • Video content gives the user more information than textual content and hence has more chances of getting the leads. Behind the scene, information helps to develop trust and gain the confidence of the customer to make a successful conversion. It also boosts brand awareness.
  • E-books can be downloaded and used as a lead generation tool in content marketing. The E-Book helps to engage the user and raise brand awareness. The e-book content should be creative, in-depth, and engaging to gain the trust of the reader. It is used to gather contact details in exchange for the information that the user is interested in. It helps to gain subscribers to send emails about new products and services.

Social Networking sites are the best options for Performance Marketing. Facebook and Instagram are the best platforms to connect with users for marketing products and services.

These social networking sites are the ideal mode to interact with customers because these leading social networks are available in multiple languages and can reach across geographical, and economic boundaries.  According to Statista by 2022, the number of social networking users will be estimated at 3.96 billion. Check the graph given below.

Facebook is leading the competition and it has an extensive list of services for marketing.

Benefits of Performance Marketing

Performance Marketing is easy to track performance and make payments accordingly. There are various analytical tools that make it very easy to keep track of the performance of the marketing campaign.

Performance Marketing is the perfect example of getting the best ROI. Performance Marketing channels will give the appropriate returns even if the budget of advertising is increased and help to grow the business.

It helps the advertisers to ensure that the performance has an increasingly upward trend. The risk factor is minimal for advertisers and marketers.

I am eager to know your feedback on Performance Marketing. If you try any of the Performance Marketing options, write your feedback in the comments section below.