What Is Performance Marketing?

Whether you're a business owner or a marketer (or both!), you're likely aware of several types of marketing available. Performance marketing is a subset of the larger digital marketing world, where advertisers pay for specific outcomes, such as clicks or conversions, ensuring a more targeted and results-driven approach.

What is Performance Marketing?

Performance marketing is a results-oriented digital marketing strategy where advertisers only pay for their ads once a specific goal is achieved. The goal can vary from viewing a video to making a purchase to filling out a form on a webpage, but the focus is always on achieving measurable results.

Unlike traditional advertising campaigns, performance marketing ensures a more targeted approach with guaranteed results, and the ability to monitor and adjust performance in real-time. This way, businesses can optimize their campaigns for maximum effectiveness and get the most out of their marketing budget.

Types of Performance Marketing

There are several types of performance marketing, each with its unique approach and benefits.

• Affiliate marketing involves partnering with affiliates to promote your products or services, and you only pay them when they generate a sale or lead. 

• Pay-per-click (PPC) advertising allows you to bid on specific keywords and pay only when someone clicks on your ad. The most common platform for this type of marketing is Google Ads.

• Influencer marketing involves working with social media influencers to promote your brand or products to their followers. 

• Email marketing involves sending emails to a specific audience, encouraging them to take a particular action. 

• Search engine optimization (SEO) isn't paid, but it's an essential part of performance marketing. SEO is measured by the ranking of the keywords, organic traffic, bounce rate, and more.

• Content Marketing involves creating and sharing valuable free content to entice and convert customers. Performance is generally measured by engagement rate, social shares, and the volume of quality leads it generates.

By understanding the different types of performance marketing available, businesses can choose the right strategy to meet their marketing goals and budget.

Performance Marketing KPIs

The best key performance indicators, or KPIs, to measure for a given strategy depend on the overall goal. If a business wants to drive sales, the main KPI would likely be CPA or AOV. Metrics like CPC or CTR would be less relevant in this case. If a business wants as much site traffic as possible, however, then CPC and CTR would be the main metrics to track. Identifying the most relevant KPI and setting an accurate goal are vital to a campaign's success.

Some common KPIs include:

• Click-through rate (CTR): the number of clicks your ad receives divided by the number of times your ad is shown (impressions).  

• Cost per acquisition (CPA): the cost to acquire one customer or conversion. 

• Cost per lead (CPL): the cost of acquiring a prospect, or lead. This KPI is often used in B2B marketing.

• Return on ad spend (ROAS): how much revenue your ads generate compared to how much you spend on them. 

• Bounce rate: percentage of users who leave your website after viewing only one page. 

• Cost per click (CPC): how much you pay for each click on your ad. 

• Engagement rate: how often users interact with your content, such as likes, comments, and shares. 

• Average order value (AOV): average amount a customer spends on your website per transaction. 

Benefits of Performance Marketing

Performance marketing offers several benefits, including a more targeted approach, guaranteed results, real-time monitoring and adjustment of campaigns, and the ability to optimize campaigns for maximum effectiveness. It can be a highly useful marketing approach to help businesses get the most out of their marketing budget and achieve measurable results.

Is Performance Marketing Right For You?

Whether performance marketing is right for you depends on your business goals, budget, and marketing needs. If you're looking for a more results-driven approach where you only pay for specific outcomes, then performance marketing could be an excellent fit for your business. It can help you reach your target audience more effectively, increase conversions, and optimize your campaigns for maximum effectiveness. However, if you're not focused on results-driven marketing and prefer more traditional marketing methods, such as print or television ads, then performance marketing may not be the right fit for you. It's essential to evaluate your business needs and goals before deciding on whether performance marketing is the right choice for you.