Marketing is well known for going through some major transformational changes for centuries. The industrial revolution, however, has managed to upskill the industrial marketing domain to new heights. Although one question is quite peculiar, marketing can guarantee you views but can it guarantee performance?

In this article, we will talk about:

1. What is performance marketing?
2. Types of performance marketing
3. Important metrics

1.   What is Performance Marketing?

Performance marketing is, in simple terms, a measurement of the online campaigns of your marketing plans. Performance signifies results that are measured depending on the conversion rate of the ads.

If we were to take an example: Suppose you instruct a publisher to market your video on a website. You agree to make the payment but only after a thousand impressions of your video (CPM). This method is one of the most basic forms of inbound or performance-based marketing that is still in use today.

Payment after achieving an action like gaining 500 subscribers, making 200 sales, or 150 downloads are some examples of the metrics which can be placed for payment conditions under performance-based marketing. These metrics are flexible and can be decided by the retailers and the publishers.

A business will only make the payment for their marketing campaign after they achieve this pre-made set of goals. In fact, even the budget which will be utilized, desired goals, and scope of ads can all be fixed before starting the online digital marketing campaign.

This type of marketing involves four kinds of parties:

• Retailers or Merchants: Essentially these are the businesses or brands that want to promote themselves. They are the ones who make the payments for their ads to the publishers.

 

• Publishers or Affiliates: These are the mediums for marketing like influencers, mobile apps, review websites, blogs, and so on. The ads are marketed with the help of any chosen publisher platform.

• Affiliate Networks: These networks help to track the performance of online marketing campaigns. Some examples include Rakuten marketing, AWIN, and Partnerize.

• Affiliate Managers: The agencies or managers who specialize in handling these campaigns and form a bridge between the retailers and publishers. They help to increase the ROI (return on investment) of these online campaigns by using professional techniques and tricks.

 

2.   Types of Performance Marketing

Unsurprisingly, there have been a plethora of advancements in the channels under performance-based marketing. There’s only one rule to follow: find and target the correct people at the correct time. You can select any channel according to your budget, goals, and campaign type.

●    Social Media

Social media is outperforming its potential with every new update in the app industry. It has become a great platform to increase user engagement, gain traffic and feedback, and even make sales.

The paid ads on social media apps like Instagram and Facebook are garnering massive attention, whereas other platforms like LinkedIn and Pinterest are also playing big in the marketing field.

For example, The recently introduced paid ads on Instagram reels have already managed to gain huge support and popularity among marketers.

●    Native Advertising

Native advertising aims to blend with the overall content of a webpage. These types of ads are strategically placed as suggestions or suggested articles and videos on a website or platform.  They help to create a natural tone of advertisement for a campaign.

●    Display Advertising

Under this type of advertising, display ads or banner ads are specially placed for a target set audience. You have probably seen them everywhere, from your favorite websites to your social media feeds.

One of the biggest advantages of display advertising is that ads can be targeted easily according to your audience. For example, placing a sofa cover ad on a furniture website.

●    Search Engine Marketing SEM

When you search for something on a search engine you get two kinds of results, paid and organic. Usually, the top few sponsored results on your SERP (search engine results page) are what we call SEM or paid search ads.

3.   Important Metrics

A few metrics can be taken into consideration while deciding the payment for performance marketing ads.

• COST PER CLICK (CPC)

Usually utilized to increase the traffic rate, cost per click equals payment for every click on a certain ad.

• COST PER THOUSAND (CPM)

Under this metric, an ad is judged based on 1000 impressions. The payment is cleared after every 1000 impressions of a particular ad.

• COST PER ACQUISITION (CPA)

CPA is all about actions and is also fruitful after the audience completes a specific action. For example: downloading a pdf or subscribing to a blog.