What is Performance Marketing? An In-depth Guide for 2019

17th Jun 2019 Posted By Faheem Ahmed

Bloggers, affiliate marketers, and entrepreneurs often try different sales and marketing tactics to reach more people, increase sales revenue, and achieve brand positioning.  

Have you ever come across the term performance marketing?

Does Cost-per-action ring a bell?

You surely must have heard about clicks, lead generation, and conversion rate during online marketing discussions or planning. If you haven’t had a chance to closely analyze performance marketing, then this article will come in handy. This guide would walk you through the whole idea of performance marketing so that you could add performance marketing strategies to your marketing mix.

Here’s an overview of performance marketing.

What’s Performance Marketing?

Performance marketing refers to the online marketing system in which an advertiser pays the publisher when a specific action is performed, which could be a sale, click, or lead. This online marketing strategy works on the pre-defined performance marketing rules.

What differentiates performance marketing from other online marketing and advertising is that it works more on the action than the transaction. Once the system recognizes the action, whether it’s a click, sales, or lead generation, it’s recorded as a legitimized action.  

So performance marketing provides an avenue to connect with multiple sales and marketing opportunities under the performance-based rules.   

How Does Performance Marketing Work?

There is no rocket science behind performance marketing. If you’re into blogging, you might have heard about affiliate marketing as a money-spinning strategy. Performance marketing, however, is a little bit different as it’s more aligned towards the campaign-goal rather than the transaction. You’ll learn more about the difference between performance marketing and affiliate marketing later in this article.

There are 2 main players in performance marketing.

  1. Merchants (or Retailers)

Merchants are the advertisers who opt for performance marketing options and join ad networks that offer online advertising facilities. These are often software companies, indie software developers, eBook authors, and WordPress plug-in developers who are focused on product promotion.  

  1. Publishers (or Affiliates)

Publishers are the marketers who take those products from the ad networks and promote them through their blogs, websites, and social media to earn money online. They don’t create products, but instead, promote others’ products and earn commission or incentive through promotion.

As you can see, performance marketing is based on these two important pillars. Although the advertising networks have an important role in performance marketing, merchants and publishers are the main players.

Why You Should Try Performance Marketing

Bloggers and online marketers learn to adapt, experiment, and navigate along the way. Therefore, if you’re wondering performance marketing is imperative, keep reading.

Lead Generation

Lead generation is a marketing strategy that digital marketers, software companies, and plug-in developers use. You’d notice a lot of bloggers and marketers use opt-in bribes such as a free eBook or a checklist on their blogs or websites. You could download that freebie just by providing your name and email address. They build their email list through opt-in bribes as well as generate leads through their content and freebies. Some companies use trial versions of softwares or survey reports for lead generation. Performance marketing can be used for lead generation.   

New Userbase

Performance marketing can bring in a new userbase for your product. When publishers are promoting your offer, new users are discovering your products and some of them might be purchasing, as well.

More Downloads

If you have a software product that you want to promote, employ performance marketing to get more downloads by promoting the freemium version of your software. A lot of WordPress plug-in developers promote their free versions to create stickiness and convert users to customers.

Extra Money

Affiliate marketers and bloggers look at making money on the internet. They use multiple monetization strategies such as Google AdSense, affiliate marketing, and direct ads. They could add up performance marketing to their monetization mix to broadcast a few offers to their audience through an email newsletter or social media.

Easy Conversion

One of the perks of performance marketing is that it doesn’t require a purchase all the time. Mostly, the offers in performance marketing are action-based. For instance, if the form is submitted successfully by a unique visitor or a product is downloaded by the user, it would be considered as a conversion. Thus, making it more convenient and easy to marketers vis-à-vis affiliate marketing in which a purchase is mandatory.

Are Affiliate Marketing and Performance Marketing the same?

If you haven’t heard much about performance marketing and never tried affiliate marketing, then it could be difficult to digest so quickly. Here are some key differences between affiliate marketing and performance marketing:

  • In affiliate marketing, a conversion sometimes takes time to be verified to be considered a sale. The advertiser wants to make sure that it’s not a fake sale, meaning, the publisher isn’t supposed to buy from his/her own affiliate link.
  • In performance marketing, the conversion is rather quick and blunt. However, the ad networks have algorithms installed on their systems to analyze the legitimacy of downloads. Simply put, you can’t download an item from the offer you’re promoting by yourself, it would immediately be detected somehow through the IP address of your internet connection or MAC address of your computer.
  • The affiliate doesn’t have many options when it comes to offering. You only make money in affiliate marketing when someone purchases a product through your referral link. However, most affiliate programs have cookies system, which means, the purchase doesn’t have to be right away. Instead, there is a validity period from 30 – 90 days in which cookies remain valid, and if the same visitor who didn’t purchase the item right away directly comes back to the website and purchases the item, it would still be considered a referral sale.
  • One of the benefits of affiliate marketing is that you’d get a handsome amount of commission on the sale. Since the commission is given in percentage of the price. For instance, it could be 10% to 70% of the price of the item. So if a product is priced at $100 and they offer a 30% commission on the sale, then you get $30 on each sale.
  • Performance marketing does have so many offering options, for instance, cost per acquisition, pay per download, pay per click, pay per lead, pay per install, pay per call, and more.
  • While performance marketing does have multiple advantages, the big loophole is which is that there’s a low payout on every action. You’d often find the payouts on offering between $.50 to $2.
  • One of the differences between these two marketing/monetization strategies from the publisher’s standpoint is that affiliate marketing could also work on a low-traffic site, whereas, performance marketing may require a high-traffic site to convert and make a good amount of money.     

Types of Conversion in Performance Marketing

Here are different conversion points that represent the actions that are being taken during the online advertising campaigns. Let’s discuss some of the popular types of conversion in performance marketing:

Pay Per Sale/Cost Per Acquisition

It’s a simple transactional activity that occurs when a sale is recorded. Advertisers only pay the publisher when a visitor or user converts into a paying customer. Consider it as a customer acquisition cost.

Pay Per Lead

Pay Per Lead is a marketing strategy in which the advertiser pays the commission or fee when a lead is generated. For instance, if 10 people signed up for a demo of the software, then the company would pay for the 10 sign-ups. Grammarly, for example, pays $0.20 per free registered sign-ups.

Pay Per Click

Pay Per Click is a common advertising model in which the advertiser pays for each click that a publisher gets on the ads. Usually, the advertiser sets the banner ads to drive traffic to its website or landing page.

Pay Per Download

In pay per download conversion, a publisher earns a commission or a fee based on the number of downloads it provides to the advertiser. A publisher must read the terms and conditions before signing up for the pay per download offer. The terms and conditions must clearly state when a pay per download activity is considered valid; some ad networks require the completion of a download, while others count it a valid activity once the click is recorded. So, publishers must be crystal clear on these regulations.

Pay Per Install

A pay per install campaign pays off commission to the publisher when the installation of the software or app is verified. For instance, if you promote a trial version of the software and the campaign pays off $10 per installation. You might not get paid on the downloads. Instead, you may earn a commission when the referred users would install the software and activate the trial version. They must have a system, for example, user registration, to analyze the referral record for publishers or affiliates.

Pay Per Call

Pay per call is an advertising model in which the advertiser pays the commission or fee when a phone call is made by the audience based on advertising or marketing. Pay per call advertising model requires a referral identification system to differentiate sales of the marketing team.

Thus, the conversion types mentioned above are commonly used in performance marketing to promote products, bring in new sales, and increase the userbase of a product.

The Essential Performance Marketing Channels

You might not want to try out all of the marketing channels simultaneously, but you’ll be better off having a few options in your bucket to test at some point. Here are major channels that can help you run your performance marketing campaigns:

Native Advertising

Native advertising is a type of online advertising that blends with the content and doesn’t appear like banners ads. If you use the Pocket app, you’d often see sponsored bookmarks along with your bookmarks. That is precisely what native advertising is all about. The fundamental benefit of native advertising is that it doesn’t stand out much and put pressure on the website visitor to see or click on it. It flows along with the content and website design perfectly.

Push Notification

Push notification is an advertising feature that allows you to reach out to the audience through a notification on their mobile app or in the web browser or on the desktop. Push notification could be a vital tool in performance marketing when an advertiser either wants a lead, sale, or click on the product.

Popup Ads

Popup ads are an engaging option, especially when it comes to clickability and customer acquisition. It would have been an incredible element of the performance marketing campaign. The reason is that the whole idea of performance marketing is based on the action that the advertiser is looking for. Therefore, a popup ad could entice the website visitor to take action. As a result, the publisher could earn money and the advertiser just might generate a lead.

Social Media Marketing

Social media marketing could be an essential channel for performance marketing. It comprises the use of social media platforms to find, attract, and engage the relevant audience through content, advertising, and engagement. Thus, social media marketing could be an option to try out during a performance marketing campaign.

Sponsored Content

Sponsored content is a paid editorial on the popular sites and blogs that have relevant traffic. The idea behind sponsored content is that it gives you a platform to attract new eyeballs that might be interested in your product. You’d often see brands collaborating with bloggers and they publish sponsored blog posts. It does look so simple, but in reality, it’s quite a job. You have to come up with great content that compels people to consume despite seeing the sponsored content tag. The idea could essentially lead to winning at performance marketing because of advertisers who lookout for the relevant audience that may be interested in their product.

Search Engine Marketing

Search engine marketing is a website and content methodology that prepares a website for organic traffic from the search engines. Beyond search engine optimization, but it gets aided by paid search ads. When you’re focusing in on performance marketing, search engine traffic would come in handy during the campaign. The more the traffic, the higher the chances of conversion.     

Affiliate Marketing

Affiliate marketing is a popular monetization method used by bloggers, website owners, and online marketers. Bloggers and online marketers use the very idea of affiliate marketing to run their performance marketing campaigns. What they do in affiliate marketing is that they promote a product to earn a commission and get paid once a sale is recorded. Essentially using the same idea for performance marketing and choosing the campaigns through ad networks that offer performance marketing services to make money.

8 Best Performance Marketing Networks

Let’s take a look at the list of eight popular performance marketing networks out there:

  1. MaxBounty
  2. ClickBooth
  3. Peerfly
  4. GlobalWide Media
  5. ClickDealer
  6. Panthera Network
  7. CPAmatica
  8. CrakRevenue

Conclusion on Performance Marketing

A large majority of newbie bloggers stay busy in a tug of war with the Google AdSense revenue and they leave other options by the wayside. They look out for other monetization options and discover affiliate marketing as a better alternative to PPC ad networks.

Performance marketing is important for bloggers and online marketers because it opens up new avenues of marketing for digital marketers and monetization for bloggers. Exactly why we shared an in-depth piece of content on performance marketing.

Some of you reading this article might not have paid attention to CPA networks before, and now you would look out for them. In this case, not only would you learn new things, but you may end up increasing your blog revenue. As far as online marketers are concerned, they could discover an underpriced marketing technique in the form of performance marketing.