Performance Marketing - What Is It & How It Works?

There was a time when a marketing campaign is a hit and miss effort. There are strategies that work and do not. Worse, it was hard to pin down the reasons for hitting and missing. This will no longer happen with performance marketing. You can confidently invest in a campaign that is bound to deliver results. So, what is performance marketing?

In a nutshell, performance marketing is an online program wherein payment is made only when a specific action takes place such as a click, generated lead, sale, and more. Paid marketing channels such as native advertising, search engine marketing, sponsored advertising, social media advertising, and affiliate marketing are used in performance marketing. 

How Performance Marketing Works

Each media caters to a specific audience and offers advertising platforms to reach them. Facebook, for instance, allows you different options to show your ads to Facebook (and Instagram) users. Google displays your ads in SERPs. Not everybody can see all the ads, all at the same time. How these ads are shown to whom are determined by:

  • Audience targeting and segmentation – Each platform segments the audience and offers you different ways to target specific segments. 
  • Bidding – You can put in a bid to allow your ads to be aired at a specific time and place to your chosen audience. 
  • Performance – The performance of your ad will be measured wherein poor performance will result to reduced exposure.
  • Conversion – When the desired action is not achieved, the advertiser does not pay the network. It follows that the more the desired action is met, the more the ad gets shown. 

Performance Marketing Strategy

The following strategies and corresponding measurable actions are effective in performance marketing:

  1. Cost per Acquisition – The advertiser pays when a specific action happens. This can be a click, form completion or sale.
  2. Cost per Leads – The advertiser pays whenever the advertisement yields a sign-up from an interested consumer.
  3. Cost per Sales – The advertiser pays whenever the advertisement results to a sale.
  4. Cost per Click – The advertiser pays whenever the advertisement is clicked on.
  5. Cost per Impression – The advertiser pays every 1000th time his advertisement is shown. 

Performance Marketing Channels

1. Native Advertising – It is a fact that there are ad blockers that people online use. Add to this another fact that most of them naturally ignore ads. Native advertising allows a way to get in despite hindrances. It gives click-through opportunities on the websites that your target market use. Among other forms of online advertising, native advertising gets more clicks, as much as 10 times more.

Native advertising requires quality content that provides value that will get shown in the right venues. You need to have a clear picture of who you want to target. What will inspire them to act. Then, create content that will push them to make the action. After you have launched your campaign, you can fine-tune the performance by analyzing the results on hand and then making appropriate changes.

2. Social Media Advertising – The objectives of social media marketing includes increasing traffic, lead generation, engagement and sales. There are a lot of social media channels aside from the big ones like Facebook, Instagram and Twitter. You need to choose the right platform to work in. 

Consider the following when choosing the social media platform to work with:

  • The ad formats allowed on the platform.
  • Are the users of a particular social media your market?
  • How has your organic efforts fared so far in a specific platform?
  • How is your competition using the platform?

The following are the best practices in social media advertising:

  • Use the targeting options to create specific audiences.
  • Create ads that go well with the content found in the platform.
  • Understand the different formats you may use.
  • Tinker with the bidding strategy to find the one that gives the highest ROI possible.

3. Sponsored Content – Sponsored articles are effective in driving traffic and conversions. It also increases visibility to your target audience. When done properly, sponsored content is a win-win for both advertisers and publishers.

4. Search Engine Marketing – This is the most popular performance marketing channel. It allows advertisers to put their ads in front of sure customers. Search engine marketing is grounded on keywords. Knowing how to pick the right keywords is important. Those with high commercial intent like buy, deal, free shipping, discount are pricier because they are competitive. Note that SEM uses a real-time auction system. An auction takes place every time somebody enters a search query. You will be allowed to join the auction when you have identified the keyword you want to bid on and have determined how much you want to spend. 

5. Affiliate Marketing – In affiliate marketing, a publisher enters a relationship with an advertiser. They become an extension of the advertiser’s brand by allowing their site for be used for selling. In return, the affiliate gets a commission for any action that happens – usually a sale. 

Performance marketing is a great system if you want a marketing effort that is measurable. To ensure optimum result, strategize your campaigns well and create an ad that will talk to your target audience in a format he will listen to and language he will understand. 

Author Bio - Ajay Dalal is a content writer and a copywriter who specializes in writing marketing blog Technology and sales pages. He often writes for Dricki, and  Digital Junkies and explores new technologies to share his knowledge through writing.