Performance Marketing: A Beginner’s Guide (2023)

What is performance marketing?

Performance marketing is a comprehensive term that refers to online marketing and advertising programs in which advertisers (or “retailers”) pay marketing companies (or “publishers”) when a specific action is completed. This action may include a sale, a click, or a form submission, depending on the program.

How does performance marketing work?

Performance marketing works on a pay-for-performance model, meaning that advertisers only pay when a specific action is completed. This allows for a more targeted and measurable approach to marketing, as advertisers can track the success of their campaigns based on these actions.

Is performance marketing the same as affiliate marketing?

Affiliate marketing is a type of performance marketing, but performance marketing encompasses a wider range of marketing tactics and strategies beyond just affiliate marketing.

Affiliate marketing

Affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought by the affiliate’s own marketing efforts.

Brand marketing

Brand marketing focuses on creating a strong brand image and building brand awareness through various marketing tactics and strategies.

Market validation

Market validation involves testing the market to determine the potential demand for a product or service before investing in it.

4 main types of performance marketing

Social media advertising

Social media advertising involves creating and sharing content on social media platforms to achieve your marketing and branding goals.

Search engine marketing (SEM)

Search engine marketing is a form of internet marketing that involves the promotion of websites by increasing their visibility in search engine results pages.

Influencer marketing

Influencer marketing involves collaborating with influential people to promote a product, service, or brand to their audience.

Native advertising/sponsored content

Native advertising refers to advertisements that are designed to fit in with the content of a website or publication, providing a non-disruptive advertising experience.

Performance marketing examples

Some examples of performance marketing include affiliate programs, influencer collaborations, sponsored content on websites, and pay-per-click advertising campaigns.

How to measure performance marketing

Cost per thousand impressions (CPM)

CPM measures the cost of 1,000 advertisement impressions on one webpage.

Cost per click (CPC)

CPC measures the cost of each click on an advertisement that directs users to a website.

Cost per conversion

Cost per conversion measures the cost of each desired action, such as a sale or sign-up, resulting from an advertisement.

Limitations of performance marketing

Doesn’t focus on brand building

Performance marketing may not prioritize brand building and long-term brand awareness as much as other marketing strategies.

Risk of brand dilution

With a heavy focus on performance and conversions, there is a risk of diluting the brand’s image and reputation in the pursuit of short-term gains.

False certainty in attribution

Performance marketing relies heavily on attribution models, which may not always provide an accurate picture of the customer journey and the impact of marketing efforts.

Performance marketing FAQ

What does a performance marketing specialist do?

A performance marketing specialist is responsible for creating, managing, and optimizing digital marketing campaigns that are focused on driving specific actions, such as sales or leads.

Is performance marketing the same as paid marketing?

Performance marketing is a type of paid marketing, but not all paid marketing is performance-based. Performance marketing specifically focuses on paying for measurable results.

What is meant by performance marketing?

Performance marketing refers to online marketing and advertising programs in which advertisers pay marketing companies when a specific action is completed, such as a sale or a click.