What is Performance Marketing?

The definition of performance marketing 

Put simply, performance marketing is a type of digital marketing that is results-driven. Simple right? But isn’t all digital marketing in some way results driven??

Well, performance marketing is a type of marketing where a brand or business only pays when and if a certain goal or objective is met. These objectives can be anything from leads, bookings, downloads, sales, or phone calls - whatever is most valuable to your business. 

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How does performance marketing work?

While the definition of performance marketing is simple enough, there are a few different parties involved - four to be exact:

1. The retailer/merchant (you).

2. Tracking platforms.

3. Affiliates/publishers.

4. Outsourced Program Management (OPM)/Affiliate managers (us).

Let’s now look at a brief definition for each of these. 
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Retailer/merchant (you)

This is you; a business or individual looking to promote your services, products, or a deal/sale that you’ve got going on. 

Affiliates/publishers

These are essentially the hosts of the ads; the platforms on which the ads themselves are published and promoted. This can be Facebook, Google, YouTube, or Instagram or it could be an influencer that promotes your product. 

Outsourced Program Managers (OPM)/Affiliate managers (us)

This could be an external agency (like us) that runs your ads or an in-house member of your digital marketing team. They are the main connection between you and the affiliate platforms/publishers and the ones that implement and devise the strategies based on data and research. 

Tracking platforms

This is where all the data, assets, and information derived from the campaign are stored and analysed. These platforms are used to monitor leads and analyse the campaign’s performance. They are vital to the proper functioning of a performance marketing campaign! 
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Performance marketing terminology

Once you’ve set up your campaign there are a few different terms that are used to measure and pay for the ads, these include:
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Pay Per Click (PPC)

With Pay Per Click advertising, you pay for the number of times your ad is clicked. The metric this is measured in is CPC - Cost Per Click. PPC is especially popular with Google and YouTube ads. So while you pay per click, the cost per click varies. 

Cost Per Sale (CPS)

CPS gives you an idea of how much it costs for each sale after someone has clicked the ad and landed on your website. For example, if you garner 10 clicks at $2 each, and one of those results in a sale, then your CPS is 10*2 which is $20.

Cost Per Thousand Impressions (CPM)

This is just what it sounds like - instead of paying per click or measuring cost per click, this is focused on impressions and views. For some campaigns, you might set a budget that you’d like to spend per 1000 impressions and work from there. 

Cost Per Lead (CPL)

This is especially useful when your business is less focused on product sales and more focused on customer information/lead generation. The way a lead is defined depends on your business but generally is set as a customer completing a specific action such as a contact form.

Cost Per Action (CPA)

Similar to CPL but even more general, CPA measures the cost of a customer fulfilling a specific, defined action. 

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The types of performance marketing 

Performance marketing is actually a broad term that can be applied to a variety of different digital marketing strategies, including:
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Social media advertising

With over 4.62 billion people (58.4% of the world population) on social media, there is no denying the importance of social media platforms. Love it or hate it, if most of the people in the world are there, you need to pay attention, and social media advertising is a great way to harness some of that power. 

Programmatic display advertising

Programmatic display advertising essentially refers to a type of advertising where automated bidding is used for the ad display space. Programmatic advertising is used on platforms like Google and Meta (Facebook) - see our example above. The company whose ad is at the top (Paire) will have set a higher bid than its competitors and therefore automatically rank higher. 

PPC Advertising

As mentioned previously, PPC stands for Pay-Per-Click and PPC advertising is an entire subset of performance marketing itself. PPC advertising is most commonly used with Google and involves only paying once someone clicks on your ad - the CPC (cost per click) depends on how much you are willing to bid to sit at the top of the search results. 

Native advertising

Native advertising makes use of the appearance of a website to sell ads - this can be in the form of a suggested video on YouTube, a sponsored article on a news site, a sponsored Instagram Story, and more. It’s a great way to organically target your audience! 

Affiliate marketing

With affiliate marketing, you reach out to a business or individual to promote your business. This can be a website that hosts your products, a coupon company or even working with an influencer/YouTuber/blogger. 

Other types of marketing

It’s vital to remember that performance marketing is a broad term that can encompass just about any type of marketing so long as there is an agreement to only pay for a service if a certain set of goals are reached. 

For example, if you engage the services of a content marketing team to write blogs for you and you only pay for their services if the blog reaches 1000 clicks per month, then that is performance marketing. If an SEO agency states that you only pay once you reach page 1 for your focus keyword then that is performance marketing. Performance marketing is just any type of measurable, trackable, results-driven marketing that is dependent on a set goal. 

How to develop a performance marketing strategy for 2023

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1. Establish your goals and objectives

As performance marketing is entirely dependent on your goals and objectives, you need to have some goals in mind before doing anything. Make sure they are viable, measurable, and profitable. This involves setting goals with your performance marketing agency as well as the platforms used (what is the target action you want to track). 

2. Identify the channels and audience you want to target

While targeting all marketing channels isn’t a good idea (re: impossible), targeting just one might also not be wise. It’s important to identify the 1-3 platforms where your target audience spends most of their time and how much budget you want to allocate to each. Diversification is good, but if your campaign is too broad it loses focus. 

While doing this you’ll also need to identify your target audience. What is their age, gender, background, what are they looking for, what problem do you solve? These are all vital aspects to consider. 

3. Develop and launch your campaign 

Next is where the hard work comes in. This is when you start to outline the finer details of the campaign. You’ll start to come up with copy and other assets, and create the campaigns on your chosen platforms. 

Once you have an outline, you need to ensure the copy fits the character limits of the different platforms, and you’ll need to find images that match the accepted size of each given channel too. It’s good to develop ads with different images and copy for the same platform to compare and contrast what is working and what isn’t in the next step. 

Then it’s time to launch 🚀

4. Measure, analyse, optimise

Once you launch your campaign, the data will start trickling in. What copy is converting, and what isn’t? Which photos are converting, and which aren’t? Are there any glaring problems? Are you over-performing? Underperforming? Now is when you can sit down and analyse all the data coming through and use the information you gather to further refine your campaign and get that conversion rate and ROI even higher. 

Once you’ve completed this, your performance marketing campaign is well on its way. All you have to do is regularly monitor for problems and then implement changes to get that ROI even higher. 

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The benefits of performance marketing 

If you need any more convincing, here are a few of the specific benefits that performance marketing can bring to your brand:
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It doesn’t cost much if it doesn’t work

The easiest benefit to understand is that if your goals aren’t met, you won’t have to pay much for your performance marketing campaign. Performance marketing agencies are the Top Guns of the digital marketing world - they put their money where their mouth is. 

The results are measurable, trackable, and tweakable

Of course, in order for performance marketing to work, it inherently needs to be measurable and trackable. The agency could never prove that they’ve met your expectations if they aren’t measuring anything (and that wouldn’t be good for anyone). 

The other benefit of this is that once the results start coming in, you can make educated tweaks that can further optimise your campaign and increase its ROI.

It can help you better understand your customers

Thanks to all the measuring and monitoring that is taking place during a performance marketing campaign, you can actually learn more about your customers. You can observe the whole click-to-conversion path and identify exactly where to implement changes and improvements to your business. 

It elevates brand awareness

Thanks to signing up with affiliates and agencies, you get your name out to a new audience and increase your brand awareness, which (if all goes to plan) leads to more traffic and leads. 

It diversifies your revenue stream

Diversification of revenue is always a good idea. Having all your eggs in one basket is extremely risky. For example, if all you rely on is SEO and the next Google update comes around and tanks your website you are - excuse our French - absolutely buggered. 

On the other hand, if you are making use of other marketing streams like performance marketing or PPC, you can up the budget to these while you take the time to figure out the issues with the problematic marketing channel and get it back up and running. 

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Choose Gravitate Digital as your performance-based digital marketing agency

Gravitate Digital is a team of thinkers, strategists, & digital psychologists. We take the time to learn your business, language and story, weaving our own digital expertise seamlessly into your brand and team. Servicing Australia-wide, we provide consistent communication as if we were in the same room as you and our performance marketing campaigns can take your business from where it is now to where you want it to be. 

Niche but potent, we are a team of conscious performance marketing experts that will get you the best results. So if you want the best performance marketing campaign for your business, contact us today and we’ll help you get there.