What Is Performance Marketing and how to use it.

The containment measures implemented to stop the coronavirus pandemic plunged the global economy into a deep contraction. So even if digital transformation accelerated, most businesses still need to reduce marketing expenditures. Among various models, performance marketing strategies are more efficient and economical.

According to the US Census Bureau’s 2020 Annual Retail Trade Survey (ARTS), online sales increased by 43% during the pandemic. As more businesses embrace eCommerce, marketing and advertising technologies also evolved.

One of the most notable developments is the improved capability to collect real-time digital marketing performance metrics. Before the pandemic, for instance, marketing attribution was very challenging. Nowadays, data transparency lets pay-per-click (PPC) marketing agencies and marketers determine how campaigns and customer interactions contribute to conversions, sales and many other goals.

The ability to attribute enabled paid search marketing and Google Ads specialists use performance marketing metrics to optimize advertising campaigns, increasing efficiency and delivering better return on investments (ROIs).

What Is Performance Marketing?

A performance marketing strategy is a marketing model that allows advertisers to pay for results, which can be pay-per-impression (PPI), pay-per-click (PPC) or conversions like subscriptions, sales or downloads. It differs from most other advertising models, where advertisers pay upfront and could spend hundreds to thousands of dollars without a single conversion.

In traditional marketing and advertising models, determining the effectiveness of a campaign is usually based on statistical calculations. Such is the case, for example, with lead generation strategies where the cost per lead (CPL) is unpredictable. Digital performance marketing strategies, meanwhile, differ in that pay per click marketing agencies and Google Ads specialists measure the performance marketing metrics of advertising campaigns and attribute the marketing performance, like clicks or conversions, to different channels in real time.

In essence, a performance marketing strategy drives actions and tracks the results. Furthermore, it is easy to see the ROI of each asset, marketing activity, or advertising campaign at any given time. So, with performance marketing, advertisers can quickly see the cost of results obtained from paid marketing and advertising.

While large organizations have the financial capability to promote their brand, most typical businesses only have limited marketing funds. So for these companies, performance marketing is the most suitable digital marketing strategy, as payments are determined by the results obtained.

What Are The Pros And Cons Of Performance Marketing?

Performance marketing is an excellent option for companies that want to control their marketing and advertising funds. Rather than “hoping” to get the desired results, this omnichannel marketing model lets the advertisers set goals and pay only after obtaining those goals. But before committing to this strategy, it is best to know the potential downsides. Sawat Marketing is a Bradford based Marketing Agency.


 Increased reach. Performance marketing comprises several strategies, such as affiliate marketing, search engine marketing (SEM), social media marketing (SMM) and PPC advertising. Tapping into these different channels, especially on platforms with large numbers of users, provides businesses with a rich pool of potential customers. Besides enhancing brand awareness, advertisers can also build stronger customer relationships.

 Real-time tracking. It is easier for pay per click marketing agencies and advertisers to measure performance marketing metrics and be transparent with the progress of each campaign, from click-throughs to conversions. Marketing and advertising attribution also help identify the best-performing partners and channels to focus on and pour more resources.

 Lower risk. Businesses can plan how much to spend and start with low-risk strategies. One such performance marketing strategy is affiliate marketing, in which payments are made only after the desired action, such as CPL or cost per acquisition (CPA).

 Flexible strategies. Performance marketing is customizable. So after measuring the metrics, advertisers can focus on partners and channels that provide high ROIs while stopping those that did not perform, leaving room to try other strategies.


 Missed opportunities. Performance marketing agencies differ in experience, knowledge, tools and many other factors. Unfortunately, some miss opportunities by failing to turn performance marketing metrics into actionable insights.

 Cost. Remember that with performance marketing, advertisers are paying for the actual results. The narrower it is in the sales funnel, such as pay-per-sale (PPS) or cost-per-sale (CPS), the higher the cost. Although metrics like cost per lead are cheaper, there is no guarantee of conversion.

What Results Do Performance Marketing Provide?

As alluded to, performance marketing itself is not a specific marketing activity. Instead, it is a paid marketing methodology that bases payments on actual results derived from a pre-defined key performance indicator (KPI).

Regardless of the advertising or marketing strategy used, the most often used KPIs are the following:

• CPM (Cost-per-Impression). Each time an ad is displayed counts as an impression. So with CPM, advertisers usually pay for every thousand impressions.
• CPC (Cost-per-Click). Advertisers pay for the number of times users click on an ad.
• CPL (Cost per Lead). Advertisers pay for the number of times users take action, such as subscribing to a newsletter or signing up for a webinar. In lead generation strategies, CPL identifies qualified leads.
• CPS (Cost-per-Sale). Usually used in affiliate marketing, the payment system relies on actual sales.
• CPA. (Cost-per-Acquisition). In digital marketing, CPA refers to the aggregate cost of getting a customer down the sales funnel, from acquisition to conversion.

One term that may come up when discussing social media advertising costs and paid search marketing is cost-per-action, which some may mistake for cost-per-acquisition, as both share the same abbreviation. Cost-per-action, to be clear, refers to a specified action, which can be anything, such as click-throughs, form submissions, subscriptions, downloads and sales.

What Channels Are Best For Digital Performance Marketing?

As an omnichannel marketing model, advertisers can promote a business in dozens of channels. The following are some of the most popular ones that have provided good ROIs.

1. Banner Ads

Banner ads have been around for more than three decades. The first ad, bought by AT&T, appeared on HotWired (now in 1994. While some internet users use ad-blocking technology to stop banner ads from appearing, this has benefited advertisers as users who see banner ads either consent or do not necessarily resent seeing them.

If there are other concerns besides ad-blockers, that is banner blindness/ad blindness, a form of selective attention. This phenomenon refers to a web behavior in which internet users consciously or subconsciously ignore page elements they perceive as banner noise or any other promotional clutter.

At any rate, banner ads proved to be resilient. Over the years, countless companies have had great success generating leads with more potential to go through the sales funnel.

2. Native Advertising

Native advertising, in simple terms, is a form of ad that appears “almost seamlessly,” matching the form and function of the platform where it appears. Often, users can recognize native ads as most platforms add labels, such as “Sponsored” or “Promoted” content.

Some examples of native advertising are as follows:

 Sponsored posts in the “Related Posts” or “Recommended Articles” sections or as in-feed button links.
 Boosted posts on Facebook.
 Paid video content in YouTube’s recommended video feed.

Native advertisements deliver a less intrusive and disruptive ad experience. Some critics, though, claim that they can be misleading, such as users mistaking them as a part of a site’s content. Regardless, one of the advantages of native ads is that they are more immune to ad blindness than banner ads, which is why they deliver impressive marketing performance metrics.

Native video advertising is a growing trend on social networks, with social media advertising costs and spending expected to increase by 20.1% year-over-year. YouTube, TikTok and Facebook Watch are the best media platforms. Others worth considering are Instagram Reels, Snapchat Spotlight and Pinterest TV.

3. Content Marketing

Content marketing is a digital marketing approach used by 90% of marketers, with 66% planning to increase their budget. Mainly, this strategy focuses on creating, publishing and distributing content to attract the target audience and take them through the sales funnel. Sawat Marketing is a Bradford based Marketing Agency.

The most popular types of content are as follows:

 Blog Posts
 Case Studies
 Guides and How-To’s
 User-Generated Content (i.e., testimonials and reviews)

Content marketing is one of the best lead generation strategies, with 67% of marketers saying it helped them increase demands. Furthermore, 72% said it helped educate the audience, while 63%  said it helped them build customer loyalty.

Businesses can increase the effectiveness of content marketing by using digital performance marketing strategies that combine SEM, SMM and PPC.

4. Social Media Marketing

Social media marketing needs no introduction as it has become the most recommended digital marketing channel mainly because many people use one or more platforms. Each of these networks – Facebook, YouTube, WhatsApp, Instagram, Messenger, WeChat and TikTok – has over a billion users.

Social media allows businesses and advertisers to connect and engage with the audience. Besides increasing reach, interacting with users can help forge relationships, generate qualified leads and convert them into sales.

5. Search Engine Marketing

Search engine marketing aims to attract visitors to a website by using optimization techniques that boost page/post rankings in search results. A prerequisite to accomplishing this goal is to use search engine optimization (SEO) strategies to improve the crawlability and indexability of each page and post.

Building organic traffic, though, is a slow process that takes weeks to months to begin showing results. As an option, a brand can opt for paid search marketing strategies such as PPC campaigns run by Google Ads specialists and pay per click marketing agencies.

A big part of SEM success is integrating SEO strategies into content marketing. For example, a blog post needs to use the right keywords and incorporate best SEO practices to rank higher on search results, thus increasing a website’s search visibility.

In every performance marketing campaign that involves a website and social media, it is a given that SEO will play a critical role.

6. Affiliate Marketing

Affiliate marketing is an advertising scheme in which a business pays third-party publishers or affiliates for every sale. Usually, the compensation is either a percentage of the sale or a fixed fee. But in some cases, it might be another marketing performance metric, like a unique visitor or lead.

Generally, affiliates can sign up with a company directly, like Amazon. Most affiliate marketers, though, use affiliate networks such as Awin and CJ Affiliate, each boasting hundreds of partners.

While there are conditions, affiliates are usually free to promote products and services by sharing a unique link containing their affiliate ID on websites and social media networks.

How To Build A Performance Marketing Strategy

Regardless of marketing or advertising campaign, performance marketing is result-driven. So the steps to build a strategy are generally the same.

1. Identify the Goal

Advertisers need to know what goal they are trying to achieve. Most businesses would choose one or more of the following:

 Brand Awareness
 Customer Engagement
 Lead Acquisition
 Paid or Organic Website Traffic
 Remarketing or Retargeting

Most advertising platforms require advertisers to establish goals before creating and setting up ad campaigns. The reason is simple – goals determine strategies and marketing channels.

2. Choose the Digital Advertising Channel

Performance marketing agencies usually recommend diversifying marketing channels. One exemption is if an advertiser has a minimal advertising budget.

Nevertheless, creating two or more campaigns serves two purposes:

 Increase reach by spreading ad campaigns on multiple channels.
 Increases the chance of successful campaigns.

3. Set Up and Start the Ad Campaign

The processes involved in setting up ad campaigns vary by channel and platform. Usually, it includes the following:

 Identify target audience.
 Determine their pain points.
 Decide on a marketing message.
 Create persuasive copy.

Due to the complexities involved, many companies opted to hire pay per click marketing agencies or Google Ads specialists.

4. Track Analytics and Measure KPIs

Tracking analytics and measuring performance metrics is the strength of performance marketing. On websites, Google Analytics and Search Console provide a ton of data. However, they are not as comprehensive as premium tools used by SEO specialists and agencies.

Each social media platform provides advertisers with its analytics. Facebook, for instance, shows the following:

 Funnel analysis
 Customer Lifetime Value Analysis

As reputable performance marketing agencies know, there is no guarantee that every ad campaign will be successful. While some need to be ditched, most often only require some tweaking to optimize further and improve their KPIs.

Performance Marketing Is Best For Small-To-Medium Enterprises

Performance marketing is not restricted to one specific marketing or advertising campaign. Instead, it can be any of the popular strategies used today. The most important thing to remember about this method is that advertisers pay only for the results.

For small to medium-sized businesses, starting with one or two digital advertising strategies and with the help of reputable performance marketing agencies is a great way to promote products and services. While it does cost a little more, you are essentially paying for results already obtained.

If you would like to know more about “What is performance marketing?” and “What can it do for your business?” Contact us at 843-353-6383. Our SEO specialists can discuss cost-effective plans to grow your business.

Filed Under: Web DesignSearch Engine OptimizationOnline MarketingPay-Per-ClickE-CommerceLocal Online MarketingMobile MarketingInternet MarketingOnline Reputation Management

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