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Performance marketing is a comprehensive term for advertising and online marketing. In this form of marketing, the advertisers only pay when a particular activity happens. This activity could be a lead generated, a sale, or a click.

Performance marketing professionals rely heavily on paid marketing mediums. It is a form of online marketing that is making a significant mark in the digital marketing world every year. Simply put, it is marketing based on performance.

What is the difference between affiliate marketing and performance marketing?

Affiliate marketing is a type of performance marketing where the advertisers reward the affiliates for the activity regarding their marketing efforts. It can be said that all sorts of marketing come under the umbrella of performance.

Affiliate marketing is related to affiliated brands and product marketing. At present, it has grown to be a much more innovative and dedicated ‘performance marketing’ strategy.

On the other hand, performance marketing includes much more traditional ‘affiliate marketing’ that is known for generating sales through cashback and coupon sites.

Conversion optimization tools, influencers will large email lists and plug-ins offering a tailored experience is how performance marketing works. This is a new way of marketing ensuring performance across devices both online and offline.

It is possible through different marketing channels. Thus, it opens a world of marketing exposure and value that no brand, advertiser or merchant can miss out on.

What is the work process of performance marketing?

Performance marketing works in four groups. They are:

• Retailers
• Affiliates
• Affiliate Networks & Third-Party tracking Platforms
• Affiliate Managers

All these four groups work in unison with each other.

Retailers – These are also known as advertisers. They are the businesses that promote their services and products through affiliate partners or “publishers”. Retailers and e-commerce companies in different genres like fashion, clothing, food, beverage, health, lifestyle, beauty and sports can be successful in performance marketing.

Affiliates – They are the marketing partners. Affiliates or publishers come in different forms like loyalty, coupons, cash backs, product reviews, online magazines, and more. There should be a strategy on what these marketing partners need from a merchant to be successful.

Affiliate Networks & Third-Party tracking Platforms – The affiliate networks are important to the merchant/affiliate partnership. They offer a one-stop-shop for information tools like banners, product feeds, text links, payouts, and promotions. Different affiliate networks and tracking platforms have different cost structures, strengths, weaknesses, merchant vertical expertise, and more.

Affiliate Managers – Affiliate managers are the main drivers between the affiliates and merchants. The affiliate managers can either be in-house or they can be outsourced as well. Working with an experienced affiliate management company signifies that the brand is ready to scale up the performance and affiliate marketing.

There are some merchants who decide to offer an experienced agency to manage 100%. Some others work in conjunction with their in-house team. Sometimes it is beneficial to work with external agencies since the in-house teams might have limited resources, market research, and expertise.

What are the most common payment models used in Performance marketing?

• Pay Per Sale or Cost Per Acquisition

This is an arrangement where the retailer or a merchant offers an affiliate publisher for the sales generated. This is the most common mode of payment for the merchants.

• Pay Per Lead

A “lead” is described as an individual or a potential customer who has completed a form registration or signup. This includes some sort of information provided by the consumer or user about themselves.

Leads can be as simple as an email, a name, or as complicated as a three-page information in exchange for a loan or mortgage. The more complicated the lead form, the better is the payout.

• Pay Per Click

In Pay Per Click, the retailer pays an affiliate for clicks on their landing pages. This is a lesser-used medium of payment in performance marketing.

What are the benefits of performance marketing?

There are multiple benefits to performance marketing.

• The obvious benefits reside on the fact that you can build your own brand with third-party partners, their audiences, and budgets. You can increase the market share, audience engagement, and targeted traffic.
• The other benefits include reducing risk, increasing market reach, and decrease budgets while growing the brand.
• Performance marketing is completely trackable, quantifiable, and transparent. The brands will have the option to check the click to consumer path of each buyer. They can identify the opportunities for investment.
• In performance marketing, the payment is done after a certain action, the risks are lesser. Also, the cost per acquisition is less and the ROI is higher. This is what leaves for more room for investing in other marketing strategies to expand your business.

What are some of the performance marketing tips to succeed?

Create a well-optimized landing page and offer: A bad landing page will make you lose a lot of clicks, visitors, and potential customers. Similarly, a bad offer prevents visitors to continue with the purchase.

If you are an advertiser, it is imperative to ensure you are offering your publishers with interesting offers for promotion. Being a publisher, you have to audit links and offers, provide the latest content, and keep updating the landing pages.

Continue A/B test and optimize the KPIs: Testing and measuring are extremely essential to reap the benefits from any good marketing strategy. When it is about performance marketing, you should try different methods for optimization of conversions, search engine optimization strategies, and CTRs. A/B testing helps you know what works and what doesn’t.

Choose the traffic sources: You need to make sure that the traffic is coming from qualified and reputable sources. The traffic sources are important in performance marketing. If the sources are less reputable, the consumers will not easily rely on your brand. Thus, they will be deterred from buying again.

Track and monitor as much as possible: Track the attribution with mobile vs. desktop, bounce rates, and more. All are important data points that can offer better insight into what is working and what doesn’t.

Similar to testing, the tracking and measuring gains are equally important to get the most of your performance marketing campaigns. Without proper analysis and adjustments for optimization, you cannot grow your sales.

Some existing performance marketing trends to check

• Performance marketing was responsible for more than 16% of e-commerce sales in 2017. It is easy to track the growth in this marketing strategy. This makes performance marketing to be as good as email marketing. It is one of the major driving forces for e-commerce conversions.
• As this marketing strategy grows, more people are making a career in performance marketing. Advertisers are investing in it and publishers are entering the space as well.
• With better options for improved tracking and attributions due to third-party tracking platforms, the enhancements enable first click models. Thus, the publishers will not get dinged if someone leaves the referral and comes to buy from different sources.
• Another important trend in performance marketing is to observe the continued development with the implementation of Artificial Intelligence and Machine Learning to drive sales.
• Marketers will have thousands of data points to track and measure. AI will take out the complications of these data points and help in scaling efficient optimization seamlessly using machine learning.
• This growth trend also allows marketers in freeing up the time while giving more opportunities to be creative in the marketing efforts.

In conclusion, it can be said that performance marketing helps in scaling up the reach, engagement, and conversion of the new buyers at a lower cost, lower risk, and higher ROI. It will enable you in building the brand and increase product awareness while engaging with customers without facing budget-constraints.