What Is Performance Marketing And Is It Worth It In 2022?

Unfortunately, Forrest Gump got it right: working with a marketing company is like a box of chocolate – you never know what you’re going to get.

Okay, that’s not exactly how the original quote went, but the sentiment is certainly true.  

With traditional marketing spend, you pay a flat rate to a marketing firm to perform specific marketing services for you. 

You’re charged on a monthly or per-project basis, and the company carries out various marketing tasks for you, including ads, SEO, email marketing, etc.

And while the monthly or per-project pricing model is standard, it has one major flaw: 

results are not guaranteed. 

You may end up spending loads of money and get little to no results in return. 

This is especially true if you don’t have the budget to hire a top-tier marketing firm and you end up working with a less experienced firm.

But what alternative do you have? 

Enter performance marketing. 

What Is Performance Marketing?

performance marketing

Performance marketing is online marketing and advertising where you pay only when a specific, predefined action occurs. 

“Action” generally refers to the desired outcome of the marketing efforts and can refer to clicks, sales, leads, and more. 

One term you often hear alongside performance marketing is “affiliates,” but it’s essential to understand that performance marketing is distinct from affiliate marketing. 

The term “affiliate marketing” originated long before “performance marketing” and has traditionally involved a rather limited number of strategies, like coupon codes, PPC ads to landing pages, etc. 

In many people’s minds, affiliate marketing is done by people selling knock-off Viagra or get rich quick schemes. 

Performance marketing is much broader than affiliate marketing, and encompasses a large number of strategies, including SEO, PPC, email marketing, native advertising, and more. 

With performance marketing, there is often more value created for the consumer as well. 

Take the website Wirecutter, for example. 

They make money when someone purchases a product through their site. 

The way they convince someone to make a purchase is by spending hundreds of hours comparing products and then recommending the one they think is best. 

The reviews benefit the consumer, the sales benefit the company making the product, and the commission benefits Wirecutter. It truly is a win for everyone. 

Performance Marketing Players & How It’s Measured

How performance marketing is measured

There are different players involved in performance marketing. The primary groups include:

Merchants –  These are the companies that want to promote their products or services. These merchants can be in just about any industry, including traditional retailers selling products, as well as service-based businesses like insurance, legal services, chiropractors, roofers, and so much more.

Affiliates/Publishers – These are the individuals or companies who drive sales for the merchants. They can do this in many different ways, including coupon sites, review sites, YouTube videos, social media, local SEO, and so on. There are individual influencers who team up with merchants, as well entire companies dedicated to performance marketing. 

Performance marketing is tracked in four main ways:

  1. Pay per click – In this case, retailers pay affiliates for clicks on a desired website page.
  2. Pay per sale – As you would guess, in this instance, affiliates are only paid when a sale is made.
  3. Pay per lead – Leads are anyone who provides specific information to a company. The information can be surface-level, such as an email address, or more in-depth, such as an address, phone number, and other personal information.
  4. Pay per install – If a product is a mobile app or other installable service, affiliates are only paid when a person downloads and installs the product on their device.
  5. Pay per ____ – Merchants can also define their own marketing “goal” beyond the four listed above. This could include things like booking a consultation, requesting a quote, and more. 

Why Performance Marketing Over The Traditional Model?

What Is Performance Marketing And Is It Worth It In 2022? 1

Traditional marketing takes your money without guaranteeing results. For every marketing success story, there are just as many stories of marketing companies promising big results and then massively under-delivering.

 If you don’t have the budget to work with a well-established company with a proven track record, you may end up wasting a lot of money and getting nothing in return. 

Performance marketing yields the same benefits as traditional marketing without the associated risk. With performance marketing, you still get:

  • Brand exposure through third parties by giving you access to their audiences
  • Increased market share
  • Increased traffic 
  • More audience engagement
  • Most importantly, RESULTS

And because you only pay based on results, you can be confident that you’ll get a high ROI from your marketing efforts. 

What’s more, performance marketing is tracked from start to finish, so it’s entirely measurable and transparent.

You’ll know which avenues are producing the best results and which aren’t working. This means you can put your money where the ROI is largest.

What Is Performance Marketing And Is It Worth It In 2022? 2
What Is Performance Marketing And Is It Worth It In 2022? 3

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What Are The Different Performance Marketing Channels?

  1. PPC Ads
PPC Advertising

With pay-per-click (PPC) ads, an advertiser only pays whenever a person clicks on their ad. Rather than organically generating traffic, a company can get it on command at a cost.

PPC ads involve a variety of steps, including keyword research, creating ad groups and campaigns, building PPC landing pages to convert clicks into customers, and more. 

According to Google AdWords, the price per click varies depending on the vertical, but it’s around $3.17 on average

PPC ads show up in Google Search results, social media platforms, and other places. 

An affiliate/publisher can create PPC ads to drive traffic to a merchant’s landing page, and the merchant pays the affiliate based on how many people they send to the page. 

  1. SEO

With SEO, the goal is to generate organic search traffic. 

In other words, when a person types a relevant query into their search engine, SEO increases the odds that a specific website appears. 

Publishers (like Wirecutter) often create websites that are highly optimized for SEO and then promote various products or services on those sites. 

For example, a publisher might create a site where they do in-depth reviews of different insurance types and services. 

They would receive a commission when someone signs up to get a quote from an insurance company. 

Or, a publisher might team up with a local company and use local SEO strategies to drive leads or sales for that company. 

  1. Content Marketing
content marketing

Content marketing involves many channels and refers to planning, making, publishing, and sharing content that resonates with your ideal audience. 

Publishers/affiliates do this with the goal of attracting your target audience in a way that feels authentic to boost awareness, loyalty, reach, revenue, and more.

The benefits of content marketing are vast. It helps boost conversions, builds customer loyalty, fosters a sense of community, educates potential customers about your services, and more. 

There are a large number of content marketing strategies that merchants and affiliates can deploy, including:

  • Blogs
  • Podcasts
  • Social media
  • Video
  • Webinars
  • Infographics
  • And more

When and what you pay depends on what type of content marketing you’re doing. 

You may pay per click on a social media post, per view on a video, or per sign-up via a specific podcast coupon code. 

  1. Native Advertising

Native advertising refers to ads that viewers may not even realize are ads. 

These are promotions placed organically in people’s feeds so that it feels like a natural part of the consumption experience.

With the rise of ad blockers and general consumer mistrust around advertising, native ads can open many doors that wouldn’t open otherwise. 

These ads offer helpful information and increase the chances that potential consumers will make a purchase.

The key to success with native advertising is that the ad must match the surrounding format. 

For example, if you teamed up with a website to create sponsored content, the content should match the tone of the rest of the site and be relevant to the site’s audience. 

  1. Social Media Marketing

Social media performance marketing typically involves working with an individual or company to create high-performing posts and ads on a variety of platforms. 

These platforms include Facebook, Instagram, Twitter, LinkedIn, Pinterest, Tiktok, and other social media sites.

The design, copy, and any other features of the posts should be tailored to the individual social media platform being used. 

Copying content from one platform to the next doesn’t usually work because the style and types of posts that do well vary between sites.

Benefits of social media marketing include:

  • Building your brand
  • Competitor research
  • Developing customer relationships
  • Boosting awareness
  • Finding leads

In performance marketing, social media marketing is typically paid for in terms of engagement, likes, comments, shares, or clicks.

  1. Influencer Marketing
Influencer marketing

Influencer marketing is exactly as it sounds: partnering with influential figures with loyal followings to increase exposure and sales for your company.

Usually, influencer marketing involves teaming up with someone who has a sizeable social media following or popular website. 

However, the size of a following is less important than the quality of that following.

 Influencers with smaller, yet very devoted followings are more likely to generate sales than someone with a huge, somewhat generic audience. 

When you pay influencers depends on the desired outcome. 

Payment can be made based on clicks on an influencer’s affiliate link, sales using their discount code, or something else entirely.

Don’t Waste Your Marketing Dollars

Honestly, why wouldn’t you use performance marketing to drive sales and grow your brand? You’re guaranteed results, and you don’t pay until you get those results. 

There are a lot of so-called marketing “experts” out there who talk a big game but actually have very little real-world experience. 

Using performance-based marketing helps you avoid these scam artists and get significant positive results from your marketing efforts. 

That’s a win-win. 

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