Performance marketing: What is it and why should you care?

Although many tools facilitate how to plan, track, and optimize digital marketing campaigns, measurable actions are best handled by those who know how to understand the data. Not only does this further the insight on how, when, and where to allocate a business’s spend but it allows businesses to be vigilant on what’s most important. Listed below is our summary of performance marketing and why you should care.

What is performance marketing? 

Performance marketing is an umbrella term that’s used to describe any online marketing activity that can be tracked and attributed to a specific action and/or result. 

There are three main types of performance marketing payment models:

• Percent of sale: The advertiser pays a commission on each sale generated
• Leads: The advertiser pays a commission on each sale generated
• New customers: The advertiser pays a fixed amount for each new customer acquired

There are also situations where performance marketing models become hybrid and encompass many payment types. 

Performance-based marketing tactics such as paid—where advertisers only pay when a user clicks on an ad—are not performance marketing. While pay-per-click advertising, also known as PPC, campaigns focus on action—the ad click—they don’t always lead to performance-based outcomes such as sales or sign-ups. 

Why do businesses care about performance marketing?

Since performance marketing opens up opportunities beyond traditional marketing, it’s important to focus on web destinations and creators across various digital landscapes. With platforms that help to bridge these relationships by offering means of measuring goals and compensation, businesses can achieve desired results through the assistance of performance marketing. 

Who uses or works with performance marketing tools?

Since performance marketing is data-driven, it’s best handled by digital marketing professionals. However, many people can utilize its strategy. 

• Marketers plan and execute performance-based campaigns
• Publishers track performance and get paid for results
• Influencers find opportunities, set goals, and measure performance
• Advertisers find publishers and influencers to work with

How reliable is performance marketing? 

While performance marketing is a critical strategy that offers advertisers the insight they need to run campaigns successfully, digital fraud is something that shoppers, 

business owners, and advertisers need to be aware of this.

Why does ad fraud happen?

• Bots simulate real user traffic on the website to generate ad impressions
• Invalid traffic is generated by humans who click on ads to deplete a competitor’s budget
• Fake websites are created to inflate impressions
• Domain spoofing imitates a premium website to sell fake inventory

Since performance marketing campaigns look at actions rather than metrics, the best way to ensure validity in the actions you pay for is to hire a professional agency to manage your digital marketing services. This ensures that the leads you pay for are real people who have been contacted and are interested in what you’re selling. 

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