Tarun Gupta

What is Performance Marketing and How Does it Work?

Post By Tarun Gupta Post User Last Updated: Jun 15th, 2022 category Internet Marketing comments no comments.

performance marketing strategy

With the right digital marketing techniques and proven strategies, you can drive incredible online traffic and achieve great business results. But what if you want to measure the results and overall ROI based on performance? This is where performance-based marketing comes in. Performance marketing helps businesses innovate more, and grow more.


What is performance marketing?

As the name implies, performance marketing is the set of integrated digital marketing activities where the result is calculated based on certain performance metrics such as ad clicks, or a link. Payment to the publisher(s) is made based on the following one or many metrics:

  • Cost Per Click (CPC)
  • Cost Per Impression (CPM)
  • Cost Per Sales (CPS)
  • Cost Per Leads (CPL)
  • Cost Per Acquisition (CPA)

Suppose an advertiser collaborates with a publisher for ad placement or other kinds of promotions on different performance marketing channels such as social media, search engines, videos, content syndication websites, and more.


When it comes to payment, advertisers don’t pay in a standard way. Instead, payments are done based on the number of clicks, impressions, shares, or sales achieved throughout the campaign.


Top Performance Marketing Channels

When selecting the digital marketing channels for performance marketing, it’s important to identify what channels work best for you. Based on the result delivery and user interaction, we have narrowed down the following types of performance marketing channels that may drive results.

1. Banner (Display) Ads

Banner ads are a very popular digital advertising method where ads are placed in high-traffic locations such as website pages to create brand awareness and generate click-throughs, purchases, and leads.

2. Native Advertising

With native advertising, brands run their sponsored content alongside other kinds of organic content. Native ads are displayed so seamlessly that users find it difficult to differentiate.

3. Content Marketing

Content marketing is another top-notch marketing channel being used for performance marketing campaigns. Content marketing is all about educating your target audience using informative, relevant, and high-quality content. Content marketing includes blog posts, case studies, e-books, and more.

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4. Social Media Marketing

Social media marketing is another best channel to conduct performance marketing campaigns For performance marketers, social media is a haven. It offers a two-way benefit to brands. Social media not only drives users to your website but also grows your reach when the promoted content is shared by the users further.


How to Create a Successful Performance Marketing Strategy?

A performance marketing strategy depends upon your target markets and the communication platform used. Thus, it’s difficult to outline a single performance marketing strategy. However, there is always a standard and proven process to creating a successful performance marketing strategy. Here we go:

1. Determine your performance marketing goals

Like other marketing strategies, you need to outline the goals. You have to be clear about what you want to achieve from the campaign. The most popular digital marketing goals companies want to accomplish from such campaigns include:

  • Brand Awareness
  • Website Traffic
  • Remarketing or Retargeting
  • Engagement
  • Lead Generation
  • Sales

Setting your campaign goals before launching is the core of any performance marketing strategy. Setting your campaign goals is important as it significantly impacts your ad location and ad audience. Once you’re done with the goal setting, you can move forward and create campaigns to achieve those specific goals.

2. Find the right digital channel(s)

In digital marketing, it’s always recommended to utilize different communication channels instead of relying on only one. Using more channels to deliver your campaign helps to diversify it further and spread campaign exposure and expand reach.


Identify the channels that your target audience frequently visits. Then start promoting and syndicating your content on those channels. This way you can multiply your potential reach and connect to a much wider audience.

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3. Create and launch the campaign

Creating a campaign is all about producing and promoting quality content that resonates with your target audience. You can create relevant content only if you have identified the target audience and understood their pain points and desires. Then, you can create content, ads and personalized messages to address their needs and grab their attention.


The more you understand the target audience and how the product or service can appeal to them, the easier it will be to create the best ad copy, design, and scheduling. And of course, the technical aspect of the campaigns, such as ad sizes, copy character limits, and acceptable images, also depend on the particular platform or channel you are using.

4. Measure and optimize the campaign

After the campaign launch, the most important task is to track and measure the campaign. Utilize analytics tools to monitor insights across all channels in use.

The insights that you gather can help you determine the best-performing channels and most engaged audiences. Based on this data, you can ascertain the bottlenecks and fix them to improve the performance further.


How does Performance Marketing Benefit Businesses?

Since performance marketing majorly focuses on tracking and attribution, it offers marketers more control over their budget and ROI. Performance marketing campaigns are highly focused, thus, tracking and measuring such campaigns is easy.


By utilizing analytics tools, performance marketers can monitor the health of the campaign for better results. Every performance marketing campaign is guided by ROI, thus marketers can continually focus on improving performance results.