What is Performance Marketing and How It Works?

What is Performance Marketing and How It Works

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Performance Marketing is the kind of terminology given for online campaigns in which advertisers pay to the advertising platforms for the results achieved either in form of clicks or conversions. In short, Performance Marketing is a digital marketing strategy compelled by the results.  This reflects more when companies are trying to reach a wider audience because payment is based on how users interact with the content.

How Performance Marketing Works?

Basically Advertisers place their ads on different digital platforms and then pay based on how that ad performs. There are few diverse methods to pay when it comes to performance marketing.

Cost Per Clicks (CPC):  Marketers pay based on the number of times their ad is clicked on. In simple words, whenever the ad gets clicked by customers the advertisers have to pay for it. This is one of the best ways to drive traffic to your site.

Cost Per Impressions (CPM): This is one of the cost effective ways of marketing where advertisers have to pay based on impressions. Impressions are essentially views of your ad. With CPM, you have to pay for every thousand views.

Cost Per Sales (CPS): In this scenario advertisers have to pay only when sales are driven by an ad. This kind of advertisement is generally used in affiliate marketing.

Cost Per Leads (CPL) : This is popularly known as cost per lead and advertisers pay when someone signs up for something, like sign up form, email newsletter, register form, pop up form, contact form etc. Advertisers generate leads and ask the team to follow up with the customers and drive sales.

Cost Per Acquisition (CPA): CPA stands for cost for acquisition or actions, advertisers pay when consumers complete a specific action that involves making a call, sharing their contact details, visiting your blog etc.


Top Performance Marketing Channels:

There are different digital channels which are used for driving traffic and sales for the business such as:

Banner Ads: There are a number of ads seen online in different forms. Display ads appear on top, bottom, side and mid of the web page, Facebook newsfeed etc. To fascinate your audience, you need entertaining, interesting and interactive content in different forms. This is an option for firms to opt for the display ads or checkout other ways.

Native Advertising: Native advertising are those advertising that work seamlessly beside any other form of organic and paid content. It takes the advantage of the natural appearance of a web page or website to promote sponsored content. It works flawlessly on ecommerce portals and can be seen in the marketplace, etc. People cannot differentiate between these content that facilitate your brand in a way that feels normal.

Content Marketing: Content marketing is all about enlightening and educating your audience about your brand, product and services. Content has the power to influence your audience in respective grounds. With content marketing the goal is to provide useful information and fascinate your users through different platforms. Coming up with creative, informative, and entertaining content can create a big impact on users and brands. Content can make your brand talk and get engagement with users all across. This helps to reach a wider audience through content marketing.

Social Media: For performance marketing social media plays a key role. It drives traffic, audience engagement, and sales for the business. It helps to increase brand awareness and conversion for the business as well. Advertisers can use these platforms to share sponsored content organically that extends beyond your original post. Facebook and instagram are the most popular channels that have a huge list of services for performance marketers. Whereas other social media platforms also offer opportunities to reach new audiences.

Search Engine Marketing (SEM): Most online research is done through search engines and that means having a website that is well optimized and promoted in search result pages is essential. In performance marketing, the objective is purely on cost per clicks, especially for paid ads. Whereas organic many performance marketers rely on content marketing and SEO optimized web pages or landing pages.  

Frequently Asked Questions:


Q1. What is performance-based marketing?

Performance based marketing is an online marketing tactic which is driven by results. In simple words, companies make the payment to the advertisers only when they get results such as clicks, sales, leads, actions, conversions etc.

Q2. Is performance-based marketing a scam?

No, it is one of the elements of digital marketing which works with brands.

Q3. What are the benefits of performance-based marketing?

Performance marketing benefits is to leverage your marketing efforts and meet the company goals and objectives within budget. It is an efficient way to develop your potential audience. One can expand their audience reach and monitor valuable data with proper planning.

Q4. What is the role of performance marketing?

The role of the performance marketing is to serve as an approach in digital marketing that assists to hold the customers for a long run and create sales for the company.

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