<\/span><\/h2>\n\n\n\nPerformance Marketing is a contract between companies and advertisers. In this contract, companies only pay to advertise when certain conditions meet or action is taken, like a contact form filled out, getting a call, and purchasing a product.<\/p>\n\n\n\n
Let me explain in my own way!<\/p>\n\n\n\n
After the internet’s invention, It was easy to track any action or activity taken by internet users on digital platforms like websites, displays, videos, and search ads. So, brands & companies decided to spend money in a hierarchy. Brands only pay the marketing service provider when their goal and expectation are fulfilled. <\/p>\n\n\n\n
For example, I am the manager of a financial firm. I aim to get sales leads and convert them into potential customers, but I have a budget of around $10 per lead<\/strong>. I would tell the marketing team (Outsourcing) that I have a fixed budget of 10 $ per lead for the sales lead of the campaign. <\/p>\n\n\n\nIf CPL crosses 10$, then whatever extra cost is not my concern. <\/p>\n\n\n\n
<\/span>How Does Performance Marketing Work<\/span>? <\/span><\/h2>\n\n\n\nGenerally, performance marketing works on these 5 pillars, also known as the performance marketing pricing model. <\/p>\n\n\n\n
Advertisers place their ads on a given channel (see more on the top-performing marketing channels below) and then get paid based on their campaign performance. There are a few different ways to get paid when it comes to performance marketing:<\/p>\n\n\n\n
<\/span>1. Cost Per Click (CPC)<\/span><\/h3>\n\n\n\nAdvertisers pay based on the number of times their ad is clicked on. That is an excellent way to drive traffic to your site. <\/p>\n\n\n\n
<\/span>2. Cost Per Impression (CPM)<\/span><\/h3>\n\n\n\nImpressions are essentially views of your ad. With CPM, you pay for every thousand pictures (so if 25,000 people view your ad, you’d spend your base rate times 25). <\/p>\n\n\n\n
<\/span>3. Cost Per Sale (CPS)<\/span><\/h3>\n\n\n\nWith CPS, you only pay when you make a sale driven (conversion) by an ad. This system is also commonly used in affiliate marketing. <\/p>\n\n\n\n
<\/span>4. Cost Per Lead (CPL)<\/span><\/h3>\n\n\n\nMuch like cost per sale, with CPL, you pay when a person signs up for something, like an email newsletter or webinar. CPL generates leads, so you can follow up with customers and drive sales. <\/p>\n\n\n\n
<\/span>5. Cost Per Acquisition (CPA)<\/span><\/h3>\n\n\n\nCost per acquisition is similar to CPL and CPS but is more general. With this structure, advertisers pay when consumers complete a specific action (which could include making a sale, sharing their contact information, visiting your blog, etc.).<\/p>\n\n\n\n
<\/span>Types of performance marketing<\/span><\/h2>\n\n\n\nPerhaps there are many types of performance marketing, but I only know these 6 types. Because these are trackable and measurable.<\/p>\n\n\n\n
<\/span>1. Native advertising.<\/span><\/h3>\n\n\n\nThis is a form of paid media that doesn’t look like ads, unlike display ads or banner ads.<\/p>\n\n\n\n
Native ads follow the natural form and function of the site they’re on \u2014 such as news or social sites. Instead, they fit “natively” on the page and can be fed dynamically based on each user viewing the content.<\/p>\n\n\n\n
The most common payment models for native advertising are CPM (pay per impression) and CPC (cost per click).<\/p>\n\n\n\n
<\/span>2. Affiliate marketing.<\/span><\/h3>\n\n\n\nAs explained above, affiliate marketing is any digital marketing affiliated with the advertiser and paid out after the desired action takes place. This often involves partnering with coupon, loyalty, review, and incentive sites or working with an influencer, YouTuber, or blogger.<\/p>\n\n\n\n