Log In Start studying!

Select your language

Suggested languages for you:
StudySmarter - The all-in-one study app.
4.8 • +11k Ratings
More than 3 Million Downloads
Free
|
|

Performance Marketing

Performance Marketing

Imagine that you run your own business. You are trying out new digital marketing tactics to increase your brand awareness and gain new customers. You have tried specific measures in the past, failed, and run out of ideas. You outsource the job to an advertising agency but cannot spend too much on advertising because of your budget. What do you do? This is where performance marketing can help you. Using this method, you pay the marketing agency only after achieving the desired results. Interesting, isn't it?

Performance marketing is an engaging digital marketing strategy used in business nowadays. Read further to find out more about this topic!

Performance Marketing Definition

Performance marketing is a digital marketing strategy followed by brands that are result-driven. A performance marketing strategy means that the brands will only pay their marketing agencies once they see the agreed-upon results or when specific actions have been carried out.

Performance marketing is a result-driven digital marketing strategy.

This strategy suits companies that are planning to reach out to new customers. The companies only have to pay their marketers based on the new engagement they generate due to the marketing campaign. The company measures engagement in terms of the following:

  • clicks,

  • leads,

  • shares,

  • impressions,

  • comments,

  • completed surveys, or

  • purchases.

Performance Marketing Channels

Performance marketing channels are the platforms where advertisers or publishers place a company's advertisement to increase customer engagement. Marketing agencies use five main performance marketing channels, and they are:

  1. Display Advertising,

  2. Native Advertising,

  3. Search Engine Marketing (SEM),

  4. Content Marketing,

  5. Social Media Marketing.

Performance Marketing Channels: Display Advertising

Display advertising uses a combination of texts, images, or videos to advertise a product or a brand. Marketing agencies publish these advertisements on websites to catch the user's attention. The ads are strategically placed on the "right" websites, meaning that the marketing agencies will look into the type of website and traffic it might welcome before publishing the advertisement. This way, they can ensure that placing the brand's advertisement on that particular website can bring in more engagement for the brand.

The display advertisement for a job portal might be visible on a resumé creation site as people creating new resumés might be looking for a new job. Therefore, there is a high possibility that the ad will draw such users to the job portal. As a result, this placement increases the job portal's engagement.

Display advertisements are usually seen on the different sides of a website.

Performance marketing Display StudySmarterFig. 2 - Banners, texts, and videos are an example of display marketing

Performance Marketing Channels: Native Advertising

Native advertisements do not take the form of traditional advertisements. They are masked within the nature of the platform (e.g., website or social media).

They usually appear to the viewer as a suggested video or article. Customers often encounter them on social media platforms or websites.

When the user finishes reading an article or watching a video, a sponsored article or video will appear as the suggested next option. It would be related to the user's current viewing, thereby tempting them to engage with the advertiser's next recommended post.

Performance Marketing Channels: Search Engine Marketing (SEM)

Search engine marketing (SEM) is a type of marketing often combined with native advertising and other kinds of advertising. SEM focuses on improving the visibility of a website on the Search Engine Results Page (SERP).

The websites or webpages shown on the top of the SERP are paid to appear there to bring in more engagement. This form of marketing is called pay-per-click (PPC), as the company pays the advertiser once a user clicks on the webpage.

Marketing agencies can also use SEO (search engine optimization). This method focuses on finding relevant keywords to include on the webpage so that it can rank at the top of the SERP.

SEO brings organic clicks to the website. Marketers can measure both organic and inorganic clicks to evaluate their performance.

Check out our explanation of SEO Marketing to learn more.

Performance Marketing Channels: Content Marketing

Content marketing focuses on creating and distributing valuable and relevant content regarding the product, service, and customer. It focuses on educating the target audience about the product or service. In content marketing, the advertisements are brought to the user's attention by linking the brand in context to what the user is reading or viewing. Content marketing can take the form of blogs, e-books, podcasts, etc.

Want to learn more about the ins and outs of content? Check out our explanation of Content Marketing.

A company selling organic food can have a blog discussing the benefits of organic farming and consuming organic meals. This blog might have a link to their organic food brand's website that will direct the reader to find it.

Content marketing costs 62% less than outbound marketing and brings in three times more leads.1

Performance Marketing Channels: Social Media Marketing

Social media is a booming platform for performance marketing agencies, providing them with many opportunities and possibilities to reach a customer and increase engagement.

Companies can reach customers who, if interested in the product or service, will share or engage with the product, bringing in more traffic and recognition to the brand. Paid and sponsored content is critical on social media. On social media, brands mainly use the CPM method, or the cost-per-mille, which means that the brand pays a third party for every thousand views on their advertisement.

Performance marketing Social media StudySmarterFig. 3 - Social media marketing is an example of performance marketing

4.70 billion people use social media for an average of 2 hours and 29 minutes daily.2

Performance Marketing vs. Digital Marketing

Performance marketing is a type of digital marketing. Despite sharing similarities, such as the platforms and target audience, digital marketing and performance marketing differ.

Digital marketing consists of a wide array of digital marketing platforms and channels. While digital marketing focuses on promoting a product or service, performance marketing is result-oriented and focuses on increasing engagement.

Performance marketing strategies use specific key performance indicators (or KPIs) to measure performance. This makes it possible to track the progress in performance marketing, whereas other digital marketing techniques might not be as easily measurable.

Check out our explanation of Marketing KPIs to learn more.

While performance marketing focuses on short-term goals, digital marketing strategies are for longer-term ones.

The main difference between digital marketing and performance marketing is that digital marketing encompasses all the digital channels and the strategies used for digital marketing (including performance marketing). In contrast, performance marketing strategies enhance digital channels and strategies.

Performance Marketing Examples

The company's budget and goals determine its performance marketing channels and strategies. Below are a few examples of how marketers can use performance marketing to achieve different goals.

Performance Marketing Examples: Social Media Advertising

A new online retail clothing store is trying to increase engagement on its website. The company chooses social media platforms such as Instagram and Facebook to run advertisement campaigns. Using the platform's algorithm, the advertisements can target people who have shown interest in similar products. Based on their search data, customers who have exhibited related interests will be better attracted to the ad, leading to more clicks and engagement.

Performance Marketing Examples: Search Engine Marketing (SEM)

A new business webpage is trying to bring in more traffic. The webpage will have to rank highly on the SERP to achieve this. Therefore, the advertising agency has been optimizing the website and taking steps to keep the webpage relevant and consistently top-ranked. This way, more users will click on the webpage as this appears first on the search pages.

Performance Marketing Examples: Display Marketing

A new makeup brand trying to gain more visits to its web page chooses to test its display marketing strategy. The brand advertises on YouTube before makeup tutorials to ensure that the right customers are targeted. This way, the brand can guarantee that almost all viewers show some interest in makeup and might be willing to check out the new brand. This will lead to higher engagement on the brand's website.

Performance marketing is increasingly gaining popularity among brands as it helps them understand which marketing methods have worked and which have not. Brands can identify which marketing strategies appeal to which group of people and which do not.

Performance Marketing - Key takeaways

  • Performance marketing is a result-driven digital marketing strategy.
  • Marketers can measure engagement in terms of the following:
    • clicks,
    • leads,
    • shares,
    • impressions,
    • comments,
    • completed surveys, or
    • purchases
  • The main performance marketing channels include:
  • Display advertising uses a combination of texts, images, or videos to advertise a product or a brand.
  • Native advertisements are masked within the nature of the website and usually appear to the viewer as a suggested video or article.
  • SEM focuses on improving the visibility of a website on the Search Engine Results Page (SERP).
  • Content marketing focuses on creating and distributing valuable and relevant content regarding the product, service, and customer.
  • Paid and sponsored content is critical on social media.

References

  1. Simplilearn. What Is Performance Marketing: How it Works, Channels, and Benefits. 19 September 2022. https://www.simplilearn.com/what-is-performance-marketing-article#what_is_performance_marketing
  2. Dave Chaffey. Global social media statistics research summary 2022. 22 August 2022. https://www.smartinsights.com/social-media-marketing/social-media-strategy/new-global-social-media-research/#:~:text=4.70%20billion%20people%20around%20the,social%20media%20is%202h%2029m.
  3. Fig. 2 - Banners, texts, and videos are an example of display marketing (https://unsplash.com/photos/gLU8GZpHtRA) by Eleni Afiontzi (https://unsplash.com/@eleniafiontzi) is licensed by CC (https://unsplash.com/license)
  4. Fig. 3 - Social media marketing is an example of performance marketing (https://unsplash.com/photos/mr4JG4SYOF8) by Alexander Shatov (https://unsplash.com/@alexbemore) is licensed by CC (https://unsplash.com/license)

Frequently Asked Questions about Performance Marketing

Performance marketing is a digital marketing strategy followed by brands that are result-driven. This means that the brands will only pay their marketing agencies once they see the agreed-upon results or once certain actions have been carried out.

Performance marketing is responsible for increasing customer engagement and website traffic to increase a brand's popularity. It plays a major role in attracting and acquiring customers for the brand. 

Performance marketing is best suited for companies that are planning to reach out to new customers. The companies only have to pay their marketers based on the new engagement they receive as a result of the marketing campaign

Performance marketing strategies are measurable and traceable. This makes it easier to track the success of the marketing campaign. Also, the companies only have to pay the advertising agencies when certain objectives have been fulfilled.

There are five main performance marketing channels used by marketing agencies, and they are:


  1. Display Advertising
  2. Native Advertising
  3. Search Engine Marketing (SEM)
  4. Content Marketing
  5. Social Media Marketing

No, organic SEO is not part of performance marketing, as it is not a paid type of marketing. Performance marketing is a type of paid digital marketing technique. 

Final Performance Marketing Quiz

Question

Define performance marketing.

Show answer

Answer

Performance marketing is defined as a result-driven digital marketing strategy.

Show question

Question

List a few ways in which customer engagement can be measured. 

Show answer

Answer

  • clicks, 
  • leads, 
  • shares, 
  • impressions,
  • comments,
  • completed surveys,
  • purchases. 

Show question

Question

The main performance marketing channels include:

  • Display Advertising
  • ________________
  • ________________
  • Content Marketing
  • _______________


Show answer

Answer

Show question

Question

The use of a combination of texts, images, or videos to advertise a product on a website is called:

Show answer

Answer

Display Advertising

Show question

Question

Native advertisements do not take the form of traditional advertisements. They are masked within the nature of the website.

Show answer

Answer

True

Show question

Question

When the user is done with an article they were reading or a video they were watching, a sponsored article or video will appear as the suggested next option. It would be related to what the user is currently viewing. 


This is an example of

Show answer

Answer

Native advertising

Show question

Question

Search engine marketing is a type of marketing that is often done in combination with native advertising and other types of advertising.

Show answer

Answer

True

Show question

Question

Expand SERP

Show answer

Answer

Search Engine Results Page

Show question

Question

Expand PPC

Show answer

Answer

Pay-Per-Click

Show question

Question

Expand SEM

Show answer

Answer

Search Engine Marketing

Show question

Question

What is SEO?

Show answer

Answer

Search Engine Optimization

Show question

Question

___________ marketing focuses on the creation and distribution of content that is valuable and relevant to the product or service.

Show answer

Answer

SEM

Show question

Question

________ marketing can take the form of blogs or e-books.

Show answer

Answer

Content

Show question

Question

Paid and sponsored content is critical on social media.

Show answer

Answer

True

Show question

Question

Expand CPM.

Show answer

Answer

Cost-per-Mille

Show question

Question

Expand KPIs

Show answer

Answer

Key Performance Indicators

Show question

Question

While performance marketing focuses on long-term goals, digital marketing strategies are comparatively for shorter periods.

Show answer

Answer

False

Show question

Question

__________ make it possible to track progress in performance marketing.

Show answer

Answer

KPIs

Show question

Question

All digital marketing strategies are directly measurable.

Show answer

Answer

False

Show question

Question

The types of performance marketing channels used only depend on the product or service, but do not depend on the company's budget and goals.

Show answer

Answer

False

Show question

60%

of the users don't pass the Performance Marketing quiz! Will you pass the quiz?

Start Quiz

Discover the right content for your subjects

No need to cheat if you have everything you need to succeed! Packed into one app!

Study Plan

Be perfectly prepared on time with an individual plan.

Quizzes

Test your knowledge with gamified quizzes.

Flashcards

Create and find flashcards in record time.

Notes

Create beautiful notes faster than ever before.

Study Sets

Have all your study materials in one place.

Documents

Upload unlimited documents and save them online.

Study Analytics

Identify your study strength and weaknesses.

Weekly Goals

Set individual study goals and earn points reaching them.

Smart Reminders

Stop procrastinating with our study reminders.

Rewards

Earn points, unlock badges and level up while studying.

Magic Marker

Create flashcards in notes completely automatically.

Smart Formatting

Create the most beautiful study materials using our templates.

Sign up to highlight and take notes. It’s 100% free.

Get FREE ACCESS to all of our study material, tailor-made!

Over 10 million students from across the world are already learning smarter.

Get Started for Free
Illustration