Everything You Need to Know About Performance Marketing
What is performance marketing?
Is Affiliate Marketing the Same as Performance Marketing?
What is the Process of Performance Marketing?
What are the Most Common Uses of the Term “Performance Marketing”?
What Are Performance Marketing’s Advantages?
What are some of the most important performance marketing trends to watch?
Everything You Need to Know About Performance Marketing
Performance marketing is a type of online advertising which is becoming more popular in the digital marketing field each year. According to Rakuten Marketing and Forrester Research, over three-quarters (74%) of US shoppers visit two to three non-retail websites before making a purchase, while 16% visit more than four websites, according to Business Insider in 2016.
When looking at the global ecosystem of buyers, these are huge numbers, and they are continuing to rise as interest in Performance Marketing as new customer acquisition, customer reach, engagement, and conversion strategy grows.
The estimated amount spent on affiliate marketing in the United States alone – $6.82 billion by 2020 – reflects this expanding interest. You have come to the correct place if you are hoping to get into the realm of Performance Marketing and need to brush up on your skills. We have compiled a comprehensive guide to everything Performance Marketing so you can feel like a pro in no time.
What is performance marketing?
Performance marketing is results-oriented Marketing. This performance can take the shape of a completed lead, sale, booking, or download, among other things. An example of performance promotion is generating leads and then paying the prospective customers only after they convert.
A merchant can be confident that their money is being properly spent because they are already converting their target audience before they pay for the transaction by paying the affiliate or publisher when a specific action is done.
Furthermore, because merchants only pay once the desired action is achieved, they obtain additional benefits such as free brand exposure and targeted clicks. It is the only new client acquisition plan or marketing opportunity available today!
Is Affiliate Marketing the Same as Performance Marketing?
Affiliate marketing is a term that is used interchangeably with Performance Marketing and a subset of a larger “performance marketing” umbrella. It encompasses Influencer Marketing, Email Marketing, Search Marketing, and any other form of marketing in which the marketing partner exchanges sales (or completed desired actions) for commission payouts. The most valuable KPIs will be recognized and paid out according to set performance parameters in this strategy.
Before Performance Marketing, there was a word called “affiliate marketing,” which is still in use today. Performance-based marketing has evolved into a term that includes much more than traditional couponing, loyalty programs, mobile app developers, geo-targeting, paid search, email marketing, etc.
As the name implies, affiliate marketing is the marketing of affiliated brands and products. It has evolved into a more innovative, performance-based strategy that has become a driving force for incremental sales, new customer acquisitions, market expansion, customer segmentation targeting, and high ROI campaigns.
Writing an article about a new product or brand to be shared through various content channels, such as a personal blog, or showing a product review or lifestyle photograph on Instagram or YouTube are now examples of performance marketing. Applications can now recommend other products to buyers within other apps and earn a commission on such purchases thanks to technological advancements.
Conversation optimization tools, influencers with enormous email lists, and even plug-ins that provide consumers with a completely personalized shopping experience while only charging once the sale is completed are all instances of how Performance Marketing works today.
Budgets are frequently limited at some point, and internal marketing channels may compete for that budget; however, with affiliate marketing, the budget limitation is removed, and a boost in reach, engagement, and conversation is achieved beyond what a company can afford to advertise on its own.
As a strategy, performance marketing provides merchants with free additional brand and product exposure. Additionally, it provides higher consumer engagements, conversion rates, average order sizes (basket values), and third-party endorsements. All of them lead to sales, brand loyalty, and increased buyer retention. While Affiliate Marketing and Performance Marketing may appear to be the same thing on the surface, each has its methodology, and Performance Marketing today encompasses a lot more.
Performance Marketing is Affiliate Marketing at a larger scale, with new partnerships and technologies being incorporated into the mix. At the end of the day, both words result in a bounty, commission, or payback to the affiliate or connected partner for the recommendation or sale.
What is the Process of Performance Marketing?
Retailers or “Merchants,” Affiliates or “Publishers,” Affiliate Networks and Third-Party Tracking Platforms, and Affiliate Managers or “OPMs” (Affiliate Management Companies) are the four categories that makeup performance marketing.
Each group is necessary for Performance Marketing to succeed, and they all work together, each with their critical role to play in achieving the intended outcome. Here’s how each group is broken down:
Retailers, also known as "merchants,"
These are businesses that want to promote their products and services through Affiliate Partners or “Publishers,” also known as Advertisers.
Performance Marketing may be very successful for retailers and e-commerce enterprises in numerous sectors such as fashion and apparel, food and beverage, health and beauty products, and athletic goods.
This is because, in today’s environment, consumers seek product recommendations, reviews, and discounts from influencers and other buyers before making a purchase, especially while they are in the research stage.
“Publishers” or “Affiliates”
This group is known as the Performance Marketing industry’s “marketing partners.” Coupon websites, loyalty and reward websites, product review sites, blogs, online magazines, and so on are all examples of affiliates or publishers.
When it comes to the finest affiliate programs that pay rapidly, coupon and loyalty sites, especially in the North American market, are a terrific method to drive sales with minimal work and smaller commission payouts.
However, as Affiliate Marketing evolves into a full-fledged Performance Marketing model, a strategy is required to understand what each of these marketing partners requires from a merchant for them to succeed. Publishers, for example, who primarily promote through their blogs, social groups, and social channels are known as influencers.
Their goal is to provide honest personal experiences and reviews to their followers, and they enjoy being the first to announce new product releases, exclusive offers, and sales, as well as having product giveaways for their followers. This collaboration is valuable because it provides additional brand and product exposure as well as long-term commitment for both the influencer and the brand.
Affiliate Networks and Third-Party Tracking Platforms:
Affiliate networks, also known as “third-party tracking platforms,” are vital to the merchant-affiliate relationship. They provide information and resources such as banners, text links, product feeds, promotions, and payouts all in one place (like a bank). Merchants and affiliate managers establish smart commission arrangements, offer bonuses, send out newsletters, and handle refunds on these affiliate networks and tracking platforms.
These networks and platforms are a mechanism for both the merchant and the affiliate to keep track of leads, clicks, and conversions. Partnerize, Commission Junction, AWIN, Impact, Avantlink, PepperJam, and Rakuten Marketing are some of the top affiliate networks and monitoring platforms in the Performance Marketing business.
Different affiliate networks and monitoring platforms offer different strengths and weaknesses, fee structures, merchant vertical expertise, and so on, so do your homework or consult a professional, such as an experienced affiliate manager or an OPM.
Affiliate Managers or OPMs (Outsourced Program Management Companies):
Affiliate managers, also known as affiliate management agencies (OPMs), are the principal point of contact between the merchant and the affiliate. While affiliate managers can operate in-house, because of their knowledge and existing network of affiliate partners, businesses may want to engage with agencies to handle the entire program or support the in-house team.
Working with an agency, such as Global Excellence Award winners, All Inclusive Marketing, provides a more hands-on deck, established proven processes, rich partner databases, and technical and strategic knowledge.
Partner recruiting, growth plans, long-tail program optimization, content production, campaign management, and other tasks that agencies may help with are common. Some merchants choose to hand over complete control of their program to an experienced agency, while others choose agencies to work alongside their in-house staff.
Working with an agency can help bridge these gaps and deliver significantly faster outcomes because in-house teams often have limited resources, knowledge, current affiliate relationships, and market reach. Affiliate managers in agencies ensure that everything affiliates require is available to both merchants and partners in the network and that everyone is on the same page in terms of brand strategy and approach.
When deciding whether to engage with an affiliate program management business or an OPM, there are several factors to consider, including the size of your in-house team, your budget, your goals, your deadlines, your vertical knowledge, and your brand alignment/fit. Let’s look at the four most prevalent payment types utilized in Performance Marketing now that we’ve covered the groups involved.
Cost Per Action (CPA) (Cost Per Acquisition)
This is an arrangement in which a merchant pays a publisher for sales generated after the transaction is completed. This is the most typical payment model for retailers to set up in e-commerce.
Pay Per Lead (PPL)
A “lead” is a completed form registration or signup that includes information about the user or consumer and is normally a non-cash conversion. This information could include the customer’s name, email address, phone number, household income, personality qualities, employment information, and other details.
Leads can range in complexity from a simple name and email to a three-page in-depth information exchange to qualify for a mortgage or loan. The larger the reward, the more complicated the lead form is.
Pay Per Click (PPC)
A shop will pay an affiliate for any clicks they refer to a certain landing page in this payment scheme. This concept is less common in performance marketing, and it’s usually only employed when Nexus is applicable.
Pay Per 'X'
Outside of a lead, click, or sale, the ‘X’ can represent whatever the merchant sets as the intended activity in this payment model.
What are the Most Common Uses of the Term “Performance Marketing”?
Various sections within the digital marketing space use Performance Marketing, but they differ slightly from one another. Not all performance marketing is created equal. While one merchant may determine that only one area is suited for their plan, others may use numerous areas under the wider umbrella of “Performance Marketing” to achieve their objectives.
Here are some of the most popular uses of the phrase “Performance Marketing” in digital marketing.
Affiliate marketing
Affiliate Marketing is more closely tied to any type of marketing that is affiliated with the advertiser and paid out after the desired action occurs, as noted above when discussing the distinction between Affiliate Marketing and Performance Marketing.
This usually entails working with discount, loyalty, review, and incentive sites, especially in the North American market. When it comes to performance marketing, affiliate marketing is the most traditional and often used word.
Native Advertising
This is a type of paid media that, unlike display or banner adverts, does not appear to be advertisements. These advertisements tend to mimic the natural shape and function of the site they’re on, such as news or social media sites, and can often be fed dynamically based on the information each user reads or views.
CPM (Pay Per Impression) and CPC (Cost Per Click) are the most frequent payment options for Native Advertising (Pay Per Click).
Sponsored content
This type of Performance Marketing, which is mostly employed by influencers and content sites, entails a dedicated post or article promoting a brand and/or product in exchange for some form of remuneration.
Compensation can take the shape of a free product or an experience. Or, it can take the form of a CPA, CPM, or CPC payout.
Social Media Marketing
The use of social media channels to increase traffic or brand exposure, such as content featured on Facebook, Pinterest, or Instagram, is an example of this type of Performance Marketing. Engagement, likes, clicks, and sales are the most common metrics used in social media-based “performance marketing.”
Search Engine Marketing
Search Engine Marketing is divided into two components, and it can be successful using both paid and organic methods. Paid Search Marketing is when a company pays for clicks on advertising on search engines like Google, Bing, and Yahoo, whereas Organic Search is when a company uses non-paid methods like Search Engine Optimization (SEO) and relies on the search engine’s algorithm to rank in the top results.
Some businesses track their Search Engine Marketing results on a per-click basis, while others engage with SEM firms and pay out commissions based on results.
What Are Performance Marketing's Advantages?
There are numerous advantages to incorporating Performance Marketing into your growth and online marketing strategy. Aside from the obvious benefit of growing your market share, targeted traffic, and audience engagement by leveraging third-party partners with their audiences, budgets, and reach, you can also lower your risk, expand your market reach, and cut costs while expanding your brand and generating new revenue sources Performance Marketing is also completely trackable, measurable, and transparent.
Businesses can now see each buyer’s full click-to-consume path, allowing them to determine where to invest more, which partners to work with, and which channels to use to get better outcomes. Because Performance Marketing is paid only after the desired action is taken, the risks are reduced, the CPA (Cost Per Acquisition) is frequently cheaper, and the ROI is often higher. This frees up funds for other marketing methods to be developed and tested to help you grow and compete.
What are some successful performance marketing tips?
Concentrate on creating a decent landing page and offer
A terrible landing page can discourage visitors from converting, and a bad offer can keep them from clicking through in Performance Marketing. Furthermore, failing to function properly will discourage partners from collaborating with you and being enthusiastic about marketing your product and brand.
As an advertiser, make sure you’re providing compelling deals for your publishers to promote and check your website for any issues a visitor might have when they arrive on the correct landing page (s).
When visitors arrive at your website and mobile site, consider, and test the overall user experience. Always evaluate the links and offers you have accessible as a publisher, keep the most recent content, and releases up to date, and change any under-performing landing pages.
Perform A/B testing and optimization for revenue-generating KPIs.
Testing and measuring are vital for any solid marketing strategy to operate, as any competent marketer understands. When it comes to Performance Marketing, A/B testing can help you figure out what works and what doesn’t when it comes to conversions, click-through rates, AOVs, and traffic.
Decide on the traffic sources you'll use.
With Performance Marketing, it’s critical to ensure that your traffic comes from trusted sources and regions. Consumers will not trust you if you are getting advertised by less-than-reliable sources. They will be discouraged from purchasing or visiting again.
Keep as much track and monitoring as possible.
Attribution, mobile vs. desktop, bounce rates, and other metrics provide useful information about what is working and what isn’t. Tracking and quantifying gains and losses is just as crucial as testing when it comes to getting the most out of your Performance Marketing efforts. Your program and sales will not increase until you analyze your work and adjust improve it.
Be obedient.
Both brands and publications must obey the guidelines to succeed. Because the Federal Trade Commission (FTC) has ever-changing laws and standards, both brands and publishers need to stay on top of these federal requirements to guarantee that their programs and posts comply.
What are some of the most important performance marketing trends to watch?
Every type of marketing, including Performance Marketing, is constantly changing. With this sort of marketing accounting for more than 16 percent of e-commerce sales in 2017, it’s clear that this strategy’s growth is rising rapidly. As a driver of e-commerce conversions, this proportion puts Performance Marketing on a level with email marketing and ahead of display advertising.
More people are turning to Performance Marketing as a vocation, more advertisers are investing in it, and more publishers are entering the area because of this increase. More options to promote your business in the performance marketing area have arisen because of the increase in influencers, performance-based technology companies, and content sites.
Furthermore, thanks to the enhancements of third-party tracking platforms, publishers now have more options for improved tracking and attribution, enabling first click models where they can rest assured that they won’t be penalized if someone leaves their referral and returns to buy from a different source.
Multi-touch, position-based, time decay, and linear choices are other new advancements to keep a watch on for tracking and attribution. Another interesting trend to keep an eye on in Performance Marketing is the continuous development and use of Artificial Intelligence (AI) and Machine Learning to drive sales on a performance basis.
Automation, segmentation, personalization, and optimization are four areas to pay attention to, and these keywords are making significant progress thanks to AI and machine learning. Marketers in Performance Marketing must track and measure hundreds of thousands of data points, if not millions and billions of data points.
AI removes the complication from these data points and uses machine learning to aid scale efficient optimization. Adapting to this expanding trend also frees up time for marketers, allowing them to be more creative in their marketing efforts and getting more bang for their buck.
Conclusion
In general, performance marketing is becoming more popular among e-commerce brands, merchants, and retailers. New players are joining the channel, and new technologies are being invested to maximize results better, faster, and cheaper, according to the trends.
The relationships between various moving elements in performance marketing are extremely important, from affiliate managers who drive relationships and strategy to third-party monitoring platforms that track and credit campaign results.
Without the constraints of money or competing marketing channels, performance marketing allows you to create your brand, enhance product awareness, and engage with customers. It’s a component that goes on top and can contribute an average of 16 percent to your top and bottom lines.
Working as an extension of your brand with publishers, affiliate management organizations, and affiliate networks helps you to reach a wider audience than you might with more traditional marketing methods.
Whether you currently have an affiliate network, it’s a good idea to review your tactics and program to see if adding an outsourced management staff or controlling the program will be beneficial. Always test, track, measure, and improve. For those in the early stages of their business or program, discount and loyalty sites are a good place to start, followed by influencer, content, and AI performance-based marketing.
There’s always room to improve and grow in the Performance Marketing space, no matter where you and your brand are. Determine which strategies will work best for you and what needs must be satisfied, for not only the brand but also for your affiliates and partners. Jump in and start creating those relationships once you’ve outlined your goals.