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What Is Performance Marketing?

February 02, 2021

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The world of marketing took a serious hit in 2020. While companies eventually found their footing, most companies initially struggled with the economic ramifications of the COVID-19 pandemic. The marketing technique that provided the most financial support for businesses was performance marketing.

Performance marketing generated $6.82 billion in 2020, providing many businesses with essential support in a time of need. But what is performance marketing? You’ve certainly heard of affiliate marketing, but how does this differ?

A Look Inside Performance Marketing

Performance marketing is … well, based on brand performance. Performance is used in a comprehensive term, here, where a marketing department will look at their lead generations, sales, downloads, engagement, and more. In particular, it works in a similar way to affiliate marketing, in that a company will only payout to an affiliate or publisher when a specific action is performed relative to the merchant’s performance — increasing return on investment (ROI) and engagement or lowering customer acquisition cost (CAC). Actions can be as simple as an affiliate sending a follower to the merchant’s website or it can culminate in completing a transaction — obtaining a consumer-to-customer conversion.

How Do Affiliate and Performance Marketing Differ?

So we’ve mentioned affiliate marketing and performance marketing on a few different occasions, as if they’re different. Are they? They’re actually interchangeable terms, where affiliate marketing is a piece of the performance marketing puzzle — which is made up of …

  • Affiliate Marketing
  • Influencer Marketing
  • Email Marketing
  • Search Marketing
  • Any type of commission-based marketing

Performance marketing works on the premise of utilizing valuable key performance indicators (KPIs), which are credited and paid out based on specific actions and performance metrics — such as making a conversion, getting someone to sign up for email, etc. This is a well-known strategy for affiliate marketing, where affiliates are used to drive engagement, sales, and more. But where does performance marketing work best? Particularly across the chain of affiliates, affiliate networks, and retailers?

Where Does Performance Marketing Work Best?
  • For Affiliates/Publishers

These are the partners of performance marketing. Affiliates and publishers are the ones who promote merchants/brands to the world around them, whether it is on YouTube, Instagram, product review sites, blogs, online magazines, and more. They’re often looking for two things: a brand they trust working for and an affiliate program that is just as beneficial for them as it is their partner. In particular, they want to get paid a competitive price on time, once an action has been completed.

Their focus in the cycle is providing their audience with something of worth, whether that’s showing them a brand that is sustainable, products that are reliable, or a business that fits their niche needs. And, thanks to the ever-changing world of digital marketing, more people are being brought into the fold of performance marketing affiliates, from tech experts to social media influencers.

  • For Affiliate Networks

Affiliate networks, like the Refersion affiliate management platform, are essential to establishing the merchant and affiliate relationship. These platforms allow merchants to readily provide their affiliates with essential content and tools to promote their brand. They can also be used to provide affiliates with payment, send out newsletters, give bonuses, and find new affiliates.

Moreover, they include a large set of tools that allow merchants to track the status of their affiliate program over time. That includes checking impressions, clicks, leads, engagement, and conversions off of affiliate links. This is essential to establishing successful performance marketing campaigns, as it makes it easier to find weaknesses and make changes sooner rather than later.

  • For Merchants/Retailers

Businesses looking to promote their brand are the ones most benefiting from the performance marketing relationship. They rely on affiliates and publishers to promote their content, while affiliate networks make it possible for them to promote their marketing campaigns.

These programs benefit greatly from the outcomes inherent to performance marketing: increased engagement, higher ROI, lower CACs, and much more. Through this partnership, they are able to pay only when they receive marketing assistance, making the program work entirely in their favor.

The Bottom Line

There are numerous ways to improve your brand’s digital presence. But performance marketing for ecommerce is one of the most exceptional. Unsure where to start? Here’s where you can learn how a performance marketing program can benefit your business.

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Written by

Ruthie Carey
Ruthie Carey