Performance marketing is a key type of marketing that's driven by results. The idea behind performance marketing is advertisers only pay when certain actions are taken, like when someone clicks on an ad or makes a purchase. Having a strategy around performance marketing is the best way to approach it so you get the most bang for your marketing buck.
It might not work as well to use performance marketing on a brand-new product, as some knowledge of the customer base and target audience is typically needed. Once you have that information, you can leverage it in such a way that strong returns in performance marketing campaigns are likely.
Another important aspect of performance marketing campaigns is the ability to tweak them so they perform even better using data collected during the initial phases. Performance marketing has the potential to maximize the profitability of your marketing efforts and get you top ROIs for your campaigns.
Performance marketing started with the advent of pay-per-click (PPC) advertising on social media and other platforms. Google AdSense was a pioneer of PPC advertising and allowed website owners to make money by receiving part of the ad revenues when visitors of their sites clicked on ads there. Social media platforms now carry many ads targeted to user data that brands pay for when someone clicks on the ads.
Only the Beginning
PPC advertising was only the first type of performance marketing, however. As this type of marketing has evolved, several other areas have emerged.
Dynamic remarketing records products and services users look at. It then feeds them ads for those items when they surf the web later on. This is by nature repetitive, so a limit for how many times a user will see an ad is beneficial - also referred to as a frequency cap. It also doesn't take into account whether the user has already purchased a given item, which can be irritating for users. It's effective in many cases, however, because users may need to see an item several times before purchasing. This could be considered a lower funnel component of performance marketing campaigns.
Influencer marketing uses someone with a social media or other online following to advertise your products. New measurement tools like Gatsby can allow you to measure the success of an influencer campaign so you can accurately gauge the worth of this marketing method. Affiliate links or tracking codes can also allow for sales attribution to a particular influencer/individual to gauge performance.
Search engine marketing (not SEO) is focused on traffic from search engines using specific search terms that generate a certain number of results. Some of the sponsored ads you see in Google and other search engine results are examples of this type of performance marketing.