Performance Marketing: Explore the Benefits and Strategies

Enhance marketing tactics by adding performance marketing.

Are you a small-business owner or marketing professional looking to improve your marketing efforts?

Marketing has expanded and evolved into a cross-disciplinary business process that requires marketing teams to tackle multiple channels of customer engagement and communication. While many marketing channels can be tackled individually with their own budgets and campaigns, performance marketing has emerged as a way to fold data into several disciplines at once to create more effective and informed marketing campaigns.

In this article, we’re going to show you why close to 50% of chief marketing officers choose to spend a large portion of their budget on performance marketing.^[1] The article will overview what performance marketing is, how it works, tips and strategies for making it work for you, and how to successfully implement it into your marketing strategy.

What is performance marketing?

Performance marketing takes a more direct approach to driving traffic to your website than SEO. Rather than focusing on building organic traffic that is difficult to track and source, performance marketing campaigns rely on paid advertising and marketing campaigns to drive a more specific and defined segment of your target audience to your website. 

The focus of performance marketing is to deliver on defined KPIs, such as new lead generation or conversion rates, ensuring a brand’s ability to measure and track return on investment.

How performance marketing works

One of the clearest examples of a performance marketing service are pay-per-click (PPC) campaigns. In PPC and other performance marketing campaigns, clients only pay for results—for example, in a PPC campaign a client only pays if a lead clicks on a link in the campaign or makes a purchase from an associated link. This incentive-based marketing model ensures agencies focus on business objectives and prioritize tactics that deliver results.

Benefits of performance-based marketing

On the planning and budgeting side, marketing has become a multichannel balancing act. With client engagement coming across traditional media, social media, search engine results, and other inbound marketing funnels, it can be challenging as a business owner or marketing executive to decide where to allocate your resources. Understanding the benefits of performance-based marketing allows you to prioritize it in your marketing spend accordingly.

Measurable results you can map to specific campaigns

Data is the best measure of how you should be allocating your marketing spend. Because performance-based marketing campaigns are built around systems that track the source and behavior of leads and customers, down to which ads redirected a lead to your site and what links they follow once they reach your landing pages. This allows marketing agencies to prove the effectiveness of their campaigns by showing trackable and measurable results.

Add additional revenue channels and increase ROI

Instability in the modern economy dictates that your brand’s products and services are given as much visibility as possible to your target audience. In order to achieve this, it’s necessary to allow your products and services to be viewed and purchased through as many methods as possible.

While SEO marketing tactics focus on organic search results and directing potential leads to optimized content and landing pages, performance marketing campaigns leverage paid marketing channels in ways that expand access to additional targeted audience segments. This additional exposure allows those additional leads to easily convert to purchase your services or products who might not otherwise have organically reached your site, maximizing overall ROI. 

Expand brand reach and introduce innovation through marketing partners

Performance marketing partnerships aren’t limited to agencies. Partnering with affiliate marketing platforms and influencers allows you to expand the reach of your advertising efforts. Because affiliates are often smaller and more agile entities, your products and services can quickly be marketed to new audiences in creative and innovative ways that might be beyond the scope or means of your brand’s marketing capabilities.

Reduce your risk and exposure with performance marketing tactics

With most traditional marketing and advertising campaigns, you’re paying for the advertising space upfront, with the hopes of recouping costs on the back-end of the campaign through sales.

With performance marketing, you’re only paying for efforts and campaigns that deliver measurable and profitable results. This greatly reduces your costs and exposure from a financial angle by only having to dole out payment for actions that will generate sufficient profit to offset the cost of the campaign and agency or partnership costs.

Performance marketing strategies and channels

Performance marketing encompasses many other channels and overlaps with a number of other marketing activities to enhance and strategically improve your position relative to your competitors. Structuring any of the following types of campaigns around performance marketing allows brands to improve the impact of their marketing efforts effectively and allows marketing agencies to focus their efforts strategically to deliver results for clients.

Search engine optimization (SEO)

As we established above, SEO and performance marketing are different approaches with the same goal: driving traffic to specific landing pages in order to increase conversions. However, there is an overlap in the data that performance marketing relies upon. Search engine optimization is shown to be effective if you’ve got the right keywords and strong content driving high site traffic with a low bounce rate.

Performance marketing campaigns can set goals and targets around SEO metrics that are then monetized for the agency. For example, you can set up a performance marketing campaign to ensure a specific number of visitors to a specific website per month through search engine results tied to specific keywords.

Pay-per-click (PPC) advertising

Pay-per-click campaigns are most often executed across search engines through ad platforms such as Google Ads (previously Google AdWords). You pay to have your brand featured on search engine results pages (SERPs) tied to specific keywords and long tail phrases.

PPC isn’t exclusive to search engine marketing. Most platforms have some form of PPC, so paid PPC advertising is also relevant for campaigns executed across digital platforms such as YouTube, websites across publisher ad networks, social media platforms, and Amazon.

Social media marketing

Leveraged in a very specific way to drive conversions, social media advertising can be a stable method for executing performance marketing campaigns. A combination of prospecting funnels to reach new leads from your target audience and retargeting campaigns to further engage those who don’t initially convert becomes a very effective way to create a data-driven campaign that remains affordable by setting goals and terms of payment based on the number of conversions achieved.

Email marketing

Email is not only one of the oldest marketing channels still widely used, it’s also one of the most lucrative, earning between $36 to $40 for every $1 in marketing spend.^[2] At this high level of ROI, email marketing campaigns are a natural fit for performance marketing. Campaigns can be built to pay out on leads created, actual conversions, or sales generated by a campaign, and most email marketing platforms and service providers provide clients access to a wealth of useful data to help optimize and increase the effectiveness of these campaigns.

Affiliate marketing

Affiliate marketing programs are gaining significant ground as consumers increasingly turn to social media platforms in order to seek out brand reviews and insights. This trend is strong enough that the affiliate marketing sphere reached a value of $20 billion in 2022, and is anticipated to almost $40 billion in 2031.^[3] is trending to reach a valuation of The commission-structure of affiliate sales programs makes affiliate marketing the perfect strategy to combine with performance marketing strategies. Incentivized to promote and sell your products through channels beyond your own marketing reach, affiliate programs are an inexpensive way to increase incremental sales to audiences you might not otherwise be able to reach. 

Conversion rate optimization (CRO)

The target metrics identified during the planning and implementation of a conversion rate optimization campaign can directly tie into a performance marketing strategy. CRO campaigns prioritize tracking behaviors such as filling out a lead form, making a purchase, or any other action prioritized by the campaign as important to the customer journey and improving conversion rates. When hammering out the details, agencies and clients seeking to create the triggers that signal success can tie those same triggers to the pay structure of the project.

Native advertising

Characterized also as sponsored content and branded journalism, native advertising is paid marketing content built to mimic the media types of the host platform. For example, creating video ads to leverage as part of a YouTube-based paid marketing campaign is a form of native marketing.

Because they blend into the surrounding content, native ads have become extremely successful, and spending in this sector of marketing advertising is expected to reach $402 billion by 2025.^[4] These campaigns lend themselves to performance marketing strategies by providing a source of measurable engagement that can be tracked to ads from that platform.

Sponsored content

A special case of native advertising, brands purchase sponsored content advertising in order to have their promotional content distributed by another content distribution partner. This partner can be another brand, a publisher, or an influencer that will present your material to their audience according to your requirements. Performance marketing tied to sponsored content focuses on engagement, leads generated, and conversions.

Display advertisements

Display advertising leverages powerful visuals in banner ads, rich media, video ads, and interstitial ads to draw a visitor’s attention and then redirect from the website or social media page to the heart of the campaign. These campaigns, sometimes conducted across display advertising networks, support the gathering of data necessary for an agency to be able to provide clients KPIs and achieve targeted results. 

Content marketing

Content marketing is a powerful tool for delivering in-demand content and increasing organic search traffic. It can be a useful component for nurturing leads through a sales funnel and building brand trust, and becomes extremely important in generating the data points necessary to qualify the results delivered as part of a performance marketing campaign.

Measuring performance marketing success

Performance marketing engagements are concerned with results, and those results can be measured according to user behaviors and actions that are taken. 

• CPC refers to “cost per click,” or the amount you pay each time a potential customer clicks on a paid advertisement. Calculate CPC by dividing the total ad cost by the number of users who click the advertisement.

• CPM is the cost per 1,000 impressions generated by an advertisement. Impressions occur when an internet browser loads your ad, and is a strong indicator of brand awareness.  

• CPS helps to measure the cost per sale. This KPI requires your team to establish a budget and time range, and uses a tracking pixel to track customer behaviors once they’ve clicked on an advertising asset. Tracking this journey helps to establish the cost in terms of manpower and resources it takes to convert a lead into a customer.

• CPL or CPA refer to the cost per lead or cost per acquisition. This is the cost in resources necessary to move a potential lead through the process of entering their contact information and showing an interest in your branding. When setting targets for the CPL or CPA, it’s important to have a clear understanding of the target audience for the campaign.

Tips for crafting a successful performance marketing strategy

A successful performance marketing strategy capable of meeting client performance thresholds is one that is built on a strong foundation.

Have an established campaign goal and message

You can’t build a campaign without a cohesive message or goal. What story is the client trying to tell, or what KPI are they trying to maximize? Are you helping to sell a product? Build brand awareness? Do you want to increase subscribers to build out their email marketing database? With an established message, you can build your messaging and visual marketing assets in order to best resonate with the target audience.

Let your messaging establish the brand position for the campaign

An established goal and messaging helps your team to best position your or your client’s position relative to the target audience. Are you trying to establish with the campaign a degree of expertise, or are you presenting your organization as a solution to a specific pain point in your industry? However you position the brand, it’s important that it aligns with the expectations and values of the target audience. 

Identify strong KPIs that support your campaign positioning

Key performance indicators should align with your campaign objectives so that it’s clear when a campaign is either successful or needs to be restructured to better meet the goals that have been previously identified. This should be done with both historical data in hand and with the benefit of forecasting tools to establish realistic and achievable metrics at the start, which can then be increased or decreased as the campaign evolves over the established timeline.

Performance marketing tools and services

Because performance marketing encompasses so many marketing disciplines, it’s important that you are able to leverage a wide array of digital marketing tools to support your campaign efforts. Business intelligence tools are becoming increasingly important to parse the vast amount of data necessary to make informed marketing decisions, while campaign specific tools such as email marketing and website analytics platforms have equal importance.

Broaden your marketing efforts with performance marketing

In overviewing the benefits of leveraging performance marketing as a part of your overall marketing strategy, we’ve covered how to fold it into other marketing channels, and how it can help leadership make more effective, data-driven marketing decisions.

While you should absolutely have your own digital marketing tools, including a robust customer relationship management (CRM) platform to support your marketing and sales outreach, performance marketing is a scope of marketing that requires a broad knowledge of digital marketing and the role it plays for small business owners.