The Ultimate Guide to Performance Marketing: Strategies, Channels and Benefits

It is the solution to a question every entrepreneur wants. How do I know that my marketing is really doing something? 

Classic marketing is the equivalent of throwing money down a hole. You wish it worked. You cross your fingers. But you never actually know. It is like paying a chef for dinner you may never actually eat.

Performance marketing flips that entire model. You pay only for true results. A click. A lead. A sale. This is measurable, trackable action. It is the difference between ordering a meal and paying only if you finish it.

This performance marketing guide will demonstrate how it works. Let's begin.

What is Performance Marketing?

First, let's have a simple definition of what is performance marketing. Folks use terms like CPA and CPL without defining them. We will rectify that. This section will provide you with a clear performance marketing definition.

Performance Marketing Meaning Explained

In simple words, performance marketing is a straightforward deal. An advertiser pays a publisher only if an action is taken. No action, no pay.

Imagine it as if it were a commission based sales career. Your salesman only gets compensated when he sells. Performance marketing just brings that same philosophy to online advertising.

You pay for a purchase. This is referred to as Cost Per Acquisition. You pay for a lead. This is referred to as Cost Per Lead. You pay for a click through. This is referred to as Cost Per Click. You pay for an application installation. This is referred to as Cost Per Install.

This model holds each dollar responsible. It compels a gorgeous concentration on what really counts, outcomes. There is no vanity metric room here. We are interested in actions that drive the bottom line.

How It Differs from Traditional & Digital Marketing

It's the difference between purchasing a billboard and purchasing one customer.

Grasping this distinction will transform how you perceive each dollar in your budget.

Consider old school marketing. You purchase a TV commercial. You mail in a large check. You pray people are watching. You pray they'll remember your product. You pray they'll buy someday. There is no method for you to follow that commercial to a sale at your store.

General online marketing is one step ahead. You publish a blog entry. It receives visitors. That is wonderful. How many sales that particular post contributed, though? It is amazingly difficult to say.

Performance marketing is different. You place an ad on Google. Someone clicks. They purchase your product. You see exactly which ad generated that sale. You see exactly how much you paid for it. You see everything. It is the difference between guessing and knowing.

Why Learn Performance Marketing?

Why should you care? The advantages are simply too tempting to ignore.

You would never buy a stock without knowing what it could return. Why would you do the same with marketing? Acquisition of this skill set is one of the most valuable activities that any modern business leader can undertake.

Benefits for Startups and Established Brands

The beauty of this model is that it's universally applicable. It applies to both startups and international business. The rule doesn't change for either.

Startups exist on razor thin budgets. Dime to dollar is critical. Wasting cash on ineffective marketing is a kill shot.

Performance marketing saves you. It lets you pay only for what is working. It enables you to begin small. Discover a tactic that yields two dollars from one. Then pour gas on that little fire. Scale with confidence since the math works in your favor.

Big businesses have other issues. They have large budgets. They need to prove their giant marketing expenditure is generating revenue.

Performance marketing gives them that evidence. It produces transparent, undeniable facts. It displays the return on investment in black and white. It changes marketing from a cost center to a profit center.

The fundamental advantages are universal. Accountability. You get what you pay for.

Scalability. You can scale your expenditures in direct correlation with your outcomes.

Targeting. You can target your dream customer with laser like accuracy.

Optimization. You can optimize using actual data to improve your campaigns daily.

ROI Driven vs Awareness Driven Approaches

Let's be honest. Awareness marketing is still relevant. But you have to recognize the difference. Blending them together is like trying to screw in a lightbulb using a hammer. It may work at some point, but it is the wrong implementation for the task.

Awareness marketing is similar to using a huge net to fish. You are throwing a broad net and picking up as many fish as you can. You are creating recognition. You are sharing your tale. It involves things such as organic social media, blog posts, and PR. It is incredibly important for long-term brand health.

Performance marketing is spearfishing. You're not grabbing everyone. You're grabbing a particular fish. You can see it. You can target it. You go in for it. It's about conversion. It's about taking somebody who is already engaged and converting them into a customer.

You require both. The net imports the fish into the bay. The spear harvests them. The sharp strategy employs both combined. Utilize awareness to stack the top of your funnel with prospects. Then apply performance marketing to funnel them to a buy.

Key Performance Marketing Strategies

Now on to the good stuff. How exactly do you do this? Let's examine the fundamental strategies. Each has its own pros and cons. The point is to know when and how to use which one.

PPC (Pay Per Click Advertising)

The grandfather of performance marketing.

You put ads on search engines such as Google and inform them which keywords you'd like to target. Your advertisement appears when individuals make a search. You pay only when somebody clicks on your ad. It's ideal for capturing intent.

Someone who is looking for "best running shoes for flat feet" is going to buy. They are saying what they need. You simply have to respond. The secret to success in this case is keyword selection. Do not merely bid on generic terms such as "shoes." That is costly and inefficient.

Be specific. Bid on "stability running shoes for men size 10." The individual who is searching for that knows exactly what they are looking for. They are prepared to make a purchase.

This is one of the most pure forms of performance marketing.

Affiliate & Influencer Marketing

This is a win win.

You affiliate with a website or an individual with an audience. They sell your product. They receive a special tracking link.

When their followers use that link to make a purchase, they earn a commission. It is completely risk free for you. No sale, no cost.

Influencer advertising is no different. Nano influencers may be absolutely ideal for niche products. Don't think only of the celebrity with a million. Consider the micro influencer who has ten thousand extremely engaged followers who value their every word. That value is pure gold.

Social Media Advertising

Facebook and Instagram are not only for holiday photos. They are performance advertising machines.

Their targeting features are amazing. You can target users by demographics, interests, behavior, or even life events.

You can make a custom audience of individuals who have previously visited your site. Then you can advertise to them in order to bring them back. You can even request that the site identify new individuals who look exactly like your top current customers.

Creativity is the key here. You have to have good visuals. You have to have a good video. You have to stop the scroll. The idea is to blend in with the user's feed but at the same time stand out and get noticed.

This is great for creating desire. It is about bragging about your product in a manner that makes you want it even when you were not searching for it.

Retargeting & Remarketing

This is the magic trick.

Have you ever browsed over some shoes on the internet? Then they put ads for those same shoes everywhere you look for a week? That's retargeting.

It is effective because it targets individuals who already know you. They have already visited your site. They are already interested. For whatever reason, they got distracted. They didn't buy it.

Retargeting is your second opportunity. It is a reminder that they forgot something in their shopping cart. The return on investment on retargeting is usually huge. These individuals are so much more likely to convert than a cold audience.

To ignore them is the same as allowing a qualified lead to leave your shop without engaging with them. Do not allow this to occur. It is a non-negotiable part of any serious performance marketing plan.

Top Performance Marketing Channels to Focus On

Selecting the proper channel is selecting the proper vehicle for a road trip. You would not use a sports car in off road conditions. You would not use a tractor on the highway. Each channel is used for a specific reason.

Google Ads

This is the big boy. The search engine.

When a person is on Google, they are typically in the "I want to know, I want to go, I want to do, I want to buy" frame of mind. Converting that intent is gold.

Search Ads are the text ads you see at the top of the search results.

Shopping Ads are product listings with images and prices. They are a definite necessity for any ecommerce company. They place your product in front of a ready to buy crowd. The information that you receive from Google Ads is amazing. You can identify precisely which keywords are generating sales. You are able to view your return on ad spend.

Meta Ads (Facebook & Instagram)

Meta's ad platform is a monster. They have an incredible amount of user data.

This enables such targeted ads that it feels as though you are reading their mind.

A person browses Instagram viewing gorgeous images. They aren't necessarily on the hunt for a product. But then they view your ad for a gorgeous watch. They didn't know they needed it, but now they do.

This is where you create desire. You can tell a visual narrative. You can utilize video to show your product. You can appeal to an audience on an emotional level. Then you can retarget them down the line to finalize the sale.

LinkedIn Ads (for B2B)

If you sell to businesses, this is your playground.

There is no other site where you can target job title, company name, industry, and company size. It is every B2B marketer's wish.

Suppose you sell some new kind of project management software. You can execute a campaign that is only seen by "Project Managers at technology companies with 500+ employees." You are not wasting a single impression on someone who won't be able to buy your product.

The audience is hyper targeted and extremely valuable. The cost per click is higher than on other social media sites. But the value of a B2B lead is also exceedingly higher. It is a trade-off that is nearly always going to be worthwhile for the right product.

The quality of the leads from LinkedIn is usually exceedingly high because you are targeting someone in a professional setting.

Native Advertising

Have you ever been browsing a news website reading an article and noticed a sponsored post? That's native advertising.

It is intended to read and look like the content that's surrounding it. The intention is to be less distracting or pushy. This can result in significantly higher engagement rates compared to a regular banner ad.

They are perfect for sending traffic to blog posts or other lead magnets. The user is already in reading mode, so they are more likely to click on an interesting headline. This channel is perfect for creating brand awareness.

Ecommerce Performance Marketing

For online shops, this is not a tactic. It is the tactic.

If you're selling online and you're not implementing these strategies, you're leaving a tremendous amount of money on the table. What this section does is illustrate how to plug these gaps.

Driving Conversions for Online Stores

The whole customer journey for ecommerce is measurable. It's a performance marketer's dream come true.

You can see every step. You can optimize every click.

It begins with prospecting. Leverage Facebook and Instagram advertisements to acquire new customers. Target people whose interests and behaviors align with your existing buyers. Showcase your best offerings. Your best videos. 

Get them to your website. When they are on your site, the clock begins. This is when retargeting comes in.

Add the Facebook pixel and Google Ads tag to your website. They will monitor all visitors. If someone browses a product but doesn't buy, they are added to a retargeting list. Then you pursue them. Display them dynamic ads showing them the very products they viewed.

Remind them of what they left behind. Reward them with a tiny incentive such as free shipping to get them to pay for the item. This process converts abandoned carts into customers. It is a processful method of recovering lost revenue.

Examples of Successful E-commerce Brands

Consider the brands that exploded online. They all get it right.

Dollar Shave Club is a well known case. Their first viral video was raw awareness brilliance. They didn't leave it there, though. They leveraged performance marketing to scale. 

They targeted Facebook ads to individuals who viewed the video. They employed email marketing to convert subscribers into repeat buyers. They tracked everything. They knew their customer acquisition cost in and out.

Casper did the same in the mattress market. They used podcast advertising with special promo codes to monitor performance. They created a billion dollar brand by focusing on the metrics that mattered. They had an understanding of the value of the customer.

This meant that they could spend lavishly on buy, with the math working itself out. These firms didn't only create funny commercials. They constructed a data led business, fueled by performance marketing.

Performance Marketing Examples & Case Studies

Below are a few straightforward examples of how this operates in the real world. These are reduced case studies that demonstrate the potency of this strategy.

Suppose there is a local bakery. They would like to sell more birthday cakes over the Internet. They opt to experiment with Facebook advertising.

They make a lovely video of a cake being iced. They are going to show the ad to individuals within 10 miles of the bakery who like birthdays or baking. The ad takes you directly to an order page for the cake.

They put a budget of twenty dollars per day. The following day, they receive five new cake orders straight from the ad. They know precisely how much they invested to achieve those orders. They can determine their return. It worked. They increase the budget.

This is performance marketing at its simplest and most effective.

A B2B software firm leverages LinkedIn. They publish a guide, "The Top 5 Ways to Increase Team Productivity." They have a sponsored message advertisement promoting the free guide to IT managers.

The advertisement presents the free guide. A manager clicks, downloads the guide, and becomes a lead. The sales team makes follow up calls. They seal a deal. The firm has no idea how much that lead cost and what it was worth.

This enables them to determine their ROI and whether or not they should have more ads like it.

An affiliate blogger posts a review of the top blenders. They have a link to a blender on Amazon. Someone clicks the link and purchases that blender. The blogger receives a small payment from Amazon. The reader has an excellent blender. The blogger was compensated for being of assistance.

This is the affiliate model in action. It is a perfect relationship that drives business based on trust and value.

Which Marketing Techniques Are Most Likely to Pay You?

This is the million dollar question. Everyone wants to know where to put their money for the best return.

The fact is, it depends. It depends on your product. It depends on your audience. What works for a fashion brand may fail for a B2B consulting company.

But we can at least look at overall trends and make some educated assumptions. We want to identify the methods with the most likely chance of success for most companies.

ROI Comparison of Popular Strategies

Let's get real about ROI. Which technique truly puts cash in your wallet?

Consider your marketing budget as a grocery list. You desire maximum nutrition for your buck. Some approaches are similar to gourmet organic berries, possibly awesome but pricey and short lived. Others are more like rice and beans dependable, scalable, and always effective.

Here's the hard reality about what truly pays.

Email Marketing

Email is your golden egg. It generates the maximum ROI every time. For every dollar you invest, you can make $36 or more in return.

Why? You're communicating with people who already know and trust you.

They brought you into their inbox. It's like having a conversation with a friend instead of yelling at a stranger. The cost is minimal. The payoff is huge. This happens because it's based on trust.

Search Ads (PPC)

Pay per click ads on Google are for capturing ready to buy customers. 

Someone searches for “best waterproof hiking boots.” They’re not browsing. They’re buying. Your ad appears right when they’re ready to spend. ROI can be strong because you’re targeting high intent.

But it's competitive. You'll need to bid on keywords. Hit it, and you can earn $2 to $5 of return for every dollar spent. Miss, and you'll burn through cash quickly.

Retargeting

This is your hidden advantage.

It's like calling a customer who abandoned your store. They've already seen your product. They're interested. Sending them reminders frequently brings them back.

The ROI in this case is usually huge. We're talking 1000% or better returns. Why? You're only communicating with warm leads. It's cost effective and extremely effective.

Affiliate Marketing

You only pay for sales made by affiliates. No initial expenses. It's all commission.

This implies your ROI is basically unlimited since you have no expense without return. It's having a sales team working on commission only.

The payback? You give up your margin. But it's an excellent opportunity to get more exposure without an investment.

Social Media Ads

Facebook and Instagram are excellent for creating buzz.

The payback's often lower than search or email. You may get $2 to $4 returned per dollar.

Why? You're usually interrupting folks who are browsing for fun. You have to try so much harder to convert that attention into action. But for top of funnel awareness, it's effective. Just don't expect instant paydays.

How to Build a Performance Marketing Strategy for Your Brand

You are convinced. You are ready to begin.

Here is a basic, three step process to create your first campaign. This is a useful, doable plan. You can begin to implement this today. No theory. Just action.

Step 1: Establish Measurable Goals

This is the critical step. You need to know what you're working towards. "Get more customers" is a wish. It is not a goal.

A goal is measurable and specific. "Gain ten new clients this month." "Create fifty new leads for our sales team." "Get a three dollar return for every one dollar spent advertising."

This is known as a SMART goal. Specific, Measurable, Achievable, Relevant, and Time bound. Your whole campaign will be built around this goal. All decisions you make will be through this goal.

Does this ad enable me to get a customer for under X dollars? If not, discard it. This is what differentiates professionals from amateurs.

Step 2: Select the Correct Channels

Don't attempt to be everywhere. That is a formula for burnout and confusion.

Depending on your goal and your audience, select a single main channel to begin with.

Are you selling to consumers? Begin with Facebook or Instagram ads. Are you selling to businesses? Begin with LinkedIn. Are you selling something that people search for on Google? Begin with Google Ads.

Excel at one channel. Learn its data. Then, and only then, should you move to a second channel. It is better to be a master of one channel than a beginner at five.

Step 3: Monitor KPIs & Improve

You don't get to just launch your campaign and forget about it. It is the starting point.

Now you listen to your data. This is where the real battle gets fought. You have to monitor your Key Performance Indicators. These are the figures that show you whether you are winning or not.

The important ones are Return on Ad Spend, Cost Per Acquisition, Conversion Rate, and Click Through Rate.

You need to have a tracking system in place. Put the Facebook Pixel and Google Analytics on your site. They are free and non-negotiable. They inform you what is going on after someone has clicked your advertisement.

An ad isn't performing? Turn it off. Try a different image.

Does the landing page have a low rate of conversion? Rewrite the headline. Test an offer. This is an ongoing process of optimization. The campaign is never complete. It is constantly being tweaked. The marketers who succeed are the ones who do not stop testing and learning.