Performance Marketing Basics: Everything You Need to Know

What is Performance Marketing?

Performance marketing? Influencer marketing? Social commerce? Marketing has enough terms to make even the most experienced marketer’s head spin. And that’s where we come in to help.

So what is performance marketing exactly? Most marketers will have their own definitions of what has grown to be a more comprehensive term, but it’s a combination of paid advertising and brand marketing where advertisers pay once a specific action occurs (click, impression, lead, etc.).

Performance marketing works very simply: you create an ad, give it to a media platform, they serve it up to potential customers and your target audience, then you pay for each interaction based on the ad types. Some common examples are:

  • Google displays your advertisement on their Search Engine Results Page (SERP), then you pay for each click gained (Cost-Per-Click or CPC).
  • Meta displays your ad on a variety of their platforms (i.e. Facebook or Instagram), and you pay once you receive the desired action from that audience (display ads, sponsored video content, etc.).

Different Types of Performance Marketing Channels

With increased digital transformation, performance marketing has exploded across many channels. While not exhaustive, the following are common performance marketing channels most online marketers take advantage of:

Native Advertising

Native advertising is material in an online publication (such as So Yummy or Blossom) that resembles the publication’s editorial content but is paid for by an advertiser and intended to promote the advertiser’s product. Native ads are a powerful tool that combines advertising with content marketing.

Affiliate Marketing

Affiliate marketing is an advertising model where a company pays someone (i.e. bloggers) to advertise their products or services to generate sales. The blogger or affiliate network gets kickbacks or commissions for hosting the ad(s).

Social Media Advertising

Social media advertising is when a company pays a social network (i.e. Facebook, Instagram, LinkedIn) to show their advertisement on their platform. Social media advertising is great for generating key metrics like traffic, brand awareness, engagement, leads, and sales.

Search Engine Marketing (SEM)

Search engine marketing is a form of performance marketing where a company pays a search engine (like Google, Bing, or Yahoo) to serve up an advertisement on their search engine results page. Campaign performance is generally judged on clicks, impressions, and conversions. Think Google Ads.

At First Media, we utilize data-driven strategies and in-house teams to make original user-focused creative and high converting performance marketing campaigns. All production, media buying and data analysis is done in house, taking the stress and work out of it for our partners. Our proprietary tools make the most effective media decision to bring new customers to brands at scale.

How Performance Marketing Campaigns are Assessed

Optimizing your performance marketing strategy is important. Wasteful ad spend can be a death sentence for most brands. Return on investment (ROI) or return on average spend (ROAS) are important to keep an eye on. Campaigns are typically evaluated and optimized by the following metrics:

Cost-Per-Click (CPC)

This one is pretty simple: advertisers pay based on the number of times their ads are clicked on. This is a great way to drive traffic to your website if that is the goal of your marketing efforts. CPCs are made more effective by optimizing click-through-rates (CTR) with better ad copy or keyword targets.

Cost-Per-Acquisition (CPA)

Also known as cost-per-action or CPA, cost-per-acquisition is defined as the total cost of a user taking a desired action that leads to a conversion. For example: form submissions, sales, downloads, etc.

Cost-Per-Sales (CPS)

Cost-per-sale is when an advertiser pays only when a sale takes place that was driven by an ad. This is similar to affiliate marketing.

Cost-Per-Impression (CPM)

Cost-per-impressions are measured by how many views your advertisement had. For CPMs, you typically pay per thousand views. This ties in with those banner ads you see on websites or display advertising on the Google Display Network.

Depending on your marketing strategy, different performance marketing goals can make or break your digital marketing strategy. Well-defined key performance indicators (KPIs) help your marketing budget go further and help your underlying business goals.

Benefits of Performance Marketing for D2C Brands

For direct-to-consumer (D2C) brands, leveraging performance marketing is key. From top to bottom, performance marketing allows you to take control of your sales funnel and optimize based on your marketing goals. 

For example:

  • If your goal is to get more brand awareness, you can launch a display ad campaign to get your brand and product out to your target audience.
  • If your goal is to gather email addresses to fill your email marketing list, you can launch a native advertising campaign in an established publication that grants the user access to the piece if they enter their email.
  • If your goal is to increase sales, you can run an ecommerce focused campaign on a social network (i.e. Instagram, Twitter, or Facebook) that leverages a CPS model.

In today’s new marketing world, the benefits of performance marketing cannot be overstated for D2C brands. Ensuring you’re leveraging the right platforms and optimizing for the KPI that will move the needle the most can be the difference between success and failure for D2C brands.