A Beginner’s Guide to Performance Marketing

Performance marketing is a comprehensive term for online marketing and advertising programs where advertisers only pay when a specific action occurs. These actions can include a generated lead, a sale, a click, and more.

Why is Performance Marketing so Important?

Performance marketing has made its way into merchandising and retail lingo as a catch-all term that describes the use of online marketing and advertising tactics to sell a product or service in the form of a lead, sale, click, conversion, download, etc.

Prepaid advertising is no longer the most reliable strategy because there is no guarantee that it will be effective. You end up wasting more time and money with little to no ROI.

The beauty of performance marketing is that it is based solely on accomplishing measurable results. This means that you’ll know exactly what you’re paying for. It allows for more efficient tracking, which will enable you to closely monitor and better optimize your campaigns.

Performance Marketing Channels: Where to Focus Your Efforts

Performance marketing professionals — in agencies, with media companies, publishers, or otherwise — rely heavily on paid marketing channels including. You have a variety of options for where to launch your performance marketing efforts. And of course you can use any combination that helps you reap results.

Social Media

Over time, it has become far more difficult to achieve measurable results with organic reach via social media networks. Consequently, agencies and media buying professionals are investing in social media advertising to play a role in their performance marketing programs.

Social networks provide you clear metrics to measure KPIs such as clickthrough rate (CTR), cost per click (CPC), and your overall ROI. As is the case with all performance marketing efforts, your starting point is to establish your objectives.

Reasonable objectives for social advertising include increasing:

• Traffic
• Engagement
• Lead generation
• Sales

The practical next step is to select the social platforms you’ll begin with. Consider the following:

• How the demographics of the network align with your brand.
• The traction you’ve gained on each network with your organic efforts.
• How your competition approaches the various social channels.
• Ad formats that can be used on the network.

Of course, the list of social media channels you can advertise on is long and includes Facebook, Instagram, Twitter, LinkedIn, YouTube, Snapchat, and Pinterest.

We won’t get into specific performance marketing campaign structures for each individually, however, you can consider the following best practices:

• Create specific target audiences by diving into the targeting options provided. You’ll twist the dials going forward as you hone in on your audience.
• Strive to create ads that blend well with the organic content found on each network. Blatantly promotional efforts tend to backfire on social media.
• Take time to understand the pros and cons of the various formats offered.
• Experiment with your bidding strategies and optimize them over time to increase ROI.
• Refresh your ads and landing pages often.

Display Ads

Display ads use images, video, and text to tell stories that grab consumers’ attention. They can appear on third-party websites, apps, and other platforms. Display ads often include a call to action that guides a consumer to a website where they can learn more about a product or service.

Content Performance Marketing

Content performance marketing is the intersection of content marketing and performance marketing. Advertisers create, publish, and distribute content they feel is most relevant to their desired audience while simultaneously working to meet demand, optimize, and measure the success of the content. The three steps involved in content performance marketing are:

1. Target Demand: In this step, advertisers determine where their audience is most likely to be looking for their product or service. Advertisers are also gauging an understanding of the types of content a particular audience likes to consume and creating bespoke content that fits those parameters.
2. Optimize Content: Once content is created to meet a demand, data must be analyzed in real-time to determine how content can become more successful. An example of this is keeping a close eye on SEO.
3. Measure Results: To inform future pieces of content, it’s crucial for advertisers to use learnings from past content performance campaigns. Setting strong KPIs allows advertisers to spend wisely and eliminate guesswork.

Native Ads

A sad truth for marketers is that most people in your target market are oblivious to digital advertising. They either have filters in place — such as ad blockers — or they filter ads subconsciously, or both.

Native advertising lets you create click-through opportunities on the websites where your target market consumes content. This format gets 10 times more clicks than other forms of online advertising. With native advertising, you want to make sure your ads align with quality content and that you leverage smart distribution via the right publishers.

The good news is that content discovery platforms such as Taboola offer advanced predictive engines that ingest high volumes of data to match viewers with content that’s likely to capture their interest.

To launch successful content discovery campaigns via native advertising, you should:

• Set a goal: Determine a specific goal and define essential metrics to gauge progress.
• Right-fit the content: Aim to build campaigns around content with the potential to inspire action.
• Prepare your launch: Launch preparation involves selecting content, audience filters, and budget parameters.
• Optimize: Fine-tune campaign performance by analyzing the data, identifying the publishers driving the best results, and adjusting your budget accordingly.
• Realign and revise: Review how campaign performance compares to your original goal, and look for ways to optimize efficiency by using granular variables like time of day, site, and device type. Consider how content discovery might support additional efforts throughout the marketing funnel.

Search Engine Marketing

Technically, search engine marketing (SEM) includes efforts to increase visibility and clicks via organic and paid advertising. In this post, we’ll address only paid, which is another viable performance marketing channel. Thanks to the Google AdWords program, SEM has been the most popular performance marketing channel for decades. Following a remarkable $237.8 billion in revenue for 2023, Google Ads has already generated $192.2 billion in 2024’s first three quarters.

SEM enables advertisers to put their ads in front of customers who are ready to buy. Keywords are the foundation of SEM and choosing them wisely is a bit of a science. You’ll benefit from conducting comprehensive keyword research where you aim to identify keywords that are relevant to your brand in terms of what prospective customers are likely to use when searching.

For obvious reasons, keywords with high commercial intent that include terms such as buy, discount, deal, coupon, and free shipping are more competitive and therefore pricier. It’s important to understand that SEM is based on a real-time auction process that takes place every time someone enters a search query. To be entered into the auction, advertisers identify keywords they’ll bid on and determine how much they are willing to spend for a click.

The process is complex, and comprehending it is critical to achieving high ROI. WordStream is a leading vendor in the SEM software space and offers deep resources for mastering the bidding process at its PPC University site.

Affiliate/Sponsored

Affiliate marketing is an established form of performance marketing. In this popular model, a publisher becomes an affiliate by securing a relationship with an advertiser to produce traffic and sales (or an agreed-upon action). Affiliates send traffic to advertisers and receive a commission in exchange for a specified action (a sale, in most cases). Affiliate publishers essentially act as an extension of your brand, using their site to sell your goods and services to their viewers. Any website operator can be an affiliate, and any brand operating online can be an advertiser, though usually the advertiser has an ecommerce brand or sells a solution via the web.

Affiliate marketing exceeded $10 billion for the first time in 2024, with growth expected to rise to $15.80 by 2028, according to Statista. Affiliate marketing software platforms act as a middleman for advertisers and marketers. Affiliates and an online merchant agree upon specific actions that will result in a payout for the affiliate, and the platform ensures that these transactions are safe, fair, and not left to manual labor. We recommend these affiliate marketing software platforms:

Much like content discovery, sponsored articles are a form of native advertising that serve as content performance marketing plays. Sponsored articles can drive qualified traffic and conversions, and they can increase online visibility in front of a highly targeted audience.

Native advertising expert Chad Pollitt writes, “Sponsored articles have opened the door for brands to become part of natural conversations with consumers within the realm of their trusted environments — the publications they go to for news, education, and entertainment on a regular basis.” Executed properly, sponsored articles have proven to be a financial win for both advertisers and publishers. In The Media Buyer’s Guide to Sponsored Editorial Content, Pollitt gives the following keys to remember:

• Sponsored content means the publisher is a media outlet.
• The long-form editorial nature of sponsored articles distinguishes them from their short-form sponsored social counterparts.
• Association with a publication and exposure to its audience increases brand awareness, web traffic, conversions, and the likelihood of profitable consumer buying behavior.

Performance Marketing Platforms

Let’s briefly explore how most platforms operate. As is the case with all media (often purchased by media buyers), each channel has a specific audience and offers different types of advertising platforms to reach them. For instance:

• Facebook, the leading social media channel, offers a variety of options to show your ads to people visiting the Facebook or Instagram platform.
• Taboola, the leading content discovery network, offers advertisers the ability to reach the readers of tens of thousands of leading online publications.
• Google displays your ads in search results pages (and across the Google Ads network).

Performance Marketing Targeting

Obviously, no channel shows all the ads available, all the time, to everyone. The different platforms choose what to show based on a combination of the following factors:

• Target audience and segmentation: Each ad platform offers ways for you to target your audience in the form of audience segments.
• Bid: The modern advertising landscape calls upon programmatic capabilities that factor in the amount you’ve agreed to pay to show your ad in a specific place and time to your chosen target audience.
• Quality and relevance: Trust is the biggest issue people have with advertising of any kind. As such, ad performance is factored. If your ad doesn’t work—that is, it earns low quality ratings—the network will reduce its exposure.
• Conversion: The economics of performance marketing is based on consumers taking action. When the required action doesn’t take place, the network doesn’t get paid. So your ad gets displayed more when it works.

Facebook advertising (and the associated fees), for example, focuses heavily on the advertiser’s bid, ad quality, relevance , and the estimated amount of actions.  Most platforms work in a somewhat similar manner.

Performance Marketing Metrics: Measuring the Impact

With any campaign, you want to decide which KPIs to optimize for with your strategy. Performance marketing gives you the chance to optimize for a variety of KPIs:

• Cost per impression (CPI): How many times your ad is viewed. Since this is generally measured in increments of 1,000, performance marketers use cost per mile;
• Cost Per Impression (CPM): The amount an advertiser pays a publisher per 1,000 times that their advertisement is shown.
• Cost Per Click (CPC): The amount an advertiser pays only when their advertisement is clicked on.
• Cost Per Sales (CPS): The amount an advertiser pays only when a sale is directly generated by an advertisement.
• Cost Per Leads (CPL): The amount an advertiser pays when they receive a sign-up from an interested consumer as a direct result of their advertisement.
• Cost Per Acquisition (CPA): The amount an advertiser pays when a specific action, such as a sale, a form completion, or a click occurs

Each of the above actions is an advertising objective and therefore a measure of performance marketing effectiveness. To evaluate your choices, and continue refining them, you’ll need to consider your campaign goals, choice of platforms, costs, and the results.

The Benefits of Performance Marketing

Here are the key benefits of performance marketing:

• Pay-for-Performance Model: You only pay when desired outcomes (e.g., clicks, conversions, sales) are achieved, ensuring that your budget is spent efficiently and directly tied to measurable results.
• High ROI Potential: By focusing on specific actions, performance marketing helps you optimize campaigns to achieve a strong return on investment compared to traditional advertising.
• Measurable and Data-Driven: Performance marketing provides detailed analytics, enabling you to track and measure the effectiveness of campaigns in real-time. This data helps in making informed decisions and adjustments.
• Budget Flexibility: Advertisers can set daily or total campaign budgets, giving them control over spending. This is particularly advantageous for startups or small businesses with limited resources.
• Scalability: Successful campaigns can be scaled up easily by increasing ad spend, targeting additional audiences, or expanding into new platforms.
• Audience Targeting: Advanced targeting options, such as demographics, interests, and behaviors, ensure ads are delivered to the most relevant audience, increasing conversion rates.
• Diverse Channels: Performance marketing spans multiple channels, including search engines (e.g., Google Ads), social media (e.g., Facebook Ads), affiliate marketing, and native advertising. This variety allows marketers to tailor strategies to their goals and audiences.
• Real-Time Optimization: Campaign performance can be monitored in real-time, allowing you to tweak strategies, creatives, or bids immediately to maximize effectiveness.
• Risk Mitigation: Since payment is based on measurable outcomes, performance marketing reduces the financial risks associated with traditional models that charge upfront without guaranteeing results.
• Enhanced Brand Awareness: Even if the primary goal is conversion, performance marketing campaigns often increase visibility, exposing your brand to new audiences and driving long-term value.

Performance Marketing Examples

French jewelry manufacturer and designer PANDORA worked with Taboola on a native advertising campaign to boost branding and conversions via content discovery and display advertising methods.

These efforts led to shoppers spending more time on the PANDORA website, ultimately increasing the conversion rate up to 130%.

In another example, Hear.com reached out to Taboola to partner on a performance marketing campaign. The project utilized sponsored content to create awareness around hearing loss and possible solutions.

Through educational-focused sponsored content, Hear.com was able to target specific geographical regions and increase traffic tenfold over two years.

Common Mistakes to Avoid

With performance marketing, it’s important to focus on easily trackable KPIs like the ones listed above. It’s much harder to track for less quantifiable things like customer lifetime value, share of voice, customer sentiment, and brand awareness, and to see the impact of long-term brand-building campaigns.

If you’re working with an affiliate, be sure to research them carefully. You want to make sure their analytics reporting is accurate, and that they haven’t accidentally or intentionally inflated any figures.

In a nutshell

Advertisers benefit from performance marketing because they only pay when a consumer takes action. This gives them a low-risk way to increase brand awareness, as they can test out different audiences and strategies without a large financial risk. And because performance marketing is by definition trackable, advertisers get consistent feedback on their efforts, which helps them know where to tweak, increase, or decrease their campaign focus and budget.

Frequently asked questions (FAQs)

Is performance marketing the same as SEO?

Performance marketing and SEO are different things. Performance marketing is a system where advertisers only pay when consumers either make a purchase or take other specific actions. SEO stands for search engine optimization, which is a system geared toward maximizing a website or web page’s traffic via search engines.

Are PPC and performance marketing the same?

PPC, or pay per click, is one form of performance marketing. With PPC, advertisers pay based on the number of clicks their ad receives.

Can I do performance marketing myself?

It’s important to have the tools to track your targeted metrics. Amazon, for example, offers self-service CPC ads and other options to help with your performance marketing and advertising efforts. And Google’s Performance Max is geared toward helping you grow your business with Google Ads. Performance marketing is a great strategy when you want to be able to measure results, and get them fast.

To really hit your business objectives, make sure to build your campaigns strategically. Create an ad that will resonate with your target audience, and choose the right platform, ad format, and optimization goals.