For a long time, we have all heard the word performance marketing. Yet, when asked, most people think that is yet another form of marketing like display, among other things. One of the easiest ways to describe performance marketing is a combination of paid advertising and brand marketing, performance marketing refers to advertising programmes in which affiliates and marketing companies are only paid when a desired action is completed, such as a completed lead, sale, booking or download. Some of the metrics used includes PPC (Pay-Per-Click) advertising. Under this, businesses pay each time a user clicks on their ads.
Now the beauty of this format of marketing is that it can be used as a layer on top of any other format of advertising.
Performance marketing versus programmatic advertising
One of the most common myths is that there is no difference between performance marketing and programmatic advertising, but they are not the same. Performance marketing is more about the different kinds of tactics used to drive measurable results and payment is based on the outcome, while programmatic advertising is all about the automated process of purchasing and selling digital inventory, using real-time bidding and data-driven targeting.
Growth marketing versus performance marketing
Once again, these are two different formats of advertising and there is no similarity between the two. In the case of growth marketing, whatever data is gained through marketing campaigns is further used to drive growth, which includes boosting revenue, customer acquisition, and retention, among others. Methods like A/B testing, email marketing, search engine optimisation (SEO), and data analysis to implement better, are some of the strategies used by brands to promote growth. There are times when growth marketing reduces the cycle of innovation thereby reducing the cost of extended marketing efforts.
Interestingly, performance marketing is a subset of growth marketing, specifically targeting measurable outcomes with a cost-per-action payment model.
Affiliate marketing versus performance marketing
For many who are not aware, affiliate marketing is part of the broader performance marketing category, which also includes influencer marketing, email marketing, search marketing, and other forms where the partner receives commission payouts based on sales or specific performance metrics.
In affiliate marketing, an affiliate earns a commission by promoting another person’s or company’s products. They promote the products and receive a portion of the profit from each sale they generate, tracked through affiliate links from one website to another. This is different to performance marketing, where payment is made based on the outcome of the impact of the campaign.
Direct response and performance marketing
There are many similarities between performance marketing and direct response marketing. Both formats focus on generating immediate, measurable results. However, direct response marketing can utilise non-digital channels like direct mail or TV advertising, whereas performance marketing is mainly digital and typically involves a cost-per-action payment model.