• Blindspot Media

Performance Marketing in 2021| All You Need to Know

What is Performance Marketing?

Performance Marketing is an umbrella-term for online marketing and advertising in which clients pay marketing companies only when a specific action occurs; for e.g.-a generated lead, a click, a sale, etc.

Performance Marketing can act as a great method that helps clients in developing and growing their businesses. Actions within the spectrum of performance marketing are to be a success because of its carefully planned targeting which in turn benefits both clients and marketing companies with opportunities.

In traditional Marketing, a payment is made in advance which is never dependent on the success of the ads, whereas in performance marketing clients only pay for successful transactions which helps them to keep track on the ROI. Everything can be tracked and measured in performance marketing, from the cost of acquisition to incrementality!

The various payment models that are used within this space are:-

- Cost per Impression (CPM): The amount any client pays their respective marketing company per one thousand times that their advertisement is shown.

- Cost per Click (CPC): The amount any client pays their respective marketing company only when their advertisement is clicked on.

- Cost per Sales (CPS): The amount any client pays their respective marketing company only on the accomplishment of a sale that is directly generated by the advertisement.

- Cost per Leads (CPL): The amount any client pays their respective marketing company when a sign-up from an interested customer is received from their advertisement.

- Cost per Acquisition (CPA): The amount any client pays their respective marketing company when any kind of action such as a click, a form completion or a sale occurs.

How does Performance Marketing work?

Performance Marketing incorporates of four main groups: Retailers or “Merchants”, Affiliates or “Publishers”, Affiliate Networks and Third-Party Tracking Platforms, and Affiliate Managers or “OPMs” (Affiliate Management Companies).

All the four groups play an equally crucial role in the functioning of Performance Marketing which brings out the desired result. Below are the briefs of each group:

1. Retailers or Merchants

This group is commonly known as Advertisers, their businesses are promoted via Affiliate Partners or “Publishers”.

Performance Marketing can be very successful for the retailers that deal in fashion and apparel, food beverages, health, beauty products, sporting goods etc.

An established online brand or an online presence in several platforms with a good number of engaged audience and a minimum proven conversation rate can help affiliate programs do their best in Performance Marketing.

Also, these programs have their own associated partners which help them gain productive ROI in swapping with exposure, marketing efforts and traffic generation.

2. Affiliates or Publishers

Affiliates or Publishers go by many set ups such as coupon websites, loyalty and cashback websites, product review sites, blogs, online magazine and much more. This is exactly why this group is called “marketing partners” of the Performance Marketing sector.

The success of Affiliate Marketing of a particular merchant consistently depends on understanding and strategy as well as inclusion of social influencers, content sites, mobile apps, artificial intelligence, complimentary marketing partnerships, remarketing ad managers and product review sites.

In this group, Influencers play a vital role as they are the publishers that promote businesses via blogs, social channels and all other social networking sites. They aim on giving their followers a sense of surety with their own personal experiences and reviews.

3. Affiliate Networks and Third-Party Tracking Platforms

This group offers end-to-end details and instruments like banners, text links, product feeds, promotions and payouts. It plays a crucial role in merchant/affiliate partnership.

For both the merchant and affiliate, these networks and platforms are a way to keep track of leads, clicks, and conversions.

Various affiliate networks and tracking platforms have their own cons and pros, cost structures, merchant vertical expertise, and much more. It is recommended to do a complete research, or ask advisory from an expert.

4. Affiliate Managers or OPMs (Outsourced Program Management Companies)

This group stands as the major force between the merchant and affiliate. For the smooth functioning of the business, brands sometimes choose to work with agencies to manage their program due to their expertise in the arena. These types of agency partnerships are often crucially important because often in-house teams have limited resources, expertise, and limited market reach, so working with an agency can help fill these gaps and bring out much faster results.

Affiliate managers make sure everything the affiliates need are at display for both the merchant and partner within the network and everyone is supported with brand strategy and approach.

It is sufficiently important to keep in mind that, for performance marketing to function effectively, one needs to be discerning about their options, make reliable choices considering their campaign goals; wisely choose platforms, costs and results. Remember that one can always improve and grow.