Many companies have employee referral programs where referring someone who gets hired comes with a reward (typically a cash bonus).
This is the same principle of performance marketing: marketers set a performance goal (like driving conversions) and reward the partners/people who help them get those conversions.
Let’s dive deeper into how performance marketing works, how to create a performance marketing strategy, and the tools you can use to implement one.
Types of Performance Marketing
There are various performance marketing partners/channels to consider for your campaigns:
- Affiliate marketing: A partner uses an affiliate code or link to promote an advertiser to their audience and is paid by tracking the conversions from their unique link.
- Influencer marketing: Brands work with creators and influencers that promote their offer to their unique audiences to inspire them to take action.
- Paid marketing and advertising: Businesses work with a publisher to display their ad (like on a webpage) and pay the publisher for actions like clicks, purchases after clicking, or the number of impressions from where they feature the ad.
- Search engine marketing (SEM): Advertisers feature advertisements in search results for business-related terms and pay the publisher if their ad is clicked.
- Native advertising: Advertisers create ads that blend in on the channels they’re on, and advertisers pay an affiliate or influencer based on their target conversion.
- Social media marketing: Creators and influencers advertise for partners on different social media channels.
How Performance Marketing Works
Executing a performance marketing strategy relies on three key players:
- The advertiser (like a retailer, merchant, brand, etc., who is looking to improve performance)
- A publisher or an affiliate partner (someone who promotes for an advertiser)
- An affiliate tracking network (a third-party system where advertisers and publishers connect and can track performance and receive payments).