Performance marketing is a mix of paid advertising and brand marketing strategies wherein affiliates and marketing companies are only paid after the desired/requested action is completed.  

Performance marketing basically consists of a retailer (or a merchant) and an affiliate (or a publisher) run strategic target campaigns to improve ROI. Moreover, the merchant only pays the publisher when the action for targeted audience is completed viz. booking a ticket, sale, downloading an item etc., targeted clicks, and more. Along with this, there is also brand exposure.  

How does performance marketing work? 

Now that we understand the basics of performance marketing, let us delve deeper and try to understand its working process. 

Performance marketing consists of 4 components viz retailers, affiliates, third-party tracking platform & affiliate network, and affiliate managers or affiliate management companies.  

  1. Retailers: Retailers, otherwise also known as Merchants, are businesses that want to promote their products or services with the help of affiliates. Basically, a retailer would reach out to an affiliate with a goal in mind, and the affiliate then chalks out a plan to engage the audience and achieve those goals. Once the goal is achieved the retailer pays the affiliate. These campaigns can effectively help in improving ROI, traffic generation, new sales leads, conversions, and more.

  2. Affiliate: Affiliates, otherwise also known as Publishers, are said to be the ‘marketing partners’ in the performance marketing space. There are various types of affiliates viz. Coupon websites, blogs, loyalty or cashback websites, product review sites, mobile apps, and more. Basically, affiliates promote the retailer’s brand/product on their channels to enhance and grow the performance of a retailer’s products.

  3. Affiliate network and third-party tracking platforms: Think of an affiliate network as a one-stop shop for all things related to information for a merchant/affiliate partnership. This includes banners, product feeds, text links, promotions, and payouts. These affiliate networks help affiliate managers and retailers to issue bonuses, send newsletters, and create commission structures along with handling returns. This way they can evaluate the performance of a campaign by keeping track of clicks, conversions, and leads.

  4. Affiliate managers or OPMs: Affiliate managers or OPM (Outsourced Program Management) is the connection between a merchant and an affiliate. Brands can either work with in-house affiliate managers or outsource their work to external agencies with a proven success rate for their expertise. This can help brands scale their performance marketing programs driving higher ROI. 

3 Benefits of Performance Marketing 

Now that we’ve seen what performance marketing is and how it works, let us move on to understanding the ways in which it can help improve your eCommerce business.  

  1. Brand recognition: If you’re a newly established eCommerce business, building your network will take time and effort. One way to start growing your network is by partnering with affiliates and agencies to help reach new customers, run targeted campaigns to generate leads, and eventually improve your website traffic.

  2. Performance tracking: Every successful strategy or campaign should be measurable. With performance marketing, tracking your campaign and the results is easy and transparent where brands can view the entire buyer journey right from clicking on the link to making a purchase. This helps you identify which customers go through making the purchase to the ones who drop off, enabling you to work on the issues to garner better results.

  3. Lower risk: Since affiliates are paid only after the goal of the campaign has been achieved, it lowers the Cost Per Acquisition and improves the ROI. For a newly launched or growing business, this is advantageous as it helps brands test their strategies and networks for growth.  

Conclusion 

With the rise in competition, digital marketing is on the rise, and subsequently performance marketing to help brands grow and generate buyers, all at low cost without burning a hole in their pockets.  

If you’re a new eCommerce business, then the right performance marketing strategy can help you establish and grow your brand by generating quality clicks, leads, and sales.  

So, what are you waiting for? Up your performance marketing strategy to convert those leads into customers.  

For more detailed information to build, grow, and manage your eCommerce website, read our Complete WordPress guide and get started. 

Author

H. Fatima used to be an Engineer by profession and Writer by passion until she started pursuing full-time digital marketing. She is presently a Content Marketeer at Newfold Digital (APAC). She mostly writes what she deeply perceives and analyses, it is her way of unwinding. Her interests include writing, reading, watching foreign-language cinema and public speaking.

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