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What Is Performance Marketing? A Complete Beginner’s Guide

LGS educate
What Is Performance Marketing? A Complete Beginner’s Guide

The world of marketing is constantly evolving. While some forms of marketing remain tried and true (such as print advertising). New methods are constantly being develop to keep up with the latest changes in technology.

Previously, marketers used to pay only for ads placed on TV, radio, or in magazines and newspapers. But now, with the rise of digital marketing, there are a lot more options available. Moreover, they now don’t pay for estimates but instead pay only when there is a desired action or performance, such as a purchase, sign-up, or download. This is what’s known as performance marketing.

Performance marketing is one of the newer kids on the block. But it’s quickly become one of the most popular methods – especially for digital marketers.

What Is Performance Marketing?

Performance marketing is a digital marketing strategy that driven by results. It’s ideal for companies that are looking to reach their audience at scale, because payment is based on how users interact with the content.


It refers to a form of digital marketing in which brands only pay marketing service. It providers after their business objectives have met or when specific actions have taken, such as a click, sale, or lead. In other words, it is performance-based marketing.

Performance marketing works when advertisers connect with either agencies or publishers to design and place advertisements for their company. On any number of performance marketing channels — social media, search engines, videos, embedded web content, and more. Instead of paying for an advertisement in the traditional way, these advertisers pay based on how well their ad performs, by measuring number of clicks, impressions, shares, or sales. 

How Performance Marketing Works

Advertisers put their ads on a given channel (see more on top PF channels below), and then pay based on how that ad performs. There are a few different ways to pay when it comes to performance marketing: 

If performance marketing is about paying for action, it pays to have a strong grasp on the various strategies. Most commonly used, and the actions most commonly measured.

  • Cost Per Impression (CPM): The amount an advertiser pays a publisher per one thousand 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  

Ultimate CPA Marketing Guide For Beginners: How To Get Start For Free (2022)

It’s worth noting that 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 of course, results.

4 main types of performance marketing

What Is Performance Marketing

Modern businesses invest in 4 main types of performance marketing:

Social media advertising

Social media advertising includes running ads on Facebook, Instagram, Twitter, LinkedIn, and more. Typically, these campaigns are set up with a funnel structure. At least one campaign to reach new people (called prospecting) and at least one to reach people who have visited their site but not yet converted (retargeting). Not all social media advertising is performance marketing— When not used to drive conversions, it can also used for brand marketing or market validation.

READ COMPLETE BLOG ABOUT Social media advertising

Search engine marketing (SEM)Search engine marketing (SEM)

Search engine marketing refers to running advertising campaigns to drive traffic from search engines such as Google or Bing. These campaigns are usually structure based on the types of search they target. For example, a business might have campaigns for the type of product they sell, competitor brands, and their own brand.

Search engine marketing is almost always performance marketing by nature. It is also entirely separate from SEO.

Influencer marketing

Historically, people haven’t always considered influencer marketing to be “performance” marketing. But in recent years, that’s change. Influencers have more business savvy, and the growth in both influencer management tools like Gatsby. Influencer partnership platforms has allowed brands to properly track and iterate on their influencer partnerships, making it truly performance driven.

Native advertising/sponsored content

Similar to influencer marketing, but instead of paying an influencer to speak about your brand, you pay a publication to write about it. As the marketer, you get a high degree of creative control over what they publish for you. Some publications call it native advertising, others sponsored content, but the strategy is the same. Note that in most countries, publications have a regulatory requirement to disclose that the content sponsored.

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