74. What is Performance Marketing ?

Performance marketing is an online advertising strategy where the advertiser pays only if the the ad gets a desired outcome from the customers. The ads must drive the customers to take preferred actions to meet the campaign objectives. These actions reflect how the ad is performing in the form of leads, conversions, sign-ups or sales.

It is cost-efficient- For instance, if the advertiser sets “sale conversion” as the key performance indicator for the campaign, then he will be charged by the publisher for every sale that takes place and not merely for clicks or impressions.

Even if your ad is not faring well, the cost is still not shooting through the roof as opposed to advertisers who pay up front for ad space without the certainty of getting the desired result over a period of time, thus keeping the ad expenses to bare minimum.

It carries low risk- You spend only for what you get without worrying about the budget getting wasted on frivolous clicks or impressions. This makes it more attractive for small and medium scale businesses as well. In traditional form of advertising, the money is spent on ad space prior to seeing the outcome as opposed to performance marketing where advertisers pay only for successful transactions. This further helps optimise the ad spend.

With a relaxed ad space to experiment with, performance marketers can constantly innovate on ways to drive the desired actions from customers. The intention of the campaign is to drive consumers’ actions as opposed to raise awareness.