How to Use Performance Marketing to Scale Affiliate Marketing Strategies

In the traditional marketing model, advertisers placed their promotions in newspapers or magazines with high circulation or readership, hoping that the money they spent would bring results. 

Then as time progressed, when websites came around, homepage banner ads followed allowing marketers to reach out to a larger audience. This approach wasn’t well-received by customers, as they would continuously skip over them in search of tangible information or data. 

Moreover, display ads with pixels and heavier animation data took longer to load and consequently weren’t appealing to marketers. 

Then came recessionary trends with stricter competition that required instant results. That’s when marketers began to shift their focus and strategies to performance marketing, which meant that they only had to pay based on the results obtained from the ad.

The following is everything you need to know about performance marketing, with tips and strategies on how you can launch successful performance-focused ad campaigns. 

What is Performance Marketing?

Performance marketing is a form of online marketing and an advertisement payment model in its most basic form, where advertisers only pay marketing fees if an agreed-upon action is completed. These conditions can be finding a lead, closing a sale, or a simple click on the publisher’s website.

There are different performance marketing methods that are niche-based and only work with specific industries and audiences. Still, there are many channels that help businesses of all types with advertising and marketing in general.

Although prepaid advertising methods can be effective in some cases, using any prepaid promotion is hardly a reliable long-term marketing strategy. The reason for that is that there is no guarantee that every promotional campaign will be effective in boosting your return on investment (ROI). 

Opting for prepaid advertising sounds excellent on paper, but upon more profound consideration, it becomes evident that prepaid advertisements sum up to be a waste of time and money, with little to no trackable ROI. The beauty of performance-based marketing is that it relies solely on achieving measurable results.

Although you can still measure and estimate your results with traditional advertising methods, the success of such a campaign is not guaranteed, making it somewhat of a questionable investment. In contrast, performance marketing allows you to invest only in the best-case scenarios, which eventually will result in conversions. 

What Makes Performance Marketing Any Different from Other Kinds of Advertising? 

Contrary to traditional forms of advertising where publishers pay in advance for the ads, performance-based marketing focuses on the success of your campaign, and advertisers are paid when the transaction proves to be successful. 

In performance marketing, your efforts can be measured down to a single lead, click, or any other kind of interaction during the customer journey. This method makes performance marketing highly precise when it comes to ROI ratio and outcome. This can be anything from acquisition costs to statistics like average order value (AOV).

While marketers still argue about what steps or practices performance marketing involves, the modern definition of performance marketing has shifted from barebones pay-per-click payment models to sophisticated platforms capable of measuring any metric related to a digital marketing campaign.

How Does Performance Marketing Work?

In recent years, affiliate marketing has reached unprecedented volumes, so it is only natural that businesses start to scale their strategies to reach new and bigger audiences. 

This method has become one of the most popular outreach channels for advertisers. Aside from just advertisers, several parties are involved in a performance-based marketing mode, each with a shared interest in promoting a successful ad campaign.

All parties work together and set goals, build strategic plans and partnerships, and set agreements to meet those goals. Setting up tracking helps determine if those goals are met. Once the goals are met, the client pays the publisher for the objective that has been accomplished.

Who Are the Publishers? 

A publisher could be any company that has and operates a website that utilizes digital advertising methods to generate more leads. Likewise, a publisher can be a sole proprietor that owns one or multiple websites. Depending on the website’s content, every publisher can provide access to specific readers and subscriber groups.

Utilizing advertisements across different marketing platforms and channels makes it easier to reach a potentially larger pool of customers. So, naturally, it also keeps audiences engaged across multiple platforms, which helps brands stay in the spotlight. 

Cross-channel marketing includes but is not limited to: traditional banner ads, social media platforms, as well as paid search.

Who Are the Advertisers?

Advertisers bid on advertisement space with publishers for their target audience. This is usually done through deals on private marketplaces hosted by affiliate programs.

For a publisher or marketer to reach and engage with a specific audience online through digital advertising campaigns, they usually use multi-channel or cross-channel marketing campaigns. Performance marketing is the right choice for campaigns that aim to generate leads and increase sales and conversions.

Trading Desks and Agencies

Advertisers who don’t directly connect with publishers or advertising platforms partner with agencies or trading desks. This allows them to handle media buying and selling without getting into too much hassle.

More often, trading desks offer various options that give access to different advertising platforms. What is more interesting is that trading desk solutions are available all in one place, making it a preferable option for smaller advertisers that don’t have big marketing budgets. 

As a rule, trading desks come supplied with reporting tools that allow advertisers to manage their marketing channels and better understand the performance of each given campaign.

Things to Know Before Starting a Performance-Based Campaign

It can be overwhelming for marketers and advertisers to consider venturing out to start a performance-based marketing campaign with many metrics to evaluate. So let’s take a glance at what you can do and how you can prepare for your first performance-based marketing campaign. 

Here are a few steps to follow. 

Have a Specific Goal in Mind

Understanding your goals is an excellent first step that will get you closer to learning performance-based marketing. To identify these goals, answer the following questions: 

• Do you want to attract a certain number of new clients and increase traffic to your website? 
• Do you want to boost your subscriber list? 
• What is your marketing budget?

Upon evaluating your objectives, it is crucial to understand what pricing model will work for your campaign and which performance marketing channels will yield the best results.

Choose Channels That Make Sense for Your Objectives

Once you’re done figuring out what you want out of your marketing campaign, you can begin surveying different channels to pick the right one for your business. Since the discussion revolves around immediate goals, switching from one marketing channel to another may be a necessary step when you’re running your campaign. 

Monitoring and Optimizing Marketing Campaign

Since performance marketing grants you access to ROI analysis and other valuable metrics, you must monitor that data as an advertiser. This makes it easier to evaluate and redirect the campaign in the direction you need at any given moment if you feel like it is moving in the wrong direction.

Pros and Cons of Performance-Based Marketing

Performance-driven marketing campaigns come down to driving consumer action instead of just raising brand awareness. On top of that, clearer measurements make the advertiser’s job a breeze. Of course, other factors like real-time data-based campaign optimizations are also a great place to start. That said, there is more to performance-based marketing than it seems at first glance:

• Performance-based marketing is growing by the day and will continue to influence digital marketing in the future. Big companies and smaller niche brands are all taking notes while trying to implement performance-based solutions into their marketing campaigns and strategies in one way or another.
• You can finally say goodbye to investing blindly without knowing the results by opting for performance marketing. Performance-based marketing has lower investment costs and lower risks regarding managing your marketing budget.
• There are more opportunities for publishers and advertisers. Using various channels like mobile, social, display, search engine, and email will broaden your options and get you a higher return rate on your investment.
• Perhaps the main benefit of performance-oriented marketing is that your ROI is transparent and accessible at any given minute. This benefit is huge since a clearer ROI enables you to fine-tune a marketing campaign on the fly depending on the situation or how well it’s performing. This ensures that you will get a positive ROI.
• One thing that is often off-putting for new affiliates is that performance-based marketing can become quite complex. To receive high returns on your marketing efforts, you must choose a marketing agency that meets the needs of your strategy. Finding an affiliate program that understands the complexities of niche-based marketing can be tricky, but it is possible. 

Performance Marketing Pricing Models

While picking the right marketing channel for your campaign is undoubtedly essential, it is also a good idea to pick the pricing model that will fit the needs of your marketing campaign. 

So what are your options when it comes to performance marketing? There are a few basic payout models that you can choose from depending on your requirements. Here are a few of them:

• Cost per sale: This payment model allows advertisers to pay their associates or partners only when they sell a product or a service. CPS makes advertisement campaigns more cost-efficient, as compared to regular pricing models. That being said, it puts more pressure on the publishers instead of the advertiser.
  
• Cost per install: With cost per install, customers only pay when a prospect or lead downloads and installs a mobile app made by your brand. CPI is one of the cost-per-action models that revolve around mobile traffic and downloads.
  
• Cost per lead: With cost per lead, you only pay when a lead prospect converts or buys a product or service. CPL is typically used when a lead fills out a registration or lead generation form or when a potential client gives you their contact information after interacting with the advertisement you have posted. 
• Cost per acquisition: Here, an advertiser pays the publisher when a specific action unrelated to leads or products is performed. Most of the time, the acquisition is a click. However, it also can be a contact form filled by the customer.
  
• Cost per click: CPC allows you to pay only when a potential client or prospect clicks on your advertisement.

These advertising objectives can measure your marketing campaign’s performance and effectiveness at different stages, from launch to finish.

Other Non-Performance-Driven Models

Albeit similar to performance-based models, these payout options are not considered part of performance marketing, albeit similar to performance-based models. However, they can be implemented and worked into your existing strategy whenever needed.

• Cost per view/view and cost per completed view: A client pays when advertisers display a video advertisement in this model. Users that use CPCV pay only when a person watches the full video. Considering that recent studies show that US adults spend 3 hours and 43 minutes on the phone on average every day, this payment method could be viable if your marketing campaigns rely on mobile traffic.

• Cost per thousand: With cost per thousand, you pay when an ad reaches 1000 impressions. Even though this payment method was around for quite a while in the digital advertisement space, it is far from precise, especially if you or your partners’ websites don’t use additional tracking software.
  

Scalable Performance-Driven Marketing Channels

When we talk about performance-based marketing, we imagine multiple marketing channels that can be used to promote a particular product, service, or brand. If you are looking to launch a new marketing campaign for your brand, to promote your services, or simply to raise brand awareness, you should consider one of the following channels:

Native Advertising

Native ads are a strategy that works well with performance-oriented marketing, which operates in terms of supply and demand. The suppliers here are the publishers that already have an established audience. With all the tools to monetize their platforms and websites, they will readily provide space for ads. The advertisers represent the demand side of native ads. Advertisers look to reach specific audiences, and their goals can range from raising brand awareness to generating leads and making sales.

The main advantage of native ads is that they can be placed in relevant spots on the website in a non-obstructive way. On top of that, native ads fit the screen of any device, be it a computer, laptop, or phone, which makes them look like a part of the website’s content.

Native advertising channels are great for sponsored ads in search engines, social networks, and partner websites. In this case, everyone benefits from native advertising, including publishers, advertisers, and end-users.

With most people consuming a lot of content daily, it can become difficult to draw their attention to your content and keep them engaged. Native ads help by driving goals like funneling leads and increasing sales. 

Nowadays, publishers have long accepted that native ads are irreplaceable client engagement methods, a special tool that can monetize your content on different platforms. They are undoubtedly effective, and they boost customer user experience without being too intrusive.

Forget about pop-up ads. With native advertising, users are in a win-win situation. They get the content they need while discovering new options that they may find helpful at the same time.

Use the following tricks to suit native ads to your best interest:

1. Set a goal: Establish a clearly defined goal with specified metrics that you can use to evaluate the progress.
2. Set up your content: It’s essential to design your strategy around the content and not the other way around. By putting content as one of the critical elements of your campaign, you can inspire more people to take action with your content or product.
3. Optimize your content: Creating and distributing fine-tuned content before launching a marketing campaign is critical in native advertising as it drives more interest toward your blog.
4. Optimize and revise: Since performance advertising revolves around data, it is advisable to use the gathered information to your advantage. For example, you can squeeze real-time data that you have gathered and analyzed into your campaign to make your content more relevant to your audience. 

When you take these tips into account, you will make granular changes to your existing campaigns or plan the next one according to how effective your campaign turns out. 

Display Advertising

It is impossible to utilize native advertising without mentioning its smaller counterpart – display advertising. While it’s much smaller in magnitude, it is no less effective than the native method. Essentially, this channel uses the bottom part of web pages and is measured by cost-per-click (CPC) and cost-per-impression (CPM). Therefore, display advertising is a perfect method to boost traffic flow to your website or blog.  

Sponsored Content and Marketing

Speaking of blogs, most of them feature some kind of advertised content. While sponsored content is similar to native advertising, there are some very distinct differences. 

For example, sponsored content doesn’t drive traffic off the site directly. Instead, sponsored media redirects potential customers to the publisher’s website. 

If you are already an affiliate marketer or are interested in the idea, you probably already know how vital content-based marketing is. However, content alone won’t support your needs for fast business growth. Combined with performance-based marketing, it can make all the difference. The two will scale your marketing strategies quite effectively, giving you the chance to see the results of these efforts in real-time.

Teaming up with partners within an affiliate network helps reach audiences that would otherwise be quite hard to engage with. As a result, sponsored content raises brand awareness for both the publisher and the partner that ordered the article.

Social Media Advertising

Even though using ads on social media can become more expensive over time, it is still viable today. Social media channels can handle a lot of traffic, so platforms like Facebook, Twitter, Instagram, LinkedIn, and other platforms have built-in tools that allow advertisers to target specific audiences with a click of a button.

Social networks give access to clear metrics that allow measuring KPIs like clickthrough rates and cost per click, making it easier to determine the actual ROI of your campaigns. However, just like with other types of performance-based marketing, the key to effective social network advertising is setting up an obtainable goal.

Here are some metrics you can track using social media performance marketing channels:

• Likes
• Comments
• Shares
• Clicks
• Sales
• Impressions
• Filled Contact Forms

The list is not exhaustive for social media platforms. However, the primary metrics to account for are click-through rates (CTR) and cost-per-click (CPC). These two are the leading indicators of the audience’s engagement and interest in your product or service. 

Search Engine Marketing (SEM) and Optimization

In theory, search engine marketing and optimization involve increasing visibility and clicks using paid and organic advertising. While organic advertising is undoubtedly a force to be reckoned with, paid SEM is what you should look for as a performance marketing avenue.

Undoubtedly, SEM and SEO are among the most popular marketing methods and not only for performance-based channels. SEM allows advertisers to put out ads for their customers ready to purchase products and services.

While keywords are the core of SEM and SEO, choosing them correctly is a science of its own. It will take some time to set your SEM and SEO game straight, but it will pay off in the end.

The SEO process is arduous but understanding its principles is vital for achieving high ROI. Hence, it is recommended to invest in the SEO elements of your campaign as much as you would invest in content.

Affiliate Marketing to Measure Performance

Affiliate marketing is another powerful model of performance-oriented marketing, as it has all the prerequisites of performance marketing from the get-go.

It is no secret that many advertisers have restricted budgets, limiting them from recognizing which advertisement methods are more effective for their specific needs. The main advantage of performance-based affiliate marketing is that the starting costs of running campaigns are relatively low. Being a part of an affiliate network makes it easier to get started without having a massive budget for marketing.

Partnering with third-party advertisers and publishers is an excellent way to gain traffic and increase your exposure to clients. These days, most affiliates are running websites, making it easier to pick partners based on a marketing strategy. With this thought process, you can offer compensation only when a partner affiliate generates traffic, makes a sale, or completes any other previously agreed-upon task. 

What To Do in Performance-Based Affiliate Marketing

When performance-based marketing meets an affiliate network, it can be hard to differentiate the two. To succeed at performance-based marketing within an affiliate network, we recommend adopting the following basic principles:  

Setting Goals You Can Achieve

As previously mentioned, setting out attainable goals is the absolute key to launching successful performance-based marketing campaigns, and affiliate networks are not an exception to the rule.

Maintain Visibility and Transparency

Performance-based methods and metrics allow you to measure every bit of data. However, neglecting any piece of information or withholding it from your partners is a bad idea. To succeed, you must ensure that you provide your fellow affiliates with all required data that will help improve their and everyone’s ROI.

Keep Your Hand on the Pulse of the Data

By opting for an affiliate network that meets your needs, you gain access to sophisticated software that helps you keep track of the ROI and other metrics. While it is not a bad idea to experiment, you should keep both your long- and short-term goals in mind, and knowing your ROI is critical for that. There is nothing wrong with changing the direction of your marketing campaign, but knowing when to do so comes with experience.

There is little doubt that most market players and big names in business measure their success based on their ROI. With the performance-based marketing boom, it is evident that it is here to stay, changing the way marketers view advertising as a whole. Many agencies used the measurability of data as the main selling point, but very few of them can follow up on their claims.

As a customer, you have the right to demand full transparency from your agency regarding any metrics. With this vital information, you will understand precisely how much each sale, prospect, or lead costs.

We advise you to ensure that your future campaigns are scalable, adequately managed, and equipped with the right measuring tools and tech stack to make the most of them.

Zero Parallel’s Open Market offers customers the perfect tools for acquiring and publishing leads through a vast network of affiliates through the use of a dynamic Ping Tree that allows you to sell your leads to advertisers outside of our typical network. 

Additionally, the program delivers access to multiple major partner programs that ensure complete transparency across all stages of your marketing campaign. 

Contact us to learn more about how Zero Parallel can boost and scale your affiliate program. Sign up as an affiliate now to start on your own performance-based marketing.