Ever since the world has turned digital, the way consumers browse and buy has changed immensely. Needless to say, it has also changed the way companies advertise and sell.
Today, marketers can track every touchpoint and measure the results in real-time. Whereas in the past, attribution was nearly impossible. And it was difficult to optimize the campaigns. But now with Performance Marketing, you can enhance your marketing strategies as well.
However, most people mistook it for Affiliate Marketing.
And that’s why we decided to write this article. Here, we will explain how performance marketing is different from affiliate marketing. Also, you will learn more about the KPIs involved and the benefits of employing Performance Marketing strategies in your business.
Yes. Both are different.
Affiliate Marketing is a Subset of Performance Marketing. However, it is used in a similar tone in most places.
To begin distinguishing between performance and affiliate marketing, it becomes necessary to understand what each term means.
Performance marketing is a traditional media arrangement that uses lead or sales-based & commissioned-based approaches to promote traffic and generate sales. Affiliate marketing, sponsored content, social media marketing, influential marketing, and other marketing models fall under this category.
In Affiliate marketing, brands collaborate with third-party partners to create leads, sell products, and earn profit. It proves to be favorable for many brands and companies and is used in industries such as financial services as aggregator sites and travel as comparison sites.
However, this approach falls under the broad category of Performance marketing, in which marketers get paid after the brands’ objectives get fulfilled.
Affiliate marketing has become a common term that is interchangeable with Performance Marketing. But the fact is that Affiliate Marketing falls under a larger “Performance MARKETING” umbrella, which includes Influence Marketing, Email, Search, and other sources of marketing, where the marketing partners exchange sales, installations, and other desired actions for fixed commission payouts.
In affiliate marketing, a commission is earned for the online promotion of products or services for third-party websites. The marketers advertise on behalf of the merchant, to drive traffic, clicks, and sales.
In recent years, affiliate marketing has evolved to the extent that the affiliate gets paid only for sale or download. It may not assure the brands whether the consumer will buy their products or not.
From this point, performance marketing enters the scene and with new technologies and smart marketing strategies, you can take a closer step towards completing the action and converting it for sale.
The key performance marketing idea is that your affiliate must follow your standards and provide measurable business results from the campaign to complete the conversion and earn a commission.
Being an advertiser network, you must identify the desired outcomes and quantitative criteria. The affiliate then creates a campaign to complete as many actions as possible.
The payment structure has a direct impact on the performance marketing approach. It is entirely up to you to decide which payment method to choose.
The main motive of performance marketing management is enhanced ROI. And what helps in determining the best output for the campaigns are the Key Performance Indexes (KPIs).
A successful performance marketing strategy may consist of the following KPIs:
CPM: Cost Per Miles. It shows the cost paid by an advertiser for every 1000 impressions achieved.
CPC: Cost Per Clicks. It shows the actual price paid for each click in the campaign.
CPA: Cost per Acquisition. It is similar to CPC and helps measure the cost after every successful action. eBook downloads, services subscriptions, or purchase conversions are some of the prominent actions to calculate CPA.
CLV: Customer Lifetime Value measures the revenue brought in by an individual customer throughout their relationship with the advertiser’s brand.
There are many reasons to opt for performance-based marketing, not least of which are the efforts that put the power back into the hands of advertisers. Below mentioned are some key benefits:
There are various areas of promotion and advertising, and the boundaries set a few years ago have diminished today. The advertising channels are getting integrated into each other.
Unlike other forms of traditional advertising where the affiliates get paid commission upfront, affiliates in performance marketing get paid for successful transactions.
Performance marketing has successfully reversed the traditional value proposition of advertising. As it allows real-time measurement for ROI, it becomes a mandate to track the campaigns.