Performance Marketing is a method of online advertising and marketing which is measured, managed and paid for on a ‘performance’ basis. You’ll often hear the term Affiliate Marketing used interchangeably, but they are not actually the same.
Performance Marketing pays out only on a completed ‘acquisition’ or ‘action’ – part of the CPA (Cost Per Acquisition) business model, this consists of the following types of acquisitions:
- Cost Per Action (CPA) – When a consumer complete a specific ‘action’ like a form registration or newsletter subscription.
- Cost Per Sale (CPS) – When the consumer makes a sale or purchases a product (More commonly used in Affiliate Marketing).
- Cost Per Lead (CPL) – When the consumer submits their ‘data’ and opt’s into further marketing or sales contact.
- Cost Per Install (CPI) – When the consumer downloads or installs a desktop or mobile application.
- Cost Per Click (CPC) – When a consumer clicks on advertising media or a landing page.
- Cost Per Mille (or Thousand Impressions) (CPM) – When advertising media is displayed to consumers at least a thousand times.
Most people think of Performance Marketing as being the same as Affiliate Marketing, however affiliate marketing is simply a ‘discipline’ of the wider Performance Marketing spectrum. Affiliate Marketing is generally a CPS, revenue sharing model where affiliates receive a proportion of the sale of any product sold via the affiliates promotional activity. However, much of the online advertising industry is focused on a performance basis, as this allows advertisers, marketers and merchants to measure their activity and control their marketing budgets.