Performance Marketing – A Complete Guide for SMEs in India

Performance Marketing- A Complete Guide For Smes In India

What is performance marketing?

As the name suggests, performance marketing terms to all the marketing and advertising efforts that lead to a certain desired action which can be a sale, a website visit or an app installation, etc.

The most important characteristic of performance marketing is that the advertiser pays the platform only when the specific action happens.

Advertisers can give an indication to the platform what the desired action is and the cost that the brand is willing to pay. The platform will optimize the campaign toward both goals.

For example, consider you are a bakery and you want people to visit your online store and get to know more about your products.

You go on Facebook and from the various ad options Facebook offers, you select banner ads and select your audience based on your location, target group demography, and interest and set your objective as “Website Visits”.

This would simply mean that no matter how many relevant people see your banner ad on Facebook, you would pay Facebook only when someone clicks on the ad and visits your website.

How does Performance Marketing Work?

How Does Performance Marketing Work?
Image soure:freepik

Performance marketing typically involves a partnership between an advertiser and a publisher or partner, such as an affiliate marketer. The advertiser provides the publisher with a unique link or tracking code to promote their products or services.

The publisher or partner promotes the advertiser’s products or services through various channels, such as their website, email, social media, or online ads. When a user clicks on the link or tracking code and completes a specific action, such as making a purchase or filling out a form, the publisher earns a commission or fee from the advertiser.

In terms of pricing models, the most common models for performance marketing include the following:

Cost per impression (CPM)

The advertiser pays a fixed fee for every 1,000 impressions of their ad.

Cost per sale (CPS)

The advertiser pays a commission for every sale made as a result of the publisher’s promotion.

Cost per lead (CPL)

The advertiser pays a commission for every lead generated, such as when a user fills out a form or signs up for a free trial.

Cost per acquisition (CPA)

The advertiser pays a commission for every user acquisition, such as when a user makes a purchase or becomes a paying subscriber.

Each of these pricing models has its own benefits and drawbacks, and the best option depends on the specific goals and needs of the advertiser and publisher.

How is Paid Performance Marketing Different?

How Is Paid Performance Marketing Different?
Image soure:freepik

Paid performance marketing is a form of online advertising in which advertisers pay publishers (websites or apps) only when a specific action is completed, such as a sale or lead. This differs from traditional forms of online advertising, such as display ads, where advertisers pay to have their ad displayed on a website regardless of whether the ad leads to any action or conversion. 

Paid performance marketing allows advertisers to more closely track the return on investment for their advertising spend, as they only pay when a desired action is completed. Performance marketing has always been interchangeably used with terms like affiliate marketing, growth marketing, etc.

In the following sections, we would try to understand the differences.

Performance Marketing vs Brand Marketing

When talking about performance marketing, the other term that often comes to mind is brand marketing.

Brand marketing is nothing but all the efforts you put into defining your brand- creating a brand name and design, establishing guidelines for clear and effective communications, and planning and executing marketing activities that set your brand apart from other brands.

Here are some examples of brand marketing from the blog of 99designs.

Apple’s Brand Marketing Strategy

Apple’s brand marketing has always focused less on products and more on the lifestyle that is defined by their products.

Some of the notable characteristics of Apple’s Brand Marketing Strategy are:

  1. Crisp white packaging
  2. Provocative taglines like Think Different
  3. Their event-like product launches
Apples' Brand Marketing Strategy

Apple products have a dedicated fandom that defines their marketing initiatives.

Nike’s Brand Marketing Strategy

Nike believes in selling stories and presenting their products with an engaging story about the origin and the idea of the products.

Nike'S Brand Marketing Strategy
Nike'S Brand Marketing Strategy

Adding a background story to the products gives the brand a human touch.

Often seen as two ends of a spectrum- performance marketing and brand marketing can be differentiated on the basis of their marketing objective.

While brand marketing helps the brand to grow in long term, performance marketing is more concerned about growing the company’s business in the short term.

But the question that we often face is, Are performance marketing and brand marketing mutually exhaustive?

Often not!

Brand marketing is like a roadmap, how would you want your brand to appear to the users?

What position would you want to take in your audience’s life? Brand marketing can be the guiding light for performance marketing to work. Barry W. Enderwick has come up with a perfect example in his article Is it really Brand vs Performance Marketing?

From his Netflix days-

At Netflix when we were establishing ourselves as a streaming company before Netflix Originals came on the scene, we would create banner ads that featured marketing messaging developed from the foundation of our brand position — ‘movie enjoyment made easy.’

Typically, it would have a benefit-driven headline like, ‘Instantly watch as many movies as you want’ followed by support copy. The imagery would be something like a happy family in their living room with the Netflix UI on the TV.”

Netflix'S Brand + Performance Marketing

Another point Brand Marketing supplements performance marketing. In almost all cases, running branding campaigns show a lift in performance marketing parameters.

Performance Marketing vs Affiliate Marketing

To define affiliate marketing in simple words, according to, “Affiliate marketing is an online sales tactic that lets a product owner increase sales by allowing others targeting the same audience— affiliates—to earn a commission by recommending the product to others.

At the same time, it makes it possible for affiliates to earn money on product sales without creating products of their own.”

Affiliate marketing involves referring to some other company’s products and services through one’s blog/website, social media channel, etc with help of a unique link or discount coupon, etc.

Every time someone would use this link to visit/purchase the product/services (desirable action to be decided between the merchant and affiliate), the affiliate would earn a commission. Here are some examples of affiliate marketing:

Popular e-commerce brands like Amazon and Flipkart run their own affiliate programs for bloggers, publishers, and content creators where they provide easy-to-use tools to integrate their unique product links on the content creator’s properties.

Now, it’s the publisher/affiliate’s work to make sure the maximum number of people visit their sites and get convinced to click on those links/make a purchase.

Amazon'S Affiliate Marketing Model
Flipkart'S Affiliate Marketing Model

A good example of an affiliate site would be the product review and comparison websites:

Affliliate Marketing Example

Affiliate marketing is often used interchangeably with performance marketing.

Going by the definition, in affiliate marketing, an affiliate is paid only when a desired action is completed, which implies that affiliate marketing is a type of performance marketing with the advancement of technology the line separating both have become thinner but performance marketing involves a lot more than affiliate marketing only like social media marketing, search engine marketing, email marketing, etc.

Performance Marketing vs Growth Marketing

By now we have understood that performance marketing has a lot of focus on KPIs such as sales, emails, downloads, etc.- it encompasses all the paid strategies to generate quantifiable results within a particular time period. In terms of the funnel, the focus is largely from the Middle of the Funnel to the Bottom of the Funnel.

In the case of growth marketing, which often relies on performance marketing to achieve its goal, the focus however is long-term like Brand Marketing though here, the priority is to generate organic traffic and acquire and retain customers.

Often the focus of growth marketing lies at top of the funnel and also involves organic marketing techniques like social media, SEO, content marketing, referral marketing, etc. And many times it can involve compromising on profitability to get more leads faster and scale up the business.

For example, a new OTT platform offering content free of cost just to grow its user base or a new e-commerce platform offering deep discounts to snatch users from competitors.

Following is an example of growth marketing according to

HubSpot’s Growth Marketing Model

Growth marketing technique includes a number of strategies and methodologies across various fields like UX, customer service, pricing structure, brand voice, product offering, etc.

Hubspot is a B2B brand that provides growth marketing solutions to companies. Following are key growth strategies employed by HubSpot that helps HubSpot achieve high growth.

  • Free Tools: Free tools offered by HubSpot act as a gateway to paid products.
  • Brand Image: HubSpot doesn’t need any case study to establish the success of its products for HubSpot is the success story of its own products. Customers opting for HubSpot want similar success for their brands using HubSpot.
  • Lead Nurturing: HubSpot uses Email Marketing (which is one of its core products) to nurture leads.
  • Pricing Strategy: HubSpot follows a Pay as You Grow model which means customers have to pay as they keep acquiring contacts.
  • Content Marketing: HubSpot is one of the most authentic and informative sources for content marketing.
  • Webinar Marketing: The company leverages its expertise by conducting informative webinars and marketing them to its audience.

Now, that we have analyzed performance marketing in detail, let us have a look at various performance marketing channels

Various Performance Marketing Channels Along with Examples

Social Media Marketing

Social Media is a term that we are all familiar with, it’s a part of our lives now just like bread and butter, now most of us have come across the term Social Media Marketing, so let’s have a better understanding of it.

Social media marketing is the process of promoting a business or product through various social media channels. It can include creating and sharing content, running social media ads, and engaging with customers on platforms such as Facebook, Instagram, Twitter, LinkedIn, and others. 

The goal of social media marketing is to increase brand awareness, drive website traffic, and generate leads and sales. It can be an effective way to reach a large and engaged audience, but it’s important to have a clear strategy in place and to regularly monitor and adjust your efforts.

Example: Spotify

Campaign: Spotify wrapped

Spotify Wrapped Campaign Example
Image source: embedsocial

The ideal fusion of machine learning and your musical preferences is Spotify wrapped. On the plate, these two items create real magic. People long for this joy, and Spotify is in charge of providing it to everyone around the globe since 2016.

In 2016 Spotify Wrapped campaign was a huge success for the company in terms of viral marketing. The wrap contains all the songs users have listened to over the last year, their favorite artists, the genres they have spent the most time listening to, and other information. It included the top five artists that listeners had heard. Additionally, it is a massive viral social media campaign rather than simply another marketing

Every year, millions of Spotify users share their Spotify wrapped to their social media profiles which is a boost for Spotify. In the app store, the Spotify app has historically seen a jump at the end of the year, because wrapped is released at the end of the year.

(Source: Startuptalky)

Programmatic Display Advertising

Programmatic display advertising is a form of digital advertising that uses automation and technology to purchase, place, and optimize display ads across various websites and platforms. This approach allows for real-time bidding on advertising inventory, targeted audience targeting, and optimization of ad performance through data analysis. 

Programmatic advertising has become increasingly popular in recent years as it allows for more efficient and effective advertising for both advertisers and publishers.

One of the key benefits of programmatic display advertising is the ability to target specific audience segments. Advertisers can use data such as demographics, browsing history, and purchase behavior to create targeted audience segments and deliver ads to those specific groups. This can result in higher engagement and conversion rates, as the ads are more likely to be relevant to the audience.

Programmatic advertising also allows for real-time optimization of ad performance. Advertisers can use data such as click-through rates and conversion rates to adjust their advertising strategy on the fly. This can result in a better return on investment for the advertiser, as they can quickly identify and address any issues with their ads.

In addition, Programmatic advertising can also provide cost-efficiency for advertisers. Since the buying process is automated, it eliminates the need for manual negotiations and the process can be completed at a lower cost.

Example: Amanda Foundation

Amanda Foundation Programmatic Display Advertising Example

The Amanda Foundation, a non-profit organization, used programmatic marketing to match potential adopters with cats and dogs at their facility. They used extensive audience targeting to determine which users would be most interested in a particular breed of cat or dog, based on their preferences and lifestyle. This helped them reach the right people with their ads and increase the chances of successful adoptions.


Native Advertising

Native advertising refers to a form of online advertising that blends in with the surrounding content on a website or mobile app. This can include sponsored content, sponsored social media posts, or sponsored search results. The goal of native advertising is to make the advertising feel like it is part of the natural user experience, rather than standing out as a traditional advertisement. 

Native ads are typically more effective than traditional display ads because they are less intrusive and more likely to be seen and engaged with by users. Native advertising can be used to promote a variety of products or services, including software, mobile apps, and e-commerce products.

Example: Sponsored Articles

Native advertising can be found on online news websites and magazines in the form of sponsored posts in the “Recommended Articles” section or as in-feed buttons. These articles are sponsored but aim to provide useful and informative content to attract a wide audience. By providing helpful information and avoiding pop-ups and banners, these sponsored posts can be an effective way to bring audiences to a native advertising page.

Sponsored Articles, Native Advertising Example
Image source: Marketing profs

Sponsored Advertising

Sponsored advertising, also known as sponsored content or sponsored posts, is a form of native advertising where a brand pays to have its content or products featured on a website, social media platform, or other digital media. This type of advertising is often used to promote products, services, or brand awareness. 

The sponsored content is designed to blend in with the surrounding content on the website or social media platform, making it less intrusive and more likely to be seen and engaged with by users. Sponsored advertising can take many forms, such as sponsored blog posts, videos, social media posts, or even search results. This can be a cost-effective way for brands to reach a targeted audience, as they can be placed on specific websites or social media channels that align with their target market.

Example: Taco Bell

Taco Bell Sponsored Advertising Example

Snapchat, a well-known image and video-sharing app, features a “filter” function where users may change their appearance or the background of a photo or video.

More than 224 million people have visited this Taco Bell filter. When done effectively, sponsored content, like the taco-face filter, enhances user experience rather than disrupting the same (like traditional advertising).


Affiliate Marketing

Affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate’s own marketing efforts. The affiliate typically promotes a product or service using their own unique referral link and earns a commission for each sale made as a result of their promotion. 

Affiliate marketing can be a cost-effective way for businesses to expand their reach and for affiliates to earn money by promoting products they believe in. It is also a win-win situation for both the merchant and the affiliate as the merchant gets more sales and the affiliate earns a commission. Affiliate marketing can be done on a variety of platforms including websites, social media, and email marketing.

Example: Amazon

Amazon Affiliate Marketing Example
Image source: ReferralRock

Search Engine Marketing

Search Engine Marketing (SEM) is a form of online advertising that involves the promotion of websites by increasing their visibility in search engine results pages (SERPs) through paid advertising. This is done by purchasing ads on search engines such as Google, Bing, and Yahoo. 

The ads appear at the top or bottom of search results and are identified by a small “Ad” label. SEM allows businesses to target specific audiences and keywords, making it a highly effective way of reaching potential customers. It can be a cost-effective way to drive traffic to a website, increase brand awareness and generate leads. However, it requires a clear understanding of the target audience, keywords, and search engine advertising platforms to ensure a good ROI.

Example: Fiverr

Fiverr Sem Examples

(Image Source: marketing.sfgate)

This ad effectively uses a clear headline to convey its message and includes a call-to-action (CTA) link at the bottom that increases the chances of users clicking through to the website. The inclusion of specific CTA links that match users’ search terms, such as “graphic design,” makes this ad stand out amongst similar ads for freelance platforms. This increases the chances of users looking for that specific service to click on this ad.

Example: In-app ads

Mobile Advertising

Mobile advertising is the delivery of online advertising to mobile devices such as smartphones and tablets. It allows businesses to reach consumers who are using mobile devices to access the internet, social media, and mobile apps. 

Mobile advertising can take many forms, including SMS, MMS, in-app ads, and mobile web ads. The ads can be delivered in a variety of formats such as text, images, videos, and interactive elements. Mobile advertising is becoming increasingly popular as more people use mobile devices to access the internet. It allows businesses to target their ads to specific audiences based on location, demographics, and interests. This makes it a highly effective way of reaching potential customers. 

Mobile advertising can be done through various platforms such as Google Adwords, Facebook, Instagram, and many more. However, it’s important to ensure that the ad is optimized for mobile devices to ensure a good user experience.

Mobile Advertising Examples
Image source:adespresso

Video Advertising

Video advertising is the use of video content to promote a product, service, or brand. It is typically delivered through online platforms such as YouTube, Vimeo, and social media sites such as Facebook, Instagram, and TikTok. 

Video ads can appear as pre-roll, mid-roll, or post-roll commercials before, during, or after a video content, and can also appear as sponsored content on a platform’s homepage or as an in-feed video. 

Video advertising is an engaging and effective way of reaching potential customers. It allows businesses to tell their stories, showcase their products and services in an entertaining and informative way, and build brand awareness. It can also be used to drive website traffic and generate leads. 

Video advertising can be done through various platforms such as Google Adwords, Facebook, Instagram, and many more. However, it’s important to ensure that the ad is well-produced, engaging, and relevant to the target audience to ensure a good ROI.

Example: Coca-Cola “The Last Customer”

Coca-Cola created an uplifting holiday video campaign in the Philippines, where they gave more than 15,000 people a surprise gift for the holidays, starting with a Coke. The campaign was memorable and effective in showing the brand’s commitment to the season of giving, which in turn, made the brand appear trustworthy, generous, and human to the customers.

How to Build Performance Marketing Strategy

How To Build Performance Marketing Strategy
Image source:freepik

1) Define your Goals

Clearly define what you want to achieve through your performance marketing strategy. This could include increasing website traffic, generating leads, or driving sales.

2) Identify your Target Audience

Understand who your target audience is and what their needs and preferences are. This will help you to create a more effective marketing strategy.

3) Research your Competition

Understand what your competitors are doing and what strategies they are using to reach their target audience. This will help you to identify opportunities and gaps in the market.

4) Choose the Right Channels

Choose the right channels to reach your target audience. This could include search engines, social media, email, or display ads.

5) Set up Tracking and Measurement

Set up tracking and measurement to monitor the success of your strategy. This will help you to identify areas that are working well and areas that need improvement.

6) Optimize and Refine your Strategy

Continuously optimize and refine your strategy based on the data you have collected. This will help you to improve the performance of your marketing campaigns and achieve better results.

7) Be Flexible and Adaptable

Be flexible and adaptable to change. As the market and your target audience change, so should your strategy.

8) Review and Report your Results

Regularly review and report on your results, this will help you to identify trends and patterns, and make more informed decisions about your performance marketing strategy.

FAQs Related to Performance Marketing

What is meant by performance marketing?

Performance marketing refers to a type of online advertising where advertisers pay publishers, such as websites or social media platforms, only when a specific action is taken, such as a sale or lead generation. It is also known as “cost-per-action” or “pay-per-performance” advertising.

What is the difference between performance marketing and digital marketing?

Performance marketing is a specific type of digital marketing where payment is based on a specific action, such as a sale or lead generation. Digital marketing, on the other hand, is a broader term that encompasses all forms of online marketing, including performance marketing, as well as SEO, social media marketing, content marketing, and more.

What are performance marketing channels?

Performance marketing channels include affiliate marketing, cost-per-action (CPA) advertising, pay-per-click (PPC) advertising, and cost-per-acquisition (CPA) advertising. These channels involve paying publishers, such as websites or social media platforms, only when a specific action is taken, such as a sale or lead generation.

Who uses performance marketing?

Performance marketing is used by advertisers, such as e-commerce businesses, lead generation companies, and B2B companies, looking to drive sales or leads. Publishers, such as websites and social media platforms, also use performance marketing as a way to monetize their traffic and earn revenue by promoting products or services and earning a commission for resulting conversions.

What are the benefits of performance-based marketing?

Performance-based marketing allows advertisers to pay only for results, such as sales or leads, which helps them to control their marketing costs. It also allows publishers to monetize their traffic and earn revenue by promoting products or services. Additionally, performance-based marketing enables advertisers to easily track and measure the ROI of their marketing efforts.

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Megha Singh

I am a mosaic of every person, thing, or substance I have loved even for a heartbeat. I love this world in all those grey areas where it's not just black and white. Every day I learn and unlearn things to become a better and beautiful version of myself so that one day I can proudly say ' You made it girl'

One Reply to “Performance Marketing – A Complete Guide for SMEs in India”

  1. A big thank you to The Media Ant for putting together such a well-crafted and informative piece on Performance Marketing


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