Performance Marketing: Basics, metrics, and pricing young startups need to know

Performance Marketing: Basics, metrics, and pricing young startups need to know
Performance Marketing: Basics, metrics, and pricing young startups need to know

When advertisers pay advertising companies based on results or performance, it is known as performance marketing. The results can be of any type, such as leads, clicks, sales, etc.

Performance marketing focuses on delivery actions and tracking them and ascertains a fixed ROI for every step or outcome.

As a marketing professional, learn terms like cost per impression, cost per click, cost per installation, cost per lead, cost per acquisition, etc. These are the terms used to measure the performance of a specific ad campaign or advertisement. Therefore, knowing them is essential to understand the basics of performance-based marketing.

Benefits of Performance Marketing over Traditional Ways of Advertising

Tracking Performance – Tracking the performance of marketing campaigns and promotions becomes easier with performance-based marketing. As a marketer, you can analyze the performance of campaigns with the help of different data analytics tools. You can measure the performance of campaigns and modify them in the future to get better results.

Focus on ROI – As performance-based marketing focuses on achieving the set goals, the results are primarily overwhelming. The marketing campaigns based on performance enhance the brand value across different metrics. Therefore, it is also profitable from the point of view of clients.

Comparison with Traditional Marketing

We collect an upfront fee or charges for running a particular ad in traditional advertising methods. The metrics like duration of the ad, display time, advertising channels, etc., played a pivotal role in determining their price.

However, the advertiser pays only when a specific action is taken in performance marketing. Instead of spending enormously on traditional ads, advertisers can agree on a special price for a particular activity. It means that they only have to pay for each click, conversion, or form filled by the customer. The best part of performance-based marketing is that the advertisers choose which metric they would like to pay for. Also, they can set a budget or goal according to their marketing strategies. Therefore, the marketing cost can be lower or higher depending on how an advertisement performs.

Also, these days people spend a lot of time on social media channels. For example, 64% of the customers buy a product after watching a marketing video. It opens up real opportunities for digital marketers to combine the strength of performance marketing and digital content.

As a marketer, you can pitch these benefits of performance marketing to your prospective clients. Clients would like this proposition as they would like to pay for performance instead of a predicted outcome any day. Along with these benefits, performance-based marketing lets, you choose different platforms for realizing your marketing goals. For instance, advertising on e-commerce platforms was evident during the last couple of years. The money spent on these platforms is predicted to grow at a CAGR of 40% in 2021. Therefore, marketers have to keep researching the available channels to analyze the performance of their adverts.

Comparison with Affiliate Marketing

Performance Marketing is much like Affiliate Marketing as it is also based on conversion goals and similar metrics. You earn a commission for promoting or selling a product/service in affiliate marketing. However, with performance-based marketing, you have the option of providing quality content and advertising through sponsored channels. Therefore, you have higher control over the performance and optimization techniques.

How can young startups optimize performance marketing campaigns?

Native Advertising

Many people in your target audience might not fully know digital advertising and its channels. Around 46% of the total searches on Google are related to local brands and products. Through native advertising, you can utilize the websites they usually visit to make click-through windows. It is observed that native advertising receives ten times more visits than other digital advertising methods.

Sponsored Content

Publishing content on dedicated channels is another way of maintaining the hype around a brand or product. Nowadays, sponsored articles enable marketers to enhance the online visibility of their clients. These articles educate and communicate with the target audience and create a trusted environment. It gradually improves the conversion rate and performance of your marketing campaigns.

Social Media Advertising

Social media advertising is another way of creating qualified traffic for your clients. As a marketing professional, identify the suitable channels to advertise the products/services offered by your client. You can choose from Facebook, YouTube, Instagram, Snapchat, and many other channels. While running campaigns on these social media channels focus on these goals:

  1. Generating traffic
  2. Engaging prospects/target audience
  3. Generating Leads
  4. Direct or indirect sales

The money spent on digital advertisements witnessed a surge in India even during the pandemic. As per the reports, the digital advertising industry has seen a growth of 15.3% by the end of 2020. Being an effective and cost-effective means of advertising and easy to track progress, social media channels prove to be a great performance marketing platform for marketers.


Search Engine Marketing is another way to increase the visibility of your brands. It includes generating traffic through both organic and paid campaigns. Google AdWords is one of the alternatives that has made performance marketing campaigns successful worldwide. It is also an affordable option for startups with a limited budget for marketing.


There was a surge in digital marketing campaigns worldwide during the pandemic. However, with the pandemic finally subsiding, companies need to focus on the metrics that deliver the highest performance in the targeted audience. Startups can also use performance marketing to drive their sales campaign. It may help them to achieve considerable success with a limited budget. Marketers need to analyze the latest trends to up their game in the coming years.


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