The Beginner's Guide To Performance Marketing

Guesswork is no longer part of the advertising process — today, it's all about measurable results. Digital performance marketing is the solution of choice for businesses, offering real-time tracking of every click, lead, and sale. With the right performance marketing strategy and tools — from advanced performance marketing platforms to AI performance marketing solutions — both corporations and SMEs can achieve scalable, data-driven growth.

What is performance marketing?

Performance marketing (performance-based marketing) is marketing aimed at achieving specific, measurable business results. The result depends on the goal. These can be:

• completed registrations (leads)

• sales

• website visits

• calls to the company

• app downloads

• reduction in cost per lead (CPL), etc.

Performance marketing platforms:

• Google Ads – search and media campaigns with precise targeting.

• Facebook Ads / Meta Ads Manager – social networks, retargeting, and lookalike audiences.

• Taboola / Outbrain – platforms for native advertising and content marketing.

• CJ Affiliate / Rakuten Advertising – affiliate networks for performance-based marketing.

• Medialister – campaign automation and analytics for digital and native ads.

Two main strengths of performance marketing

1. Measurability

You can always find out how many people were reached in a given period, how much a click costs, the conversion rate to registration or sale, and the ROI of each ad. Additionally, you can learn how advertising sources work separately and in synergy.

2. Effectiveness

Real-time analysis of advertising campaigns enables quick and flexible optimization. You can see at any moment where your budget is being used effectively or inefficiently and quickly reallocate it.

How does performance marketing work?

Advertisers place their ads on a given channel — see below for more information on the top performance marketing channels — and then pay based on the performance of that ad. When it comes to performance marketing, there are a few different ways to pay: 

Way 1: Cost per click (CPC)

Advertisers pay based on how many times their ad is clicked. Generating traffic to your site is best achieved by using this method.

Way 2: Cost per impression (CPM)

Essentially, impressions are views of your ad. With CPM, you pay for every thousand views. For example, if 25,000 people view your ad, you would pay your base rate multiplied by 25.

Way 3: Cost per sales (CPS)

With CPS, you only pay for sales that are driven by an ad. Another everyday use of this system is in affiliate marketing. 

Way 4: Cost per lead (CPL)

Similar to cost per sale, CPL involves paying when someone signs up for something, such as an email newsletter or webinar. CPL generates leads, enabling you to follow up with customers and drive sales.

Way 5: Cost per acquisition (CPA)

Cost per acquisition (CPA) is similar to cost per lead (CPL) and cost per sale (CPS), but is more general. Under this model, advertisers pay when consumers perform a specific action, such as making a purchase, sharing their contact details, or visiting a blog.

Performance marketing vs. traditional marketing

4 steps in performance-based marketing

1. Set a goal

We should evaluate the effectiveness of advertising depending on the goal set. For example, it would be meaningless to evaluate it based on website clicks if your goal is sales. The easiest way to set a goal is to use the SMART technique. Each letter of the acronym SMART stands for a criterion of goal effectiveness:

• Specific

• Measurable

• Achievable

• Relevant

• Time bound

Remember: even if your goal is to “bring 20,000 new visitors from Berlin to your website in September 2025,” keep in mind that it's not just about traffic, but about attracting potential customers to your company. 

2. Track traffic quality

Evaluate the quality of visitors. Track not only the cost per click, but also how well the audience matches your business goals:

• bounce rate, Google Analytics

• time spent on the site, Google Analytics

• Average number of pages viewed per session, Google Analytics

• user behavior on the page (heat map, click map, WebVisor), Hotjar, CrazyEgg

• user behavior after visiting the page, Google Analytics, or CRM

3. Define sources

Now move on to working with traffic sources:

• direct traffic (visitors who accessed the website by directly entering the website address in the browser address bar)

• search traffic (visitors who accessed the website via links from search results)

• social networks (SMM, targeted advertising, advertising on bloggers' social media accounts)

• contextual advertising (advertising based on search queries, interests, and audience characteristics)

• contextual media advertising (advertising on partner sites, such as Google, which is broadcast according to the user's previous search queries, the theme of the site, and the content of web pages)

• email newsletters

• messengers

4. Assess the effectiveness of each source

The effectiveness of each source can be assessed using the primary performance marketing tool: end-to-end analytics. This analysis tracks the entire customer journey, from the first point of contact to the sale (and repeat sale), to determine the effectiveness of advertising campaigns.

For example, people usually research models, specifications, and reviews online before purchasing. ROPO (Research online, purchase offline) analysis helps to understand online influence over offline sales and is achieved through user identification.

End-to-end analytics services:

• Roistat

• CoMagic

• Ringostat

• OWOX BI

• Calltouch

• Google Analytics

• Plausible

Native advertising in digital performance marketing

Native advertising, a key component of modern digital marketing, plays a crucial role in presenting ads that blend seamlessly with the content, making them less intrusive. Let’s consider a few real-world examples of digital performance marketing.

1. Dropbox

Dropbox employed a performance-based referral marketing strategy, offering storage incentives to reduce CPA. By using retargeting ads and A/B-tested landing pages, Dropbox achieved a 300% increase in CTR and 60% more sign-ups. This demonstrates how performance marketing can drive growth in the SaaS sector beyond the long-term focus of brand marketing.

2. Spotify

Spotify used search engine marketing (SEM), social media, and influencer campaigns to promote premium subscriptions, alongside brand marketing to boost engagement. Targeted free trial campaigns increased user acquisition, resulting in 29% year-on-year ad revenue growth and over 30,000 advertisers using its Ad Studio. The key takeaway is that audience-specific messaging drives performance marketing success.

3. Uber

Uber attracted riders and onboarded drivers using in-app referrals, native ads, and social media, while brand marketing fostered long-term loyalty. Incentives lowered costs and boosted engagement, resulting in a 70% increase in users over two years. The key takeaway is that aligning campaigns with customer preferences is crucial for the success of performance marketing.

4. Airbnb

To attract travellers, Airbnb used performance and influencer marketing, including social ads, affiliate marketing, and local partnerships. Incentivised referrals drove over 10 million app installations and 32 million bookings, achieving a 4.5% click-through rate (CTR) in paid search and 70% year-on-year (YoY) revenue growth. The key takeaway is that performance marketing effectively scales user acquisition, while brand marketing builds long-term loyalty.

How to deliver the value of performance marketing 

Performance marketing focuses on measurable outcomes such as conversions, leads, and sales, providing businesses with tangible value. We can divide it into two methods:

1. Integrate with brand marketing 

Although performance marketing provides immediate results such as conversions and leads, brand marketing fosters long-term loyalty and awareness, ensuring sustainable growth. Integrating performance marketing with brand marketing gives you the best chance of boosting your ROI, strengthening brand recognition, and driving both short-term and long-term business growth.

2. Leverage performance marketing platforms like Medialister

Tools such as Medialister allow businesses to automate campaigns, manage native advertising, and track results in real time. By promoting content on major sites such as The New York Times, Forbes, and BuzzFeed, and combining analytics with personalised campaigns, companies can increase engagement, reduce acquisition costs, and boost conversions.

FAQ

What is performance marketing?

Performance marketing is a digital marketing approach where advertisers pay only for measurable results, such as clicks, leads, or sales.

What are the best tools for analyzing marketing performance?

Here are some of the best tools for analysing marketing performance:

• Whatagraph: cross-channel reporting with visual dashboards.

• Improvado: centralises data from multiple sources for easier analysis.

• ThoughtSpot: AI-powered insights for data-driven decisions.

• Salesforce Marketing Analytics: integrates with CRM to optimise campaigns.

• Ruler Analytics: Attribution modelling to track customer journeys and ROI.

How do you measure marketing performance?

Marketing performance is tracked using KPIs like conversions, CTR, ROI/ROAS, CAC, engagement, traffic sources, and attribution. Tools like Google Analytics, Medialister, or Salesforce Marketing Analytics help automate tracking and provide insights.

What are the 5 key performance indicators in marketing?

Here are five key performance indicators (KPIs) in marketing:

• Conversion rate: the percentage of users who complete the desired action.

• CAC: Cost to Acquire a Customer.

• ROI/ROAS: revenue versus marketing spend.

• CTR: percentage of clicks on ads or links.

• Customer lifetime value: revenue from a customer over time.

Is performance marketing SEO?

No, performance marketing isn’t SEO. While SEO drives organic traffic without direct payment per action, performance marketing pays for measurable results.

What is performance marketing vs digital marketing?

Performance marketing involves paying for measurable actions, such as clicks, leads, and sales, while digital marketing encompasses all online marketing activities, whether paid for or not. Therefore, performance marketing is a subset of digital marketing.

What is a KPI in performance marketing?

In performance marketing, a KPI (key performance indicator) is a measurable metric used to track the success of campaigns. Examples include conversions, click-through rate (CTR), return on investment (ROI) , and customer acquisition cost.