What is performance marketing?
Performance marketing, also called affiliate marketing in the consumer/retail sector, is an exciting new online advertising strategy that rewards Web publishers when they generate leads for clients.
In the performance marketing model, Web publishers carry advertisers’ ads and links on their Web sites without an upfront cost. When a visitor clicks on the advertisers’ links and registers on the advertisers’ Web site, a lead is generated and the publisher receives a pre-arranged commission. The advertiser compensates the Web publisher when the desired action is achieved. The lead automatically is emailed to the advertiser for sales follow-up and insertion in a CRM database.
However, in this model, it is the publisher who controls what advertisers’ ads will be carried, and when and where they will run. As a result, advertisers must compete for publishers’ attention by paying attractive commission rates per lead and provide incentive-based ads that will successfully generate leads.
The relationship between advertisers and publishers is managed by a third-party “network manager.” The network manager maintains the infrastructure that tracks Web visitors from the ad links on the publisher’s site back to the advertiser’s site. And it records if a lead or purchase is consummated. In addition, the network manager serves as the banker and handles the flow of commission payments from the advertiser to the publisher. Network managers maintain affiliate networks of publishers and help advertisers recruit these affiliates to carry their campaigns. They also help recruit advertisers for publishers desiring performance-based relationships with new clients.
Performance marketing is highly measurable. Both advertisers and publishers have access to password-protected portals where they can monitor and track click-through rates, lead generation rates, and commission payments across campaigns and Web sites. This enables advertisers to perform campaign optimization and ROI calculation. And it permits publishers to analyze advertiser and ad performance in terms of revenues generated.
Performance marketing is an effective method for advertisers to leverage their marketing dollars for lead generation across a network of online publishers without the upfront cost of a traditional media campaign. For Publishers, it provides incremental revenue generation and Web site monetization that is complementary to their ad sales model.
