Many companies have employee referral programs where referring someone who gets hired comes with a reward (typically a cash bonus).

This is the same principle of performance marketing: marketers set a performance goal (like driving conversions) and reward the partners/people who help them get those conversions.

Let’s dive deeper into how performance marketing works, how to create a performance marketing strategy, and the tools you can use to implement one.

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Even seasoned media buyers can have unsuccessful campaigns if there’s a misalignment between the campaign and the target audience.

Since you’ll only pay when your goals are met, you accomplish three things:

• Your campaign is less risky
• There’s a guaranteed return on investment (ROI)
• You have better control over your ad spend

Is affiliate marketing the same as performance marketing?

While somewhat related, affiliate marketing and performance marketing are different.

Affiliate marketing is a subset of performance marketing based on paying a commission after each sale or target goal/conversion.

Performance marketing has grown broader than just affiliate marketing, with the target goal of improving a company’s performance as a whole.

Let’s say I’m an influencer partnered with Brandon Blackwood. I share a 10% discount code “MARTINA10” with my followers to use at checkout when purchasing an item from the brand. Whenever someone used my code to purchase, I would get a percentage of the sale. In this case, the tracked metric is unique sales from my code, which can be paid with a cost-per-acquisition model.

Some standard measurement and pricing structures for performance marketing are:

• Cost Per Acquisition (CPA)/Pay Per Sale – If your goal is to drive sales, you’d measure the success of your campaign by the number of sales and pay your partners every time someone buys a product that is directly traceable to them.
• Cost Per Click (CPC)/Pay Per Click – If your goal is to drive clicks to your page or offers, you’d pay each time your partner drives someone to click (which is why tracking URLs are crucial in distinguishing regular traffic from partner-inspired traffic).
• Cost Per Lead (CPL)/Pay Per Lead – You’d pay each time you get new information on a user (like after they fill out a form) because the partner inspired them to submit their information. You’d then further nurture the lead with the end goal of converting them into a customer.
• Cost Per Impression (CPM) – Also called cost per mille, you’d pay based on the number of impressions you get from an ad that a partner shares or that is displayed somewhere. CPM usually pays out every 1,000 impressions.

1. PartnerStack

Price: Contact for pricing

If you’re a SaaS company looking to develop a robust partner program, consider PartnerStack.

Key Features

• Choose from a network of active partners, or recruit your preferred partners.
• Custom partner portal and automated onboarding to share relevant training resources.
• Campaign tracking to understand performance and initiate payments.

2. Partnerize

Price: Contact for pricing

Partnerize is a simple and easy-to-use dashboard to manage your partners.

Key Features

• Build an invite-only network of partners, or get automated partner recommendations from its partner ecosystem.
• Access to real-time campaign data to view partner performance.
• Custom commission structure for each partner and automate the payment and reward process.

3. Everflow

Price: $750/mo (Core plan), contact for custom pricing

Everflow helps you simplify partnership management to ensure you drive results.

Key Features

• Easy-to-use portal to onboard partners and manage your relationships.
• Track every referral and lead and accurately attribute conversion events to each partner.
• Design a custom payout structure to pay partners when they deliver on your goals.

One of the biggest struggles of working with affiliates is creating and tracking links and codes at scale. Below we’ll go over some helpful tools.

Performance Marketing Tracking Tools

1. LeadDyno

Price: $49/mo Starter), $129/mo (Plus), more advanced pricing for businesses with 15,000+ unique site visitors per month

LeadDyno gives brands tools to grow a successful affiliate program that aligns rewards to your target actions.

Key Features:

• Create links, codes, or assign specific URLs to each partner.
• Unique affiliate dashboard to ensure you attribute conversions correctly.
• Customize a payment structure based on your key metrics and seamlessly send payments.

2. AnyTrack.io

Price: 14-day free trial; $50/mo (Basic), $150/mo (Personal), $300/mo (Advanced)

With AnyTrack, attribution reporting is easier.

Key Features

• Assign a tag to each partner that automatically tracks, attributes, and syncs your conversions.
• Track every single engagement and sale to understand performance.
• Integrate your custom affiliate network.

3. Impact

Price: Contact for pricing

The Impact tool streamlines the partnership process from initial contact to payout.

Key Features

• Universal tracking tag helps you track the traffic your partners drive on all properties across any device.
• Create payment contracts and automatically pay partners when they bring results on your key metrics.
• Find partners that align with your needs or import your existing affiliate network.

Wondering which industries use performance marketing the most? According to a 2022 study by the Performance Marketing Association, advertisers in the retail sector spent the most on performance marketing – accounting for 76% of total spending. The financial sector followed with a steep drop to 12%, then the travel industry with 5%.

In terms of revenue, the sector with the highest revenue was retail at 84%, followed by travel at 10%. Industries like automotive, healthcare, and telecoms only accounted for 1% of the total performance marketing revenue.

However, despite having the biggest spending and highest revenue percentages, the retail industry didn’t offer the best ROAS. According to the report, the automotive industry offered the best return at $26, followed by travel at $21 and retail at $12.

Any industry can have success with performance marketing. It’s all about collaborating with the right partners and setting up a robust program to reach your marketing goals.