A study from market research company Forrester found that more marketers are focusing on performance-based marketing. Performance marketing is “the new normal,” according to Forrester. Performance advertising is a competitive differentiator today; it will be table stakes tomorrow.
What is performance marketing? Performance marketing uses clearly defined and measurable business objectives as the basis of payment or optimization. This includes cost-per-action (CPA) models, such as affiliate marketing, and programmatic ads that optimize based on real-time performance metrics.
How Performance Marketing Works
The CPA model of payment is critical to understanding how performance marketing works. Advertisers and marketing companies are paid only when a specific action, such as a sale, lead or click, is completed.
This model is what separates performance marketing from other forms of advertising. In traditional advertising, fees are paid up front and do not depend on the success of the ads. Advertisers in performance marketing only pay for successful…