What is Performance Marketing? A CMO’s Guide to Performance Marketing

What is Performance Marketing?

What is Performance Marketing?

Performance Marketing is an investment this is no longer a “nice to have” but a need to have as part of your overall marketing mix. Performance Marketing, also known as “affiliate marketing”, is a model that pays rewards based on the completion of a particular action, driven by someone else’s resources (time and money) and has a guaranteed ROI because spend comes only after a desired action takes place, which can be controlled (both from a margin perspective and a tracking perspective).

In simpler terms, it’s like having an online and offline sales force that works on a commission base only.

Whether the goal is to complete a sale, complete a lead form to capture someone’s name, email and phone number, a click, an impression or a phone call, affiliates can work with you to bring in new leads, new sales, more consumer engagement, more targeted traffic, additional brand exposure, and ultimately higher ROI.

 

Who are Affiliates?

“Publishers” or “Affiliates” take a flat payout, percentage of sales or “bounty” for contributing to driving targeted traffic that result in the completion of those sales.

Affiliates can be anyone from a stay at home mom or dad to a major global corporation. They can be bloggers, newspapers, mobile app developers, YouTubers and so on. One thing they have in coming is their entrepreneurialism and that they take on the risk of investing their own resources in order to earn from advertising others.

 

What are Affiliate Networks?

Affiliate networks act as a tracking platform and a bank. They offer client and affiliate support, host creative (such as banners, text links, datafeeds, coupons), offer communication tools, monitor for fraud, and so on.

 

What are Advertisers?

Advertisers, merchants, sellers and retailers are all referring to the same thing. These are the guys who pay affiliates for promoting their brand and helping to convert a lead or sale.

 

Who are Affiliate Managers?

Similar to having a store manager in a brick and mortar location, affiliate managers help their “online sales force” succeed. They provide training, tools, support, motivation and incentives, and team leadership, in addition to tracking, reporting, assessing data and holding people accountably for their actions.

 

Here are 5 Steps to Getting Started with Affiliate, or Performance Marketing

1. Define the Goal

Do you want to generate leads or sales? Do you want new customer acquisitions or customer retention or both? Knowing your goals will help you determine the type of affiliate network and types of affiliates you need to work with.

2.  Carefully Select Your Affiliate Network

Choose one affiliate network to start and work your way up from there if you need to.  Perform extensive due diligence and hire the right person to manage your affiliate team. This is a skill set that should be dedicated to the cause.  Take a look at the mThink Blue Book for ideas of the top networks in the world to get you started.

3.    Plan Your Media Piece

Be clear and have ready ongoing promotions and campaign pieces for affiliates to promote before you launch. This should include content ideas through various deliverables, your creative, your coupon codes, your promotional offer schedule, upcoming high potential sales days and so on. Be prepared for all sales opportunities and communicate these to your affiliates in advance.

4.    Monitor Your Campaign

Work doesn’t stop after the program launches.  Be sure to continuously manage your numbers, your creative, lead affiliates, watch behaviors and sales for dips and spikes, understand what your affiliates are doing, ensure affiliates are abiding by your program terms of service.  Doing these things will help make your program more successful.

5.    Optimize Your Campaign

ROI goals are achieved by optimizing campaign sales sources. Pay more for quality, profitable traffic to scale volume and adjust or turn off unprofitable traffic sources. Continue to recruit the right affiliates and get them active. Be proactive in outreach, placement negotiations and communicating promotions. Understand your metrics and KPIs so you can identify opportunities, threats, strengths and weaknesses.

If you’re not sure how to do this yourself or you don’t have the resources or expertise in house to plan it out there are many industry professionals who can help. You can also reach out to an outsourced program management company to plan and executive it effectively for you.

Performance Marketing vs Affiliate Marketing Part 2

Affiliate Marketing vs Performance Marketing
A few days ago I posted an article originally titled “Performance Marketing is NOT Affiliate Marketing“, however it caused some confusion as to my position on particular things so I changed it to Performance Marketing vs Affiliate Marketing. The main point of my post was to demonstrate that in affiliate marketing, in this case from a merchant perspective (since most of my readers are advertisers), there needs to be some actual performance and effort attributed to sales. In reality, this goes for any type of affiliate or merchant partner.

From the affiliate side, this is equivalent to signing up and promoting a program that doesn’t convert. In this case, there is no performance from the merchant side.  That was the point of that post. However, upon receiving some good constructive feedback as to how the title and exclusion of some additional points might contribute to an already confusing topic (and I’m always open to positive constructive feedback), I wanted to share a few more points and insights that might shed some light on this subject.

 

Here are a few more thoughts on the subject:

1. Performance Marketing as a term can encompass many different channels in the digital marketing space. Technically, any marketing program that produces a return that is higher than the return it was receiving before is performance marketing, because it’s performing.

2. Affiliates, merchants, networks, agencies and anyone within the affiliate marketing space call themselves by a variety of names. A post by Missy Ward from a couple of years ago explains these terms and differences well.

3. Todd Crawford, owner of Impact Radius comments “I feel the terms “performance advertising, advertiser and media partner” are better terms for the currently used “affiliate marketing, merchant, affiliate/publisher” if the intention is to move the industry in a direction that aligns it more closely with other advertising like display, search, email, tv, radio, direct mail, print, etc.” I think this comment aligns with the point of my previous post because it shows affiliates and merchants alike needing to perform to provide value to their partners.

4. There will likely still be confusion over the next few years about the term “Performance Marketing” because it can encompass so many things, be part of so many channels and support so many people’s individual views. However it’s a term that stands strong in the affiliate marketing space because it is “performance” driven.

Regardless of whether we want to term the phrase “performance marketing”, “partnership marketing”, “affiliate marketing” or “associate marketing”, in this case, a level of effort and performance to drive incremental value, to me, still stands.

Performance Marketing vs. Affiliate Marketing

 

What is performance marketing? What is what we refer to as “Affiliate Marketing”? To me, Performance Marketing is just that: Performance. What is performance? By definition it’s the execution or accomplishment of work, acts, feats, etc. That means that just being “associated” or “affiliated” with someone does not equal true performance or true value. By signing up for every known brand then trademark bidding on brand terms to convert easy sales with coupon codes is not performance marketing. It’s “affiliated marketing”. By definition, you have to do something to earn something back.

Therefore performance marketing is more than just “affiliate marketing”. It’s creating and cultivating value where value did not exist before. Affiliate marketing has had a bad name for a while now and I wonder if the term is bringing unpleasant thought and feelings to an industry that’s actually different than it’s perceived value. To many, “affiliate marketing” is rampant with fraud, scams, spam, crimes and many other unpleasantries. However “performance marketing” shines innovation, teamwork, dedication, passion, value and incremental sales.

Is it time we started changing our terminology about who we are and what we do? The Performance Marketing Association doesn’t call themselves “The Affiliate Marketing Association”. Doing so would bring in a completely different group of people and values to the table.

ShareASale, one of my favorite affiliate networks because of their people, values and the way they bring value to their partners as best they can (both from a merchants and publishers) uses the tag line “True Performance Marketing”.

What are we offering to each other as performance marketers? What am I offering you as an outsourced program manager or consultant that makes you want to do business with me? What is a merchant offering to their customer to make them chose to buy through them over someone else? What role do affiliate partnerships have in driving new sales, improving the exposure and goodwill of a brand?

How do you create value? By doing what others are not willing to do. By putting in that little extra effort. By writing about a great new product or company that you’ve found and love so others can enjoy it too – and sharing it through every channel you can – in your newsletter, on your blog, in your tweets, in a video – with a link to the product and a picture of the product and some widgets to other related items that others might enjoy.

Sure I can give you a coupon code to help me drive some sales – but that on it’s own is not going to create the value that our merchant partners are looking for: brand awareness, product awareness, goodwill through consumer engagements and solid communications of features, benefits and positive experiences. These things lead to new sales.

A long time ago when I first got into the industry I read a book that said an affiliate’s job is to “presell”. PRE-sell. Not post sell. Not capture a sale when the customer is halfway through the checkout. Pre-sell them. Doing that takes work. It requires performance through time and effort.

In an industry where true value is essential to our survival, performance wins over affiliation any day.

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