Performance Marketing Overview

Performance Marketing Overview

Marketing has been transformed by the rapid growth of measurable, performance-based digital channels. Marketers can test, optimize, and scale campaigns in ways never before possible and the demand for performance marketing competency continues to grow.

At this point, most marketers are familiar with these channels, but we wanted to get into the nuances of these programs and what it takes to develop them.

Let’s dive into the following:


What is different about performance marketing?

Below are 5 tenets of performance marketing that inform its strategy and tactics.

Intent: When the intention is to drive an action, as opposed to driving awareness.

Most of us have seen ads targeted at us in our Facebook feeds for a company or product we are familiar or maybe unfamiliar with. Hypothetically, the goal of the marketer who created this Facebook campaign is to drive conversions.

In contrast to awareness campaigns, in which the goal may be general exposure, the intent behind the aforementioned ad is not that the audience will simply see it on Facebook and keep scrolling. The goal is that those who see the ad will click through to the linked content, add what they see to their cart, and complete the purchase.

Measurement: When the cause and effect between the marketing initiative and the consumer/user can be measured.

The ability to measure campaigns in real-time has made quick and efficient iterations a part of daily operations within a marketing team.

While marketers will agree that not all channels are equal in their depth of reporting capabilities, each has a specific set of measurement tools to help us know if efforts are working successfully or not.

Real-time: The marketer can optimize their marketing activities in real-time or near real-time based on measurement.

Real-time measurement in performance marketing means that we can report on campaign results near instantaneously, and at incredible granularity. In fact, we have become more adept at making our informed marketing decisions on the fly, responding rapidly to our key performance metrics as campaigns unfold.

While prudent planning and forethought is still at the core of most marketing teams, now more than ever, a flexible mindset that constantly analyzes data and acts quickly on new insights is a requirement for success.

Payment/User Action: In many cases, payment is made based on consumer/user action (performance based).

Our shot at running successful campaigns (and the scale of achievable results), depends largely on our whatever our willingness is to spend on each marketing action. As algorithms change rapidly and paid channels dominate over organic, the investment and smart spend put against our own campaigns is just as important as the quality of content created.

We know that having well-developed strategy on bids, budgets and what you are willing to spend to scale the business is vital to creating predictable growth channels and revenue contributors within a marketing team.

Optimization: Most importantly, the performance is being optimized, and new opportunities are constantly being tested and developed.

Most marketers have experienced that what works and doesn’t work in performance marketing constantly evolves. Many of us have found ourselves re-evaluating one-time silver bullet channels or strategies whose return dwindles each week.

Adaptability and monitoring of changing trends, ad types, and algorithms across channels is necessary, as we know that they’ll continue to change rapidly over time.

Staying committed to constant testing and iteration, and encouraging and rewarding the adaptability to do so, will make your marketing team more resilient to bounce back after encountering a wrinkle in the marketing landscape.

How do you develop the operating mindset you need to be successful?

Now that we know what lies at the core of performance marketing, let’s talk about the habits, strategies, and general mindset that are needed to drive impact. Specifically, let’s talk about the facets of the ideal operating mindset for performance marketers.

Scale and Efficiency: The marketing function needs to anchor on tactics that scale with the business model. Initially, this might not matter, but over time, you need to be careful you are not chasing shiny new channels whose hype exceeds its predicted results. This does not mean ignoring channels that deliver positive economics with limited scale, but be careful not to over-resource these areas.

Channel Diversity: Find multiple “winning” channels to diversify business risk. This means identifying at least 2-3 performance marketing channels initially that deliver meaningful, predictable traffic and revenue (don’t let your business be dependent on a single channel).

Test, Learn, Iterate Mindset: Ensure that all members of the marketing organization are deeply rooted in an “agile” operating mindset. This mindset is grounded in continuous testing, learning and iteration, and comfortable with failure as a vehicle to inform future success. Avoid a “shotgun” approach since discipline and perseverance are required to truly understand if a channel works or not (very few channels are ROI positive at start). To combat this, try 1-2 new channels at a time and iterate 5-10 times before deciding if it works (Iteration examples: refine targeting approach, refine creative, refine site landing experience).

Trading Floor Mindset: Once you find success in multiple channels, aggressively shift spend across channels on a daily (even hourly) basis to support the best performing channel. To keep the engine running, all team members must be committed to testing, and non-stop optimization of their owned channel. It is important to reiterate this desired mindset across all levels of the marketing team so that marketers at each level can both identify and act upon changes that will move the needle, as well as raise a flag if something is amiss.

New Channel Understanding: For most early stage companies, the vast majority of the focus and resourcing needs to go to established channels that are a good fit for the business, but it is important for marketers to be well versed on emerging channels since opportunities exist to get superior results with early adoption. It is also important to know when an emerging channel has reached a point where the timing is right for aggressive exploration/testing. There are no exact answers here, but the areas to think about are:

  • Business Model Fit – do you have sufficient margin for this channel and are your customers likely to look for you there?
  • Scale – has the channel reached the point where it can contribute meaningful revenue at least 10% of overall marketing contribution?
  • Efficiency – can the channel deliver efficiencies that are at least in the range of how other established channels are performing?
  • Ease of Operations – are the tools in place that enable marketers to operate in the channel in manner that is not overly burdensome?

What are the foundational requirements?

What needs to be in place before you significantly scale your performance marketing engine? Here are the crucial foundational elements that will help you succeed in your efforts:

Product/Market Fit

There needs to be confidence that if the marketer can reach the right customer with the right message, they will convert.


You need an economically sound business model with enough product margin/LTV (“Lifetime Value”) math to justify the Customer Acquisition Cost (“CAC”).

Basic Analytics Infrastructure

You will need the ability and/or resourcing to track all Performance Marketing investments, including web analytics, email analytics, partner/channel metrics, A/B testing capabilities, and mobile/app analytics.

Attribution Methodology

Having a well-developed revenue attribution methodology lets you assign measurable worth to what each of your performance marketing channels is driving for your business.

Revenue attribution is the process of matching customer sales to specific performance marketing interactions in order to understand where revenue is coming from and optimize how advertising budgets are spent in the future.

You’ll need to know this because it becomes more important to understand interaction as you add channels where customers are touching several points of interaction on the path to converting. Without attribution, you won’t know if the new ones are working (e.g., supporting SEM with retargeting).

It is critical to pick one that aligns with basic customer behavior (particularly for high consideration purchases). It is also important to understand limitations and biases of whatever you choose (and make sure management is aligned).

Most of us are aware of or have tried numerous attribution models. The difference between these models is which click receives credit for the conversion and how much weight is assigned to that click. No attribution model is perfect, and at the end of the day you’ll have to pick one for consistency and clarity of reporting across your team.

Last Click

Final click receives full conversion credit.
This is the Google Analytics default (and, consequently, the most common).
Appropriate for low consideration purchases.

First Click

The first click receives full conversion credit.
Appropriate for high consideration products/lead gen where the first click signals the start of the  discovery/nurture process.


More weight is given to the first and last click while the clicks between receive credit but not as much as the bookends.


All touch points are aggregated and assessed and through complex math, partial credit is given to each touchpoint. There are multiple technologies and platforms for this, but no one silver bullet. The higher the consideration, the more value to multi-touch.

Internal Alignment on Test Plan

Budgets need to be in place to test channels and better understand scale and efficiency. So where should you allocate test spend budgets, and what budget constraints will you face with each channel?

Facebook and Instagram: By far the most effective to test, you can get an effective test with a $10k budget over a 3 month window with Facebook’s advanced reporting capabilities.

Google SEM: Much more challenging to test given how established the channel is. It is incredibly competitive in most categories (need to be prepared to spend a minimum of $30k to get a solid signal over a 3 month window).

YouTube: Much more challenging to test given how established the channel is. It is incredibly competitive in most categories.

Performance Focused TV and Radio: By far the most challenging area to test cost effectively (need to be prepared to spend in the range of $250k to $500k over 4 to 6 month window to assess TV).

When you understand the basics of performance marketing and adopt the working mindset that is conducive to success in these channels, laying the foundational groundwork becomes much easier.

To explore the ideal mindset for prioritization of marketing channels, check out “The Importance of Prioritizing Marketing Channels.”