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Payment and models

Performance marketing

Also called performance-based marketing, results-based marketing, pay-for-performance marketing.

Short answer

Performance marketing is marketing in which payment and management are based on measurable results – clicks, leads or sales – rather than exposure. Affiliate marketing is its purest form: the store pays only once a sale has happened.

Definition of Performance marketing.

Performance marketing covers the channels where every krone can be traced to an action: search ads paid per click, social ads optimised for purchases, shopping ads, price comparison, email with tracked links and affiliate marketing. What they have in common is that results are measured continuously and the budget is moved to where it works – managed by metrics such as CPA, ROAS and conversion rate.

The difference between the channels lies in when payment happens. With search and social ads, the advertiser pays for clicks or impressions and carries the risk that they never become sales. In affiliate marketing, payment only happens for the agreed action, usually an approved sale, and the risk sits with the affiliate. That makes affiliate marketing the form of performance marketing where payment is most closely tied to the result.

Example: a store spends DKK 10,000 on search ads and gets 50 sales – a CPA of DKK 200, known only afterwards. The same store pays 15 % of the order value in its affiliate program; on an order of DKK 1,000 excluding VAT the price is DKK 150 per sale, and it is known in advance.

Performance marketing is not the same as branding. Campaigns meant to build awareness can rarely be measured on the individual sale, and measured on last click they look worse than they are. That is why it is worth testing incrementality: how many of the sales would have happened anyway?

Performance marketing vs. affiliate marketing

AspectPerformance marketingAffiliate marketing
What it isan approach across paid, measurable channelsa payment model with external partners
Who does the workthe store itself or an agencyaffiliates with their own sites, newsletters and profiles
What is paid foroften clicks or impressions, optimised for salesthe agreed action, usually an approved sale
Who carries the riskthe advertiserthe affiliate

All affiliate marketing is performance marketing, but not all performance marketing is affiliate marketing.

Frequently asked questions

What is performance marketing?

Performance marketing is marketing that is managed, and often paid for, according to measurable results such as clicks, leads and sales. Typical channels are search ads, social ads, shopping ads, email and affiliate marketing, and the effort is managed by metrics such as CPA and ROAS.

Is affiliate marketing performance marketing?

Yes. Affiliate marketing is the form of performance marketing where payment is most closely tied to the result: the store pays commission for an approved sale or another agreed action, not for clicks or impressions.

What does a performance marketing agency do?

A performance marketing agency runs paid, measurable channels for an advertiser – typically search ads, social ads and shopping campaigns – and is measured on metrics such as CPA and ROAS. An affiliate network is something else: here the store sets the price per sale itself, and partners are only paid for results.

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