Performance Marketing Explained In A Nutshell

In terms of doing business and advertising and marketing on the web, there are a baffling number of techniques, models, and tactics. Search engine optimization, pay per click advertising, banner advertising, video ads, pop ups, affiliate links – it is difficult to make any kind of sense of it all.

If you’re unfamiliar with the world e-tail and you’ve got services or products which you are seeking to sell online, it can be hard to discern your best course of action. Doing nothing and merely hoping for the best isn’t a realistic option if your competitors are doing anything above and beyond merely hoping for the best. At the same time, you don’t want to simply attempt to match competitors move for move without properly assessing the available options. You want to reach as many potential customers as possible and get the best conceivable return on investment for your marketing dollar.

Perhaps you should consider performance marketing.

## What is that?

Performance marketing, also known as affiliate marketing, is commonly compared to having an extended sales force. The collaborating sites are paid commissions on sales that occur as a result of the traffic they direct to your site.

## How does it work?

To put it succinctly there are two parties. You are the advertiser, the individual with the product or service you want to sell. You setup a contract with other websites, which are known in this context as publishers, to show advertisements which will steer traffic to your site. The links in these ads are capable of tracking the resulting traffic back to its source so that the correct publisher can be awarded the commission for a particular sale.

## And how is this any different from most web ads?

Performance marketing is fundamentally different from traditional web adverts. Traditionally, the advertiser pays the publisher based either on how many impressions an ad gets (which is to say how many times it is shown) or how many clicks the ad receives. The problem is that neither of these models guarantees sales on the advertiser’s site. All the ‘risk’ is shouldered by the advertiser, and the publisher collects his revenue regardless. Ads which are set up through an affiliate programme are different. Both the ‘risk’ and the reward are shared between publisher and advertiser. A publisher only has so much valuable real estate on his site, so if he is to generate income from it, by way of an affiliate link, it is in his best interest to try to direct the most pertinent motivated traffic through his link as possible. Better traffic from the publisher means better sales for the advertiser and better commissions.

## Why would a publisher decide to bear some of the risk if standard advertising models are essentially risk free?

That is easily answered. The earnings from a healthy affiliate relationship is a lot higher than through traditional advertising paradigms. With the shared risk comes a potential for greater rewards.

If you’re interested in discovering more about performance marketing, you ought to go online and search for a good affiliate agency. Agencies help establish and run affiliate programmes, and are a wonderful way to find good potential affiliate partnerships. Whether you’re a potential advertiser looking to broaden your sales force or a publisher aiming to generate some revenue for your website, a talented Affiliate Marketing Agency will help.

7thingsmedia is a young, award-winning, entrepreneurial Online Marketing Company (UK) that employs some of the top Online Marketing Managers in the UK – 7thingsmedia.com