Many companies have employee referral programs where referring someone who gets hired comes with a reward (typically a cash bonus).

This is the same principle of performance marketing: marketers set a performance goal (like driving conversions) and reward the partners/people who help them get those conversions.

Let’s dive deeper into how performance marketing works, how to create a performance marketing strategy, and the tools you can use to implement one.

Types of Performance Marketing

There are various performance marketing partners/channels to consider for your campaigns:

• Affiliate marketing: A partner uses an affiliate code or link to promote an advertiser to their audience and is paid by tracking the conversions from their unique link.
• Influencer marketing: Brands work with creators and influencers that promote their offer to their unique audiences to inspire them to take action.

• Paid marketing and advertising: Businesses work with a publisher to display their ad (like on a webpage) and pay the publisher for actions like clicks, purchases after clicking, or the number of impressions from where they feature the ad.
• Search engine marketing (SEM): Advertisers feature advertisements in search results for business-related terms and pay the publisher if their ad is clicked.
• Native advertising: Advertisers create ads that blend in on the channels they’re on, and advertisers pay an affiliate or influencer based on their target conversion.
• Social media marketing: Creators and influencers advertise for partners on different social media channels.

How Performance Marketing Works

Executing a performance marketing strategy relies on three key players:

• The advertiser (like a retailer, merchant, brand, etc., who is looking to improve performance)
• A publisher or an affiliate partner (someone who promotes for an advertiser)
• An affiliate tracking network (a third-party system where advertisers and publishers connect and can track performance and receive payments).