Affiliate marketing has been around on the internet since 1989, while performance marketing, like local lead gen, is a relatively new term being touted these days. Of the digital marketing variations where brands pay third-party marketers for promotional services, is there really a difference between affiliate marketing vs performance marketing?
Although they're often used in a similar context, affiliate marketing is just one aspect of performance marketing. In the following article, we take a closer took at affiliate marketing vs performance marketing, outline 3 drawbacks associated with both, discuss where the industry is headed, and provide the actionable steps and tips needed to start making money online with performance marketing ASAP!
What is affiliate marketing?
Affiliate marketing is a digital marketing strategy where brands outsource marketing activities to third-party marketers who promote the brand’s products for them for a commission. The commission is usually attributed to a sale, but can be awarded to the affiliate for driving a variety of customer actions. According to Influencer Marketing Hub, affiliate marketing is immensely popular with businesses, as 80% of brands have an affiliate program. Affiliate marketers place affiliate links within the content they promote to lead potential customers to the brand’s offer. An affiliate link is a custom URL associated with the affiliate marketer so that brands can accurately track and pay for affiliate performance. If you're really into affiliate marketing, you can check Scalers Method, which focuses on using paid ads on Facebook to generate leads.
Where to get affiliate links?
Affiliate marketers get their commission tracking affiliate links through affiliate networks like Amazon Associates or ClickBank. An affiliate network is a platform brands go to host their affiliate program and affiliate marketers use to find affiliate offers to promote. Sometimes, affiliates can also get affiliate links directly from the brand themself if the brand manages their own affiliate program.
Where do affiliates promote their affiliate links?
According to AWIN, 65% of affiliate marketers report using blogging for their promotional efforts. Other popular marketing channels for affiliates to promote their content with affiliate links include:
Email Marketing
SMS
Paid advertising like Google or Facebook ads
Social media
3 Types of affiliate marketing
- Unattached affiliate marketing - No established audience or authority in the niche you’re promoting to. No relationship with customer, you just get your affiliate link in front of them and hope for a commission. This is usually done with paid advertising campaigns because it lets you push the content in front of the desired audience.
- Related affiliate marketing - When you have an established online presence in a particular niche and use your platform to promote related products. However, you don’t actually use the products yourself.
- Involved affiliate marketing - You use or have used the product or service yourself and recommend it to your audience.
If you want to start affiliate marketing and build your own agency, and you are looking for a legit coach, check out Tanner Chidester and his course Elite CEOs.
What is performance marketing?
Performance marketing is a type of digital marketing where brands only pay marketers when their activities result in specific actions to occur. In this business arrangement, a brand as the advertiser of their products and services leverages the skills and expertise of publishers to design and place advertisements through various marketing channels for the brand.
5 Ways to earn with performance marketing
- Cost-per-click (CPC) - Payment depends on the number of clicks the marketer’s ad receives. The value to the brand is that it drives traffic to website.
- Cost-per-thousand (CPM) - Impressions are the number of people’s eyes, or views, that an ad receives. With CPM, marketers set a base rate for generating 1,000 views. For example, if the base rate is $10, and the ad receives 10,000 impressions, the marketer would receive $100 for their efforts. Other names for CPM are cost-per-mille and cost-per-impression.
- Cost-per-sale (CPS) - Payment only when advertising efforts result in a sale.
- Cost-per-action (CPA) - Payment for causing specific actions to occur that are beneficial to the brand, such as making a sale, completing a form, or signing up for a free trial.
- Cost-per-lead (CPL) - Payment when a signup occurs that benefits the sales funnel, such as for a webinar or email newsletter. These activities generate leads that the businesses can reach out to.
Top performance marketing channels
Are affiliate marketing and performance marketing the same thing?
Although affiliate marketing and performance marketing are similar, they are not the same thing. Affiliate marketing is a very large segment of performance marketing within the overall industry of digital marketing. Performance marketing encompasses a greater portion of digital marketing and therefore is broader in scope.
A general digital marketer can get paid without producing results, such as doing content marketing to provide some copy or graphic designs. However, affiliate and performance marketers are only paid if they drive actions with measurable results. Affiliate marketers earn as a percentage commission, usually for generating sales. A performance marketer, on the other hand, can receive payment for generating an array of results beyond sales and is not limited to just getting paid a percentage of the revenue from the referred customer.
3 Major drawbacks you can’t ignore
1. Performance marketing networks shut down, eventually
CPA and affiliate marketing comprise a major portion of performance marketing. Therefore, performance marketers often turn to CPA and affiliate networks like MaxBounty or ClickBank to find offers to promote. However, rapid changes in technology and intense competition in the digital advertising industry result in these networks to not last forever. Despite hosting major brands like Netflix and Target, not even Google could keep its affiliate network active for longer than five years. If you have active affiliate links on the web generating money and the affiliate network where those links came from shuts down, there goes your income.
2. Highly saturated and competitive
Because it is 100% online and brands only pay for results, performance marketing is easily accessible for anyone to try. This makes performance marketing highly saturated. Even though there are many amateurs trying and failing to do performance marketing, the fact that anyone with a little money can fund a paid advertising marketing campaign is one reason paid advertising costs are skyrocketing. Furthermore, affiliate marketing has already been around for years, so many niches are already saturated with established players. Therefore, getting content to rank well for high-volume keywords organically can be a major undertaking that also requires considerable time and money resources.
3. You assume all the risk
By far the biggest drawback of the performance marketing industry is that you, as the marketer, assume all the risks for your performance marketing campaigns. Even though you’re “working” for and marketing on behalf of brands, all resources are your own. You could spend hours coming up with the perfect angle for your performance marketing campaign and back your paid advertising strategy with a healthy budget, only to see your efforts fail.
Is performance marketing a good industry for the future?
Despite some drawbacks for performance marketers, establishing a performance partnership is the most effective form of marketing for brands. Brands value performance marketers because they excel at:
When it comes to effective advertising, you just can’t beat performance based marketing. As such, performance marketing has a bright future and is a solid online business industry to get into.
Local lead gen is a great opportunity right now
Leads, especially warm leads, are immensely valuable and businesses are often willing to pay a high price to get them. Local lead generation is a business model where you focus on a specific niche in a strategic location and generate leads for a local business for hundreds to thousands of dollars each month. Unlike other performance marketing segments like affiliate marketing, the local lead generation market has relatively low levels of competition. According to BizJournals, there are over 32.5 million small businesses in the United States alone that you could potentially serve with a local lead generation business. Why would a local business want to waste their own resources on marketing when they could just hire a local lead generation agency that specializes in finding high value clients and assumes all the risk for the business?
5 Steps for successful performance marketing
Considering that each performance marketing channel comes with its own set of unique steps, there’s no one “right way” to go about it. However, we can outline the key steps when creating a performance marketing strategy that you can use as an overall guide for a successful performance marketing campaign.
1. Establish your campaign goal
With performance marketing, the intention is to drive a specific, valuable action for the brand you're advertising for. The brand will usually specify what the campaign goal is, with some of the most common being sales, lead generation, engagement, website traffic, and brand awareness.
2. Decide which digital channels to use
As a performance marketer, you have a variety of digital channels at your disposal. Obviously, the best channels to use depend on what the performance marketing campaign goal is. You could set up a Google ad, engage in social media marketing, or even leverage an influencer or affiliate partner to reach a wider audience.
3. Create your campaign
This is where the real marketing skills come into play. Can you successfully identify a suitable target audience and related pain point to alleviate? Can you craft an effective ad to generate results for the brand that meets the specified campaign goal? Formulating a message that resonates with the target audience is the cornerstone of successful performance marketing.
4. Launch the campaign and measure performance
Launching the campaign is just the beginning! Tracking the campaign and measuring results is a crucial step that can make or break campaign performance. Like any marketing campaign, performance marketing requires testing and adjustment until you get it right.
5. Optimize your campaign and scale (if applicable)
Once you find a sweet spot where the campaign is profitable, you can put more resources into scaling the campaign to generate better results. Scaling is most applicable when talking about using paid advertising, but can also be used to extend influencer exposure or expand content creation to see if results improve.
Tips for evaluating performance
Set measurable goals
Evaluating your performance as a performance marketer starts with establishing some goals. Clearly defined goals provide you with specific marks that determine if the performance marketing campaign is a failure or success. Performance marketing goals vary depend on the specifics of the niche and marketing channel, but some examples could be:
- If $1,000 is spent on social media advertising, we should generate at least $1,500 in sales
- If 100 people view the webinar, at least 10 should sign up for the free trial
- If the ad gets 100,000 impressions, the click-through rate should be at least 15%
Track results with performance marketing platforms
A performance marketing platform like Trackier allows you to efficiently track your performance marketing efforts and detect where you should make changes. Performance marketing AdTech provides you with valuable data and insights to scale and even automate portions of your performance marketing efforts.
A performance marketing success story: Lyft
According to a Think with Google case study from March 2015, Lyft relied on performance marketing to grow its operations to the popular ride sharing application it is today. Lyft’s goal was to attract new drivers by running Google ads on the Google Display Network. As a result, Lyft’s conversions increased by an incredible 74%! By setting narrow targets, choosing an effective marketing channel, and closely tracking the cost to acquire each new driver, performance marketing has enabled Lyft to compete in a competitive ride share market alongside Uber.
Conclusion
If you’re really interested in pursuing performance marketing, you can join the performance marketing association (PMA). The PMA provides great resources and connection opportunities for performance marketers. However, if you’re just getting into online business, it’s essential to spend some time doing research before settling down. There are many opportunities to make money in digital marketing, like local lead gen or growth marketing. There are also so many online business opportunities you can make money with beyond digital marketing as well. No matter which online business model you choose, it’s important to be consistent in your efforts and never give up.
