What is Performance Marketing and How to Use It
The role of performance marketing: one of the most important in agencies and marketing departments
When a new brand debuts on the internet, driving traffic to its website right away is challenging.
Gaining new visitors and leads organically takes time.
These brands usually enter the market with the help of ads.
And to create and manage these ads, performance marketing is a powerful ally.
If not the most powerful ally of all.
Focusing on key metrics, setting goals, and tracking results is essential to avoid wasting money on ads.
In this article, we will explain exactly what performance marketing entails and share some examples of how this methodology works in practice.
Are you ready to get started?
What Is Performance Marketing?
The job of performance marketing is to ensure that your ads deliver good results by using metrics that measure their reach, clicks, click effectiveness, and more.
The term “performance marketing” is similar to inbound marketing: it does not define a single function but rather a work methodology—creating, measuring, and tracking ad performance metrics.
Because of its focus on ads, performance marketing primarily deals with paid media on a daily basis.
🔎 Also Read: Outbound Marketing – What It Is and When the Strategy Is the Best Option
Performance marketing is often used as a synonym for marketing through paid media.
And distancing itself from this image is quite difficult because its primary focus is, in fact, on these types of ads.
This is because ad performance is best measured through platforms like Google Ads and Meta for Business (formerly Facebook Ads).
Think about it: how can you measure how many people saw a flyer ad you distributed in the city center?
How do you know how many people saw your billboard?
You may associate an increase in traffic with these actions, but performance marketing goes further: you pay for measurable results.
Through the platforms we will show you, you can track every step of your campaigns—what each is delivering and how much you are paying for it.
We’ve already explored this topic in depth in our article on the many differences between paid and organic traffic.
Check it out, because we’re about to dive into some examples:
The Most Common Platforms in Performance Marketing
Performance marketing uses the leading digital paid media platforms.
By the way, I recommend reading our content on paid media to better understand this article.
They complement each other well.
Each platform has its own analytics methods, so it is common for a performance specialist to also be an expert in all of these platforms without exception:
- Google Ads
- YouTube Ads
- Instagram Ads and Facebook Ads (now Meta for Business)
- TikTok Ads
- Bing Ads
- Yahoo Ads
- Various marketplace ad platforms (Amazon, B2W, etc.)
Each of these platforms has its own technical and content-related particularities.
The analytics provided by each platform also have differences, requiring a performance analyst to pay close attention.
Performance marketing involves mastering these platforms at all levels and integrating business metrics into the running ads—return on investment (ROI), cost per lead (CPL), cost per acquisition (CPA), etc.
The goal is efficiency: generating more visitors, leads, and sales with minimal losses.
Key Performance Marketing Metrics
To truly understand what performance marketing is, you need to know its main metrics.
Performance marketing deals directly with data. Without data, it is impossible to work.
These metrics provide an overview of ad effectiveness.
The less you spend to achieve better results, the better.
To measure efficiency, performance marketing relies on some fundamental metrics.
Some are provided directly by the platforms.
Others are calculated by performance managers.
Let’s look at these key metrics:
Impressions
All paid media platforms show how many impressions your ads received—that is, how many people saw them.
Impressions are counted in total—meaning if the same person sees your ad five times, the platforms count five impressions.
However, no platform directly provides the most critical ratio: how many impressions were generated per dollar spent.
“We’re appearing to 300 people per day”—great!
But what about this other campaign that gets 250 impressions daily while spending a third of the first one’s budget?
This level of insight is what performance marketing requires.
Looking at the data, but also beyond it.
CTR
The click-through rate (CTR) is the next level of complexity in performance marketing.
While impressions show how many people saw your ads, CTR indicates how many clicked on them.
This is one of the most crucial metrics in performance marketing, especially for ads on various paid media platforms.
The first goal of performance marketing is directly related to ads.
Impressions show how many people saw your ads.
CTR shows how many of those viewers actually clicked.
But performance marketing doesn’t stop there.
The next metrics analyze information beyond the ads themselves, diving deeper into your digital marketing strategy.
🔎 Also Read: Landing Page or Chatbot? Differences and When to Use Each
Leads Generated
Some platforms allow you to set advanced metrics, such as how many leads each ad generates.
To clarify this topic—since we’ll be using some technical terms—I suggest reading this article on UTM parameters.
Google Ads, for example, provides built-in support for tracking this.
By configuring events through UTM parameters, you can directly see in the platform how many leads were generated from your ads.
Notice the deeper complexity: you’re no longer just looking at impressions or clicks but the direct results of your ads.
On other platforms, this process is a bit harder.
Most do not show how many leads were generated, but by configuring UTM parameters, you can track conversions in Google Analytics.
⚙️ See How: Google Analytics 4 – How to Access, Configure, and Use
For example, a TikTok Ads campaign with a properly configured link will appear in Google Analytics as a custom lead conversion event.
All these settings and standardizations are also part of performance marketing.
ROI
Return on investment (ROI) is a crucial performance marketing metric.
In fact, for many performance managers, ROI is the most important metric of all.
So important that we have an entire article dedicated to it.
With ROI, you analyze how much was invested versus the results achieved.
Generating 300 leads in a month is a great result.
But how much are you spending to generate them?
ROI in lead generation is one of the key metrics, but the calculation becomes even more valuable when it includes sales and revenue.
Here’s an example that illustrates how ROI calculation works directly in Google:
CPL – Cost per Lead
CPL indicates how much you’re spending to generate a single lead.
As you’ve noticed, performance marketing can focus on various advertising objectives.
Each of these objectives has different metrics and analysis methods.
CPL is specific to leads—it’s almost like an ROI calculation dedicated to lead generation.
Understanding how much you are spending per lead depends heavily on how you configure paid media tools.
As mentioned earlier, Google Ads provides built-in support for counting leads per campaign.
But not all platforms offer this feature.
That’s why configuring conversion events in Google Analytics and using UTM parameters in your ad links is so crucial.
CPL provides valuable insights, but these data points must align with strategic goals.
Think: What is a lead worth to your business?
How much revenue can they bring if they make a purchase?
The higher the revenue potential, the more you can spend to acquire leads.
But if your average ticket is low and your revenue depends on a high sales volume, a high CPL may make your advertising strategy unsustainable.
CPA – Cost per Acquisition
How much did each new customer generated through ads cost you?
And what is your average ticket size?
Performance marketing heavily relies on this metric.
It is one of the most important aspects of your work.
A high sales volume with a low average ticket depends on a low CPA to be profitable.
At the same time, companies that sell higher-priced services and specialized products can afford a higher CPA.
But of course, everything depends on ROI.
At the end of the day, a good CPA is one that delivers the best possible return on your ad investment.
What do I Need to do to Get Started with Performance Marketing?
Are we clear on what performance marketing is, what it does, and what its key metrics are?
To recap, we have determined that:
- Performance marketing is the effort of tracking metrics to keep ad campaigns constantly optimized.
- The main performance marketing indicators are impressions, CTR, the number of leads, ROI, CPA, and CPL.
- Simply measuring data does not provide a complete view of your ad performance—you need to interpret it.
- Performance marketing is about efficiency—more results for lower costs = success.
End of recap!
Everything clear so far?
In this part of the article, we’ll show you what you, your company, or your agency will need to start working with performance marketing.
It’s important to highlight that this is quite an advanced field.
We’ll cover the basics here, and the links we’ve included throughout the article will help guide you on your learning journey.
Now, let’s look at how to get started with performance marketing in four steps:
Choosing and Setting Up the Right Tools
Where do you want to advertise?
What are the best channels for your brand?
Today, the most popular ad platforms are Google Ads and Meta for Business, which includes Facebook Ads and Instagram Ads.
Google Ads is the most widely used because it allows you to advertise directly via Google—search network ads appear in search results, and display network ads appear on websites that use AdSense.
Meta for Business is the second most popular because it covers the two largest social networks in the world: Facebook and Instagram.
The key is to choose the methods that make the most sense for your brand.
Where is your audience?
Where do they look for you?
After choosing where to advertise, you need to set up your account.
To advertise on Instagram, you need a business account linked to Facebook.
To advertise on Google, simply access the Google Ads website and follow the tutorial.
Here are some platforms where you can start advertising:
➡️ Google Ads
➡️ Meta for Business
➡️ Twitter Ads
➡️ LinkedIn Business
➡️ TikTok Ads
➡️ YouTube Ads
➡️ Microsoft Ads (for Bing)
➡️ Gemini (Yahoo Ads)
Setting a Budget
The next step to starting in performance marketing is defining a total budget for your campaigns.
This is necessary because, as you develop your skills in this area, you’ll realize that it’s common to run multiple different campaigns simultaneously.
Having a monthly, quarterly, semi-annual, or annual budget gives you better control over your expenses.
This is even more important because different platforms operate in different ways, and even campaigns within the same platform can have different pricing models.
For example, on Facebook Ads, you can pay per click or per period.
On Google Ads, you enter a sort of auction, where better-optimized websites appear more often while paying less.
Defining your Target Audience
This is the most interesting part of online advertising, and performance marketing must fully master this concept.
Target audience creation has a direct impact on your ad performance since all paid media tools allow you to choose who will see your ads.
The target audience is the biggest factor in the success—or failure—of online ads.
You can have the right product, the best ad design, and the perfect copy, but if you target the wrong people, your metrics will plummet.
You need to consider factors such as:
- Age
- Gender
- Interests
- Geographic location
- Interactions with other brands (in the case of Meta)
- Keywords being searched (in the case of Google)
And whatever else can refine your targeting.
Remember: The more specific you are with your target audience, the fewer people will see your ads.
Over-segmentation means your ads will only appear to a very small portion of the internet population.
However, if your criteria are accurate, you have a higher chance of generating leads and sales, even with fewer impressions.
Monitoring
Performance marketing does not end when you set up your first ads.
That’s when it begins.
You’ll need to constantly monitor your results, looking for both opportunities for improvement and errors—which, believe me, are common.
This is where all the indicators we’ve already mentioned come into play.
You need to track your campaign’s performance at a frequency that makes sense for your strategy.
But be very careful with that frequency.
If you check every day and tweak audience settings or budgets too frequently, you might not have a solid comparison base.
Let your campaigns run for at least a month—then analyze, make necessary adjustments, and wait another month.
You can also run A/B tests with two similar campaigns.
Change the banner design, tweak the copy, adjust the audience, and launch—it will be easier to understand what works and what doesn’t.
6 Types of Performance Marketing Ads
We’ve already explained most of the work involved in performance marketing.
Its concept, metrics, and actions are what we covered throughout this article.
But as a bonus, here are six types of ad campaigns to help you dive deeper into the topic.
Just to be clear: we’ll be discussing the final results of ads when they are already being displayed.
The work of performance marketing involves setting up platforms, defining budgets and audiences, setting tracking goals, creating campaigns, and monitoring performance.
Here are six types of performance marketing ads:
Remarketing
Have you ever visited a website just out of curiosity and then started seeing several ads for its products?
That’s remarketing.
You can create remarketing ads through both Google Ads and Meta for Business.
On Google Ads, remarketing ads appear on the display network—meaning websites with AdSense enabled—as well as on YouTube in video format.
On Meta, ads can appear on Instagram, Instagram Reels, Instagram Stories, and across Facebook.
Google Shopping Ads
Google Shopping is a platform where you can register your website’s products to appear in the “Shopping” tab of the search results page.
When configured through Google Ads, Google Shopping ads can also appear on the main search results page in different positions.
The most common placement is above text-based search results:
In this position, Google allocates a significant portion of the SERP (search engine results page) to show your product image, title, store name, and price.
Google Shopping ads can also appear in image searches.
In this case, they will be displayed both in the standard SERP and in the “Images” tab SERP:
All items marked as “Product” are Google Shopping ads.
Display Campaigns
A display campaign is one that appears on websites using Google AdSense.
The concept is simple: a website owner registers with AdSense and provides space for other brands to advertise via Google Ads.
The performance marketing manager then sets up a Google Ads campaign through the display network, defining their target audience, budget, text, and creatives.
The ad will then appear directly on the site registered with AdSense.
Google ensures the right ad is shown to the right audience.
Example of a display ad:
This ad below was created using a Google Ads display network campaign.
And the site where it appears, Uol Splash, is registered with AdSense.
Search Network Campaign
A search network campaign displays text-based results directly on Google’s SERP, with a prime position at the top and bottom of the page.
Check out this example, the same one we used earlier in the article:
What we did here was create a search network campaign directly in Google Ads.
This campaign focuses more on keywords and less on the target audience.
Here’s how it works: when creating the ad, Google Ads will ask you to choose a set of keywords to configure your ad.
These keywords are the terms that people will type into the search engine.
In our example, we set up an ad for the keyword “chatbot for website.”
When someone searches for this term on Google, our ad appears.
But there are some parameters that determine who gets this privileged position.
Google runs a type of auction where the most optimized website appears more often while paying less.
Video Ads on YouTube
YouTube offers several spaces for ads.
Besides the interruption ads that play in the middle of videos, you can also configure ads in search results and on the platform’s sidebar:
All these ads are set up directly in Google Ads, allowing for a customized target audience and all other platform features.
Social Media Campaigns
Today, practically all social media platforms offer an advertising system.
Each one has its own specifics, but most follow the standard set by the former Facebook Business: an ad containing text + an image or video appears for a specific target audience.
🔎 Read also: 12 Digital Marketing Trends to Explore in 2024
How to Create a Performance Marketing Plan?
Look at everything we covered today!
We discussed what performance marketing is, its main concerns, its channels, how to get started in each one, and the types of ads available.
Now, the only thing left to do is get started. Let us know what kind of strategies you’re applying in the comments.
And don’t forget to start our free trial today!
