Simply put, performance marketing refers to any program in which the company marketing or advertising a product/service is paid only when a specific action is completed.  Clear as mud, right?  In other words, the company marketing the service is only paid if they deliver a particular action, in most cases either a lead or a sale.

A lead generation program is an example of performance marketing because the client only pays for the leads which are delivered.  This allows much greater ease in tracking campaign performance as the actual results determine how much the marketing/advertising company is paid, and it mitigates the risk for the client who is not committed to a particular cost which may or may not yield profitable results.

There are two basic models in performance marketing:  Cost per action/sale, and cost per lead:

CPA
In the cost per action/sale model, as the name suggests, the required performance is for the individual to make a purchase, sign up for a newsletter, etc…
CPL
Cost per lead is equally straight forward in meaning.  The client is not required to pay the marketing company unless a qualified lead is attained.  This generally means that a certain amount of essential contact information is gathered, along with information specific to the lead’s interest in the product or service.

The advent of performance marketing has created an exciting opportunity for anyone who is looking to promote a product or service.  There is absolutely no reason not to explore the possibilities that exist in the performance marketing realm.  And lead generation in particular, when done properly, has revolutionized many businesses’ profit margins.

The myriad lead generation and performance marketing services cropping all over the internet, however, can make the process of getting started a bit more intimidating than it needs to be.  While selecting the right performance marketing company should not be taken lightly, it does not have to be the chore that it may at first appear to be.  There are a few key qualities one needs to look for.  Please check out our article on choosing a lead generation service here, and please don’t hesitate to give us a call if you have questions.

In our FAQ section (here), we explain that SEM involves the advertisements along the right and at the top (often shaded) of the results page of the search engine, and SEO involves the “organic” search results.  This is illustrated below in the sample search for wedding planners.

Let’s dig a bit deeper into the intricacies of each.

Simply put, PPC is the advertising method used in search engine marketing (more on that here) on Google, Yahoo, and Bing, as well as the smaller search engines. The advertiser must specify parameters like the number of clicks to receive each month, the cost per click, and it is based on keyword relevancy. The ad placement, how often or during what hours it is displayed, and of course, under what search terms it appears, are based on a bid system.  The keyword popularity (how many other individuals/companies are bidding on it) determines the cost per click.  Getting a campaign up and running is a relatively fast process, and offers a virtually instantaneous presence on the search engines.

Search Engine Optimization is a much more complicated process and one that does not provide that immediate presence in the search rankings that SEM does.  This is because all of the organic results are generated based on algorithms which the search engines use (each one has its own algorithmic nuances and formula) to establish a page rank for a particular term.  SEO could be called more of a “grassroots campaign” to strategically build a broader presence online, and thereby increase search engine ranking.  One could say that SEO is the process of “persuading” the search engines that a particular site’s content is most relevant to a given keyword or topic.  This is done through a variety of onpage methods such as website content and structure management (copy, code and tags) and analytics.  Offpage methods – including link building, PR and SEM – can be a valuable asset to the SEO process.

It is important to realize that these two methods are not mutually exclusive.  For optimum results, both PPC advertising and SEO should be utilized in one’s marketing strategy.  Together, they provide a powerful marketing alliance online to increase presence and reach.