Is Performance Marketing The Next Big Step In Digital?


This post was originally published in Forbes

A company wants to grow, and they hire a marketing agency. The agency has the experts and creatives, and, in a flex of its muscles, tells senior company leadership that the agency has the power to make a real impact on the company’s business.

The company — now client — buys in. Spend a little, make a little more. That’s the goal.

But let’s think about that promised “impact.” Agencies traditionally focus on brand marketing — the type you don’t have to get out of bed to see. It’s the kind you read on your Twitter and Facebook feeds, hear on the radio driving to the beach and see on the television in your living room. It’s used primarily to grow brand recognition and increase visibility, and the result is the consumer’s awareness of the client’s product or service. That in no way ensures, however, the consumer will purchase the product or service.

Metrics associated with this type of marketing — likes, favorites, retweets and perceived equivalent media value — all have some sort of impact. But they’re not often discernible on a client’s bottom line. That means the client paid the agency a hefty fee for gained awareness, but nothing more. It’s here that "impact," for an agency, is a terrifying term.

Yes, this is an oversimplification of the relationship between clients and agencies. But it goes a long way to illustrate why the work must have a business impact. Day-to-day client contacts may love seeing upticks in shares and retweets. Senior leadership, however, are often occupied with one important question: Is what we’re spending making us a return? If not, it becomes a problem.

Brand marketing has its benefits, but performance marketing may be the answer that clients and agencies seek — especially in the digital realm. Although less well-known than brand marketing (think Alec Baldwin versus his brothers Daniel, William and Stephen), it punches well above its weight. (Much like, arguably, those same three Baldwin brothers. If you’ve seen The Usual Suspects, you know Stephen steals his scenes.)

Performance marketing’s strength lies in one simple concept: The agency must meet client-defined metrics and achieve the desired impact (a measurable business result) to fulfill the client/agency contract. In other words, the agency must “perform” or they don’t get paid.

The process is simple. First, a client defines the desired action and its qualifying criteria. Then, the marketing agency designs a campaign that drives the greatest number of completed actions for the client. The most common actions include:

Installing an Application

A company hires a performance marketing agency to drive potential customers to its online dating application that matches singles who love former CBS sitcom Everybody Loves Raymond. The campaign touts 25 free matches to those who install the app and use it for one month. The agency is paid based on the number of app installs.

Filling out a Form

A company hires a performance marketing agency to drive potential customers to its residential mortgage business. The campaign touts the company’s stellar rates to potential customers who, when they want more info about the company and its services, fill out an online form. The agency is paid based on the number of forms filled out.

Purchasing a Product

A company hires a performance marketing agency to drive potential customers to its product, a custom-made pillow adorned with actor Jeff Goldblum’s face. The campaign touts the look of the pillow and the potential increase in popularity of the buyer among his friends. The agency is paid based on the number of pillows sold.

When clients and agencies keep impact at the heart of their relationship, the results are tremendous. For agencies, it’s an opportunity to do creative work, test that work and make changes based on the results. It’s fast-paced and constantly optimized marketing. For clients, the results move their bottom line in the right direction and allow for greater investment in and collaboration with the agency.



Jordan Rolband
President & Co-Founder
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