Intro to Performance Marketing

No matter where you are in the world of online advertising, you want to succeed and to be rewarded for your success. That’s where performance marketing comes in. People in this industry measure results, then pay or get paid for those results.

This article is part of our Background & Setup series.

So Who’s Involved?

First, someone needs to be willing to pay for advertising. They could be retailers or service providers. They could be big or small. These advertisers have a demand for ad space to reach users. By paying for ads, advertisers can build brand awareness, engage with customers, and ultimately lead users to interact with their business.

On the other hand, partners want to supply space for ads. Some common examples of partners are publishers (content producers like bloggers or game developers) and media buyers. They sell ad space to promote advertiser products and services.

That leads us to ad networks, who support and manage business relationships on both sides of ad space supply and demand. Networks broker deals between advertisers and partners so they can focus on their own business plans.

Let’s Connect the Dots

Each player in performance marketing has their own needs, motivations, and business connections. We can show this off with a similar story outside of online advertising:

Barstocks Bakery wants to advertise their latest product with a flyer campaign. To help with the promotion, the company hires flyer distributors and offers them payment in the form of a commission on each sale they generate.

Over time, Barstocks hands the management of this task to a staffing agency. As an incentive to work with the best distributors, the staffing agency is offered payment in the form of a commission.

In the end, the staffing agency gets paid per sale by Barstocks, and distributors get paid per sale by the staffing agency.

Think about this story and ask yourself where you fit in. Are you an advertiser like Barstocks Bakery, a network like the staffing agency, or a partner like a flyer distributor?

From Dots to Dollars

In the above story, every sale drives payment from advertiser to network to partner. But how does a partner know if sales are correctly being attributed to them? And how does an advertiser know if they should pay commission on a sale?

Without a way to follow each flyer on its individual journey, they don’t. Each partner needs to trust that commissions are rightly attributed to them, and the advertiser needs to trust that their payouts are being rightly earned.

With TUNE, you can keep track of who takes that flyer, and how it leads to a sale. Networks and advertisers use that data not only to assign the ownership of user traffic, but also to make informed business decisions with respect to their campaigns.

Talking the Talk

We covered advertisers, partners, and networks above. Now let’s use concepts you’ve just become familiar with to introduce some industry terms:

  • Offer: A promise of payment in exchange for advertising results such as sales, views, or downloads. An offer includes all aspects of that promise, like what results are worth payment and what product or service is being promoted.
  • Attribution: The process of assigning ownership to user traffic through an offer. It usually has the goal of identifying which networks or partners yielded results for the offer.
  • Payment structure: The part of an offer that describes how advertising results are paid for. Advertisers set rates when providing offers to networks or partners, and networks do the same for partners.

These high level concepts might feel vague at first, but they’ll come together with a little bit of time. For now, let’s continue by introducing some terms that describe how a user moves through advertising:

  • Impression: A measure of an offer’s visibility and contribution to brand awareness. Impressions don’t capture direct user interaction. Instead, they’re measured when a user sees or loads your ad somewhere.
  • Click: A measure of user engagement in online advertising. When a user literally clicks (or taps or touches) an ad to interact with the offer, that’s a click.
  • Conversion: An action taken by the user that the advertiser values. Some examples are product sales, mobile app installations, and lead generation form submissions.

There’s more to learn, but if you understand how these concepts interconnect, then you’re already ahead of the curve. Next, let’s use an example to put the language in context.

Tying It All Together

Let’s say a company called Grandia eSports needs to sell event tickets for an annual competition, and does so by buying traffic for their ad campaign. They put together an offer that networks they work with can promote to partners.

The offer includes a description, promotional banner images, and who the ads should target. Not only that, the offer defines conversions as event ticket sales, and pays $5 per conversion. One of Grandia’s network contacts takes interest in the offer and decides that they’re willing to pay partners $4 per conversion.

The network then looks for its partner contacts who can best promote the offer. Blog writers and other partner contacts interested in the offer choose whether or not to start promoting it on their sites. Once ads are posted, traffic begins to flow: users see the ads, some users click on those ads, and some of those users buy tickets.

Meanwhile, the advertiser and network keep track of everything with TUNE. As long as Grandia runs the ad campaign, they pay the network based on the payment structure in the offer when blog writers bring in sales. Similarly, the network pays the writers who are driving conversions.

Going Forward

You’ll get more out of our software as you build a strong foundation of performance marketing concepts. Knowing who’s involved, how they interact, and what terms they use is a great start.

To build on this knowledge, we recommend reading about the Basics of Tracking with TUNE. That topic and other suggested reads make up our Background & Setup series.