Performance marketing or performance-based online marketing is the model by which affiliates, partners, or publishers are paid commissions on desired “actions,” i.e. a sale, a lead, or a phone call being generated from their website. There are several different models on which you can work as an Advertiser or Affiliate. The main model is called the “CPA” model or the Cost Per Acquisition or also known as Cost Per Sale. A large percentage of all affiliate marketing or performance marketing is conducted on a CPA model, that’s why you may hear the term CPA being thrown around a lot out there.
The second most popular model is probably the Cost Per Lead or CPL model, where information is being processed into a form on a website or a landing page and then that action is then paid out to whomever referred the business. Cost Per Click or CPC is another technically “performance based” model where you’re compensating someone on those clicks that they’re driving, but technically it isn’t really performance based in that it’s not commission-oriented. Then there is the Pay-Per-Call model. Ring Revenue is probably leading the forefronts on compensating affiliates and partners when the generate calls to your call center or sales center.
CPA and CPL are the primary performance marketing structures. When you hear about affiliate marketing or performance-based marketing you’ll hear these two models being talked about the most. Electronic tracking is absolutely necessary in order to facilitate all performance-based marketing. You have to be able to track the click-throughs and the sales that result and cookie the browser for a certain period of time, so people are accurately compensated for the traffic they’re referring and the sales that result or leads.
Performance based marketing is ideal for Advertisers because it only compensates when desired actions are made by site visitors. Affiliate marketers like the performance based model because the more they produce the higher the commissions per action can go. Performance based marketing has grow to huge levels and is still growing as more individual and companies decide to work on this model.