What is performance marketing

A Simple Guide to Performance Marketing and the Tools You Need

15 December 2023

What if there was a secret weapon in marketing that could be both cost-effective and less risky? The answer isn’t actually a secret - it’s performance marketing.

Did you know that CMOs spend almost 50 % of their budget on performance marketing? It's because it’s less risky and pricey than other marketing strategies.

In this guide, you'll get a crash course in B2B performance marketing. We break down how it works, why you should do it, and what tools to use.

What is B2B performance marketing?

Performance marketing is a digital marketing approach where you pay for results. An example of this is pay-per-click (PPC) ads, where you only pay for the clicks you get. Or affiliate marketing, where you only pay for the leads or sales you get.

It differs from traditional marketing, where you initially pay for exposure and get the results as a bonus.

What marketers love about performance marketing is that it makes your campaign less risky, guarantees ROI (return on investment), and gives you more control over your ad spending.

That doesn't sound too bad now, does it?

Why performance marketing?

We already gave you some of the benefits, but you can never have enough so here are five more reasons why performance marketing should be part of your wider performance marketing strategy:

1. Cost-effectiveness

Performance marketing means you don't pay unless there are results.

This guarantees you get value for your money. No more worrying about spending that precious marketing budget without seeing results.

2. Measurable results

Traditional marketing–like TV, radio, and print ads–can be hard to measure. Leaving you with a guessing game.

With B2B performance marketing, there are a lot of analytical tools available to help you measure the results of your campaigns. (We'll go through our favorites further down.)

Being able to measure marketing efforts makes all the difference so you know what works and where improvements need to be made.

3. Targeted advertising

Too many marketing bucks have been wasted on targeting broad audiences who don't want or need your products or services.

We've all been the target of these campaigns. Hint: it's that commercial you fast forward through while listening to a podcast or that annoying pop-up ad that haunts you every time you open up Facebook.

However, performance marketing helps you combat this with targeted advertising, focusing on the prospects most likely to convert and leaving the rest alone. Also, you avoid wasting money on users that will never become customers.

You can tailor your campaigns based on, for example, audience demographics, interests, and behaviors.

4. Scalability

With performance marketing, you can set a small campaign budget to test the waters and adjust it based on the results you get. Once you know what’s working, you can increase ad spending on high performers and decrease it on low performers.

Also, performance marketing happens online. (Like most things these days, but still worth mentioning.) Unlike traditional marketing, performance marketing has no physical limits. You can scale your reach on a local or international scale with the same efforts.

5. Real-time optimization

After measuring your performance marketing efforts, you can, and should use the insights to optimize your campaigns.

Analytical tools can be used to collect and analyze customer behavior data in real time. If an ad isn't performing, you can act right away. Going in and optimizing the copy, design, or CTA to improve engagement and conversion rates.

This is not possible with traditional marketing, where print ads, radio, and TV commercials are pretty much set in stone.

How performance marketing works

Now that you know the 'Why?' of performance marketing, let's review the 'How?'.

In performance marketing, we usually have three key components: the advertiser, the publisher, and the network.

  1. Advertisers want to promote their business

  2. Publishers help advertisers promote

  3. Networks act as the middle hand, connecting the other two

The advertiser will usually approach the network, which arranges the promotions with the publisher. Then, the advertiser pays the network and the publisher based on the results of the campaign.

The most common types of performance marketing are:

Search engine marketing (SEM)

SEM is when advertisers pay to rank for keywords in the paid search results to drive traffic to their website. When you search for something on Google, you will find the paid search results at the top, under 'sponsored'.

Google Ads Google search result

The paid search is followed by the organic search, where you can only rank through search engine optimization (SEO).

Paid advertising

When you think about performance marketing, the first place your mind probably goes to is paid ads. You know, those lovely things that keep interrupting you when you are browsing?

Paid ads are actually slowly losing their value with the increase of ad blockers and banner blindness.

However, they're not dead yet. Lots of B2B businesses are still finding success with display ads. Especially those who utilize interactive content, like videos and engaging graphics.

To take your B2B performance marketing to the next level, you can use a tool like Dealfront’s Promote to target specific companies' IP addresses with display ads. This makes it possible for you to reach those dream customers with your ads, even if their employees work remotely.

Native advertising

Native advertising is a fancier word for sponsored content.

You know those sponsored videos that appear in the "watch next" section on YouTube? Native ads. That sofa that popped up on Facebook Marketplace and turned out to be from an actual store? Also sponsored.

Often, users won't differentiate between native advertising and organic content, allowing you to promote your brand in a way that feels natural.

Social media advertising

For performance marketers, social media is just the best!

It makes it possible to reach users and drive them to your site–while also letting them share your sponsored content organically–extending your reach far beyond the original post.

For B2B businesses, LinkedIn is a major platform, but don't overlook Facebook, Instagram, Twitter, or even TikTok, for that matter. Your customers can be found where you least expect it, and ultimately, you need to show up where they are—wherever that is!

Influence and affiliate marketing

Businesses team up with influencers who promote their products or services to their followers.

Influence marketing is closely related to affiliate marketing, where advertisers use affiliates (publishers) to promote their products or services, usually through an affiliate network.

The affiliates promote the products or services using an affiliate link and earn a commission when people buy something through that link. (The network usually takes a cut as well.)

As always in performance marketing, if there are no sales, there is no commission.

How to measure (and pay for) performance marketing

Here are some examples of key performance indicators (KPIs) for performance marketing:

Cost per click (CPC)

CPC means you pay based on the number of times your campaign gets clicked. Track this if your goal is to drive users to your website.

Cost per impression (CPI)

Impressions are views of your ad. With CPI, you pay for every thousand views. For example, if 25,000 people view your ad, you'd pay your base rate of 25. Impressions are good to measure if your goal is increased visibility.

Cost per sale (CPS)

With cost per sale, you pay when a sale is made from the campaign. Measure this metric if your overall goal is to increase sales.

Cost per lead (CPL)

CPL means you pay when someone signs up for something, like a newsletter or webinar. If your goal is to get leads, track CPL.

5 steps to mastering B2B performance marketing

Now, before you start googling for affiliate networks or signing up for Google Ads, it's important to set up a plan. Here's a step-by-step guide to being successful in B2B performance marketing.

Step 1: Set realistic goals

Don't aim too high at first. It's better to set the bar low and raise it gradually.

Doubling your website traffic in a month or increasing leads by 50% in two weeks are examples of unrealistic goals, so put those aside for now.

You also want your goals to be measurable. Define what you want to achieve, and don't be vague. A vague goal would be to say you want to 'increase conversion rates'. Instead, say you want to 'increase conversion rates by 10 % over the next six months', for example.

Step 2: Segment target audience

Customer needs change through the different stages of the marketing funnel.

The ones at the top of the funnel are just becoming aware of their needs. So, they need educational content catering to the awareness stage.

On the other hand, prospects at the bottom of the funnel are ready to buy. They need persuasive content like case studies and testimonials to help them make that final decision.

Segmenting your audience ensures your campaign addresses the unique needs of prospects in different stages of the marketing funnel, splitting potential customers into groups based on their interests and behaviors.

Now, you can tailor your B2B performance marketing campaigns to align with the preferences of each prospect.

Use marketing automation tools to segment your target audience and optimize marketing efforts accordingly.

Step 3: Choose the right performance marketing channels

You can have the most persuasive ads, but if you pick the wrong channel, you won't see any results. Find the marketing platform where your potential customers spend their time – so you can spend your marketing resources in the right place.

Performance marketing channels like Facebook and Google are old players. But new ones with a large army of users are emerging.

Take TikTok, for example; the short-form video platform arrived in late 2016 and has gathered over 1.7 billion users worldwide in less than 10 years. And Reddit, launched in 2005, has over 57 million daily users.

Where is your target audience hanging out? If you're not sure yet, it's time you find out and meet them there.

Step 4: Create compelling ad content

You need to create ads that connect with your target audience, addressing the needs and pain points that keep prospects awake at night.

When deciding on content for your ads, don't rely on gut feelings or guesswork. Instead, do your research. Talk to customers, prospects, sales, and customer success to get insights into your audience's challenges, questions, and preferences.

Also, conduct A/B tests to compare the effectiveness of different ads. Trying out different formats, designs, copy, and CTAs.

Step 5: Track and optimize campaigns

Performance marketing is all about results, whether it's from clicks, sales, impressions, or signups.

So, after launching a campaign, use tracking tools to measure your efforts. Look at key metrics like click-through rates, ROI, and conversion rates. These insights will help you optimize the overall campaign performance. But, we’ll talk about the different tracking tools later.

Performance marketing pitfalls (watch out for these 3)

Like with all things, performance marketing has its challenges. Here are some of the things you need to be on the lookout for:

1. Ad fraud

Scammers using bots to trick ad networks and advertisers into paying them is, unfortunately, becoming more common. Cybercriminals will deploy click bots to produce fake clicks on digital ads that appear on their websites.

When this happens, advertisers you’ll end up paying for fake engagement.

To avoid ad fraud, there are a few things you can do:

  • Learn about the different forms of ad fraud so you can identify it.

  • Choose networks and publishers you trust that are transparent and credible.

  • Invest in anti-fraud tools. Google Analytics will flag fake clicks and impressions.

2. Data security

The data security and privacy laws affecting advertisers are increasing, like Europe's General Data Protection Regulation (GDPR). Businesses that handle the personal data of European customers need to follow GDPR guidelines, or they face hefty fines.

Regulations like this can make tracking prospects' behavior less effective.

Let's take cookieless tracking as an example. It reduces the amount of data advertisers are allowed to collect when tracking prospects online. For marketers, this means less user behavior data, which translates into less targeted ads.

To combat this, make sure to use tools (and partners) that stay on top of relevant data security and privacy regulations. A tool like Leadfeeder will help you track customer behavior, like turning anonymous website traffic into company names while staying GDPR-compliant.

Here, our General Legal Counsel, Hannah-Lee Wunderlich, gives you insights on how to choose a GDPR-compliant vendor for your business:

Watch video

3. Increasing competition

Ad costs are rising as more advertisers compete for the same audience. Advertisers are forced to pay more to get the best ad placements.

Statistics show Facebook's cost per mile (CPM) has increased by 89%. While Google and YouTube are up by 108%.

This makes it even more important to:

  • Niche down and only target your ideal customers; it can help reduce costs by avoiding irrelevant clicks

  • Test different ad formats, like video or carousels, to see which performs best for your audience

  • Measure your ads and use this data to prioritize your budget for campaigns that deliver tangible results

With that said, it's time to review the tools that will help you get the most out of your B2B performance marketing campaigns and avoid the pitfalls above.

The performance marketing tools you need to get started

Performance marketing tools give advertisers the power to:

  • Target the right audience

  • Measure their results

  • Optimize their campaigns

First up: Email marketing tools

When performance marketing delivers those leads, you want to make sure to engage with them, nurturing them through the different stages of the customer journey until they convert into customers.

An email marketing tool like Intuit Mailchimp is great for this.

Mailchimp email marketing tool

Integrate it with your CRM, and use it to segment your customers based on criteria like behavior, demographics, and engagement levels. This allows you to send personalized and targeted emails to specific segment groups, improving relevance and engagement.

You can also use A/B tests to experiment with different subject lines, content, and calls to action. Analyze the performance of each variant to optimize future email campaigns for better results.

With performance marketing, it's all about the results. So tracking them is crucial.

This brings us to: Tracking tools

Tools like Google Analytics allow you to track website traffic, conversions, and the performance of individual marketing campaigns to assess ROI.

It helps you see which ads and marketing channels are most effective and which might need some adjustments.

You also want to track customer behavior to see what potential customers are doing on your website and what company they come from.

This will help you evaluate the quality of the traffic and leads, not only the volume. So, you’re wasting time and resources on users without the potential of becoming customers.

Leadfeeder can be used for tracking customer behavior, identifying which companies visit your website, and keeping track of your most valuable prospects.

Leadfeeder website visitor identification solution

Pro tip: Try Leadfeeder free for 14 days

Performance marketing isn’t just numbers

The core of performance marketing is results, but remember, it's not just about the number of clicks, impressions, or even conversions – it's about quality. Targeting the right audience, creating compelling ads, nurturing the right leads when they arrive at your website, and finally: converting them into loyal customers.

Pascal Wenzel
By Pascal Wenzel

Pascal Wenzel is Team Lead Performance Marketing at Dealfront.

Now that you're here

Leadfeeder is a tool that shows you companies that visit your website. Leadfeeder generates new leads, offers insight on your customers and can help you increase your marketing ROI.

If you liked this blog post, you'll probably love Leadfeeder, too.

Sign up

Related articles

Leadfeeder knows the companies visiting your website

Install today to start identifying new business opportunities.

See for yourself

Free trial. No credit card required.

As seen in

  • Forbes
  • Entrepreneur Magazine
  • Fox
  • Mashable
  • Social Media Examiner