Performance marketing – What it is, how to measure, and channels.

Adobe Communications Team

07-24-2025

Two professionals defining a performance marketing strategy

Performance marketing requires all marketing stakeholders to collaborate in creating a transparent, accountable, and highly profitable revenue stream.

This guide provides a comprehensive, expert-level analysis of the performance marketing landscape. It deconstructs the core definitions and mechanics that power this results-driven field, conducts a deep dive into its established and emerging channels, and offers a clear-eyed forecast of the seismic trends—from generative artificial intelligence and automation to consumers prioritizing data privacy—that are shaping its future. For marketing leaders and practitioners aiming to master the art and science of results-driven advertising, this article serves as the definitive resource for navigating the complexities and capitalizing on the opportunities of the modern performance ecosystem.

What is performance marketing?

Performance marketing is a strategic approach to digital advertising where payment is directly tied to the achievement of specific, measurable actions. Often referred to as pay-for-performance advertising, this model shifts the risk from the advertiser to the publisher or marketing partner, as payment is only rendered after a desired outcome is achieved.

Advertisers collaborate with agencies, publishers, or affiliates and pay based on a variety of metrics, including:

Key channels for executing performance marketing strategies include affiliate marketing, search engine marketing (SEM), social media advertising, and native advertising. What sets performance marketing apart is its unwavering focus on results. It’s not about paying for potential reach; it's about investing in tangible outcomes, ensuring that every dollar of ad spend is accountable, trackable, and optimized for maximum Return on Investment (ROI).

Performance marketing vs. advertising.

Within the industry, the terms "performance advertising" and "performance marketing" are often used interchangeably, but they represent different layers of the same strategic framework. Understanding the distinction is crucial for precise planning and execution.

An effective analogy is to think of performance advertising as the vehicle (the ad itself). In contrast, performance marketing is the entire transportation system—the strategy, the road network, the traffic control, and the destination. One cannot be truly effective without the other.

Performance marketing vs. affiliate marketing.

Affiliate marketing and performance marketing aren’t the same thing. They’re commonly confused, and the terms are often used interchangeably, but affiliate marketing is a type of performance marketing — it falls under the broader umbrella of performance marketing.

Performance Marketing
Affiliate Marketing
Definition
A broad advertising strategy where payment is based on measurable actions.
A broad advertising strategy where payment is based on measurable actions.
"Who"
Can be executed directly by the brand (e.g., in-house SEM team) or through various partners.
Always involves a third-party partner known as an "affiliate" or "publisher."
Channels
Includes SEM, paid social, native advertising, influencer marketing, AND affiliate marketing.
The channel is the network of affiliate partners.
Primary Goal
To generate any predefined, measurable action (CPA, CPL, CPC, etc.) across any channel.
To leverage partners to generate sales or leads in exchange for a commission.

What are the types of performance marketing channels?

You’ll find a variety of channels used for performance marketing. Here are the most popular options.

Affiliate marketing.

With affiliate marketing, an affiliate — such as a social media influencer — promotes a product and earns a commission for each sale, view, or click.

In affiliate marketing, the brand works with the affiliate, or publisher, as they promote the brand’s product. The affiliate marketer is usually required to disclose their relationship with the brand. Then they’ll usually provide consumers with a unique affiliate link and get a portion of the revenue for each sale.

Affiliate marketing is flexible and low-risk, and it provides an easy way to target specific audiences. Cost per conversion and cost per like are two standard pricing models used for affiliate marketing.

Native advertising.

Another popular method of performance marketing is native advertising. Native advertising refers to paid ads that closely resemble the other content on the platform where they appear. They won’t be large banner ads or colorful display ads — you may have to look closely to see that a native ad is an ad. Examples of native advertising might include Instagram Story filters or sponsored article content.

Search engine marketing.

Search engine marketing (SEM) uses paid ads that appear at the top or bottom of a search engine results page to drive customer action and engagement. SEM differs from search engine optimization (SEO), which refers to marketing efforts that target organic search engine results.

SEM is a standard method of performance marketing. It’s highly effective because your paid ads can be targeted to catch consumers and buyers at the bottom of the sales funnel.

The cost per conversion is the typical pricing model used for SEM, as ads can be targeted to audiences who are ready to buy. There’s no need to focus on views when consumers and buyers are so close to conversion.

Social media marketing.

Social media marketing (SMM) refers to managing a brand’s social presence across various digital platforms to establish its identity and increase brand awareness. Social media marketing for performance marketing primarily focuses on social media ads.

SMM is a great outlet for performance marketing strategies because users are ready to engage, and most social media channels have extensive user data. All that data means social media ads can be acutely targeted based on location, demographics, and psychographics.

If you want to incorporate social media marketing into your performance marketing, consider placing ads on social media platforms. Depending on your brand and your audience, these platforms might include:

You can track performance by cost per conversion, cost per view, or cost per like.

Sponsored ads typically appear on Amazon, targeting certain search keywords. You’ll define a shopping keyword (for example, “sundress”) and show the ad to a relevant audience — people searching for women’s summer clothes.

You can use your company’s first-party data (information you collect from your customers) to create more effective sponsored ads. For example, if you ship more long dresses to the Midwest and more short sundresses to the Southeast, you can use those insights to target your sponsored ads better.

How to measure performance marketing.

In performance marketing, advertisers and their partners pre-define what a successful outcome looks like and tie payments directly to achieving it. These metrics function as both Key Performance Indicators (KPIs) and payment models, ensuring every dollar spent is accountable.

Connected TV.

CTV advertising refers to the delivery of ads via internet-connected television devices, such as Smart TVs, streaming sticks, and gaming consoles. This channel merges the high-impact, immersive viewing experience of traditional television with the precision targeting, programmatic buying, and real-time measurement of digital advertising. Marketers can move beyond broad demographic targeting and utilize household-level data signals, such as IP addresses and device IDs, to reach specific audiences. Furthermore, they can measure outcomes like view-through conversions (when a user sees a CTV ad and later converts on another device), effectively transforming CTV from a top-of-funnel brand awareness tool into a full-funnel performance engine.

Retail media networks (RMNs).

RMNs are advertising platforms operated by major retailers. These networks enable brands to utilize the retailer's extensive collection of first-party shopper data, including purchase history, browsing behavior, and loyalty program information, to target consumers with targeted ads. Initially, these ads were confined to the retailer's own website and app ("on-site"). However, the major evolution is the expansion to "off-site" advertising, where brands can use the retailer's data to target those same shoppers on other channels like CTV, social media, and the open web. This creates a powerful "closed-loop" attribution system where ad exposure can be directly tied to a purchase.

Shoppable video and social commerce.

This trend represents the convergence of content and commerce, where e-commerce functionality is embedded directly within video content and social media platforms. This creates a frictionless path to purchase, allowing a user to discover a product in a TikTok video, an Instagram Reel, or a YouTube live stream and complete the purchase without ever leaving the app or video player. By eliminating steps in the conversion funnel, social commerce significantly boosts impulse buys and drives higher conversion rates, turning passive viewers into active shoppers in an instant.

Top-of-funnel & traffic metrics.

These models are often used to drive initial awareness and engagement, acting as a starting point for the customer journey.

Bottom-of-funnel & conversion metrics.

These models are the true heart of performance marketing, as they directly measure actions that create tangible business value.

Strategic & ROI-focused metrics.

These are not direct payment models but are critical for guiding overall strategy and setting the value for other actions.

How to measure performance marketing success by various models

If you’re ready to take your performance marketing skills to the next level, stay ahead of these trends to help optimize your strategy.

Generative AI in performance marketing.

Artificial intelligence now helps performance marketing teams automate tasks, generate insights, and enables personalization at a scale previously unimaginable.

A/B testing for performance marketing

Enterprises leaning towards an omnichannel approach.

The modern consumer journey is now a fluid and fragmented path that weaves across a multitude of online and offline touchpoints. A consumer might see a brand's ad on Connected TV, research it on their laptop, see a retargeting ad on Instagram, and finally make a purchase in a physical store. An omnichannel performance strategy aims to deliver a seamless, consistent, and personalized brand experience throughout the entire journey.

While the strategic goal is clear, the primary operational challenge is unified measurement. The data from each channel often exists in isolated silos, making it incredibly difficult to understand how different touchpoints collectively influence a conversion.

Measure performance marketing campaigns with Adobe Marketo Engage.

Performance marketing is a discipline characterized by the unprecedented opportunities presented by AI-driven personalization and automation while prioritizing data privacy for customers.

The future of marketing is measurable, accountable, and fundamentally performance-driven. By embracing the strategies, channels, and technologies outlined in this guide, your organization can move beyond simply advertising and begin to engineer predictable, profitable, and sustainable growth.

Book a demo or watch an overview video to see how Adobe Marketo Engage can help your business measure performance marketing campaigns.

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