We all know how important it is to make your decisions based on data, especially when it comes to performance marketing.

How to leverage the power of AI and boost your business’s performance?

In this article, we will talk about the key benefits of AI technologies in Performance marketing.  

Structure of the article:

  1. Performance marketing: key terms
  2. Critical challenges in Performance marketing
  3. Five key benefits of AI in performance marketing

Performance marketing: key terms

What is Performance Marketing?

First of all, let us clarify what exactly do we mean when talking about Performance marketing.

Simply put, Performance marketing is a form of advertising that implies paying a commission based on performance. In other words, it is a goal-driven approach that enables marketers to have a clear view of their marketing efficiency and costs.

In contrast to traditional advertising, where the marketer pays a certain amount of money for their campaigns upfront, in performance marketing, digital marketers pay for a result.

Performance marketing has started to be favored by many CMOs since it enables transparency in marketing campaign efficiencies & spending and a better understanding of how marketing investments work.

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Four main  types of performance marketing

Performance marketing is traditionally known for its clear focus on such KPIs as CPC, CPM, CPL, and CPA.

Nowadays, many companies are implementing performance marketing strategies in many areas of marketing: search engine marketing (SEM), search engine optimization (SEO), display, native ads, social media marketing, email marketing, and content marketing.

We have gathered below a few common types of performance marketing.

Performance Marketing type 1: Social Media 

The social media type of performance marketing aims to gain traffic, brand awareness, or conversion. To reach these goals, you have to post content on the relevant social media platforms. You can easily track your campaign performance by measuring engagement, likes, clicks, and sales rates. 

There is so much competition on social networks nowadays that the algorithms keep on getting more complex. So focus your efforts on the social networks that you have chosen with the appropriate strategy. 

If you are in a B2B business, you might want to focus on Linkedin and Twitter as they are great social media channels for B2B companies. Also, Youtube is a good asset for B2B as well as for B2C businesses.

On the other hand, if you have a B2C business, Instagram and Facebook are the most commonly great special media channels to tackle.

Finally, to run a performance marketing strategy on social media, you must also consider what type of content you want to use for addressing your target audience

To run a performance marketing strategy you have to choose the right social media for your campaigns.

Performance Marketing type 2: Search Engine 

Search engine marketing implies two main categories: paid and organic search strategies. 

Search engine advertising is a paid method of advertising on search engines. It is a very effective performance marketing type, as you get traffic quickly. You can also target any region you want, use dayparting on your ads, and use your budget more efficiently.

Performance Marketing type 3: Native Advertising 

It is an online marketing performance strategy that enables an advertiser to promote content in the context of the user experience. Simply put, native advertising is promoting content within a publication. When you read an article online, beneath it, you have a table or tab with other articles proposed that will usually say “sponsored content.”

This type of advertising matches the website you are being advertised on, as the content is similar. These ads don’t look like advertisements.

You may usually find native advertising in online article, they are commonly noted as "sponsored content".

Performance Marketing type 4: Affiliate Marketing 

Affiliate marketing is promoting someone else’s product or service by using an affiliate link.

The commission is paid only after the affiliate has recommended a product and the customer has gone to the merchant’s website and made a purchase. 

Usually, you see affiliate links on blogs, which is most commonly called link building, or on youtube in the description box. It is also prevalent nowadays to perform affiliate marketing through influencers to leverage the buying decision on their audience. This type of affiliate marketing is also known as content marketing, and we can easily recognize it, as it can be: product reviews, case studies, tutorials, or tools’ comparison. 

All these channels can be tracked and measured by their performance. Performance-driven marketing can touch various marketing channels and tactics since all actions can be measured and monitored.

Modern marketing analytics tools offer very detailed marketing performance monitoring that helps marketers track their marketing activities.

For example, nexoya offers such an AI-based marketing performance tool that allows marketers to track their activities by adjusting the marketing budget accordingly to reach the objectives. (Find an ultimate list of best AI marketing tools here).

Critical challenges in Performance marketing

Growing number of marketing channels

Nowadays, on average, every digital marketer uses more than ten marketing channels. Indeed, having multiple marketing channels helps us reach a broader audience and target more people. However, with the growing number of various communication channels, it is getting more challenging for marketers to keep track of their marketing campaign performance. 

Although nowadays, it is highly beneficial to be present and active on different platforms and social media channels, all these efforts are worthless if you cannot measure your results and understand your data. More beneficial is actually to know how to use your existing data for improving your future results.  

Having multiple channels means having all the data distributed amongst these channels. As a result, these datasets are very hard to compare and even harder to analyze. Thus, companies are starting to aggregate their data manually using Excel and similar tools. As a result, such routine tasks as data collection, reporting, and data analysis take the most of the marketing specialist’s time.  

Knowing how much time it takes, many companies prefer to do the analysis less regularly or even ignore the reporting and data analysis stage. In this case, all the decisions about the next steps are based on intuition or a pure gut feeling.  And although this strategy seems so harmless and effective in the short term, in the long term, a lack of proper data analysis can lead to inefficient budget allocation, missed opportunities, and budget loss.

Critical challenges in Performance marketing

Four biggest challenges in Performance marketing

As a result, amongst the biggest challenges that digital marketers are experiencing right now are:

  1. Inability to get a holistic overview of the overall marketing performance
  2. Inability to analyze the data due to the large volume of unstandardized datasets from various channels
  3. Time-consuming reporting and error-prone data analysis
  4. Decisions are mainly based on intuition, no clear understanding of data

We all know that time is the most precious resource that every company has. Therefore, more and more companies are starting to invest in AI marketing software. Thanks to artificial intelligence, these software programs help companies automate such time-consuming processes as reporting and data analysis. This way, they help companies to improve the marketing team efficiency. Moreover, in addition to simple automation, some modern software programs go one step further and provide algorithms for increasing the overall marketing performance: e.g., improving conversion rate and the number of clicks. 

Let us deep dive into this topic and discuss the key benefits of AI in performance marketing. 

Five key benefits of AI in Performance Marketing

So, why do you need AI in Performance marketing?

Artificial intelligence, in many ways, can assist digital marketers and solve many challenges mentioned above.  

When it comes to Performance marketing, AI-driven solutions can enable digital marketers to get the following benefits:

1. Transparency and understanding of your data

Modern AI technologies allow digital marketers to get full transparency into their data. In other words, AI software helps you to get an inclusive overview of your overall marketing performance across multiple channels. AI technologies enable you to open your eyes to the actual data you have. As a result, AI software helps you understand your data better and make informed decisions about your next step.

2. Fast and easy reporting and data analysis

AI technologies allow you to save plenty of time on manual reporting and data analysis. Imagine how much time your marketing team usually spends on these tasks? As we have mentioned before, these are the tasks that are considered to be the most time-consuming in marketing. If you calculate how much time and money you spend on these operational tasks, you will quickly realize that it is quite a tangible loss for your business. 

Thanks to AI technologies, instead of days of hard work, these routine tasks take seconds. AI software allows marketers to automate these processes and make your team more efficient and happy, leaving more time for creative tasks.

In addition to that, machine learning and AI algorithms guarantee the elimination of human errors that usually took place in manual reporting.

3. Predictive analytics

Another benefit of AI in Performance marketing is the ability to analyze vast volumes of data and predict the potential outcome. Modern AI software can do all the dirty work for you. By dirty work here, we mean:

  • Analyze your existing data.
  • Identify patterns.
  • Based on the analysis, predict which budget allocation will bring you the most profit.

In other words, no more time- and energy-consuming data analysis and no more intuition-based decisions. Predictive analytics algorithms allow an in-depth analysis of your data. 

To sum up, with the help of predictive analytics, marketers can get an overview of future outcomes, prevent certain failures, and adjust their efforts for better reach and better decision-making overall. You can act earlier and perform better.

4. Marketing campaigns optimization and increase in total ROAS

Without a doubt, automation of various marketing processes can itself cut operational marketing costs significantly. However, modern AI-driven tools go one step further and help you to optimize your existing campaigns and increase your overall efficiency automatically. In other words, AI algorithms allow you to gain more profit while spending less money.

5. Fast and effortless data-driven decisions

Last but not least, AI-driven software helps you to make all your decisions based on real data. This is one of the most crucial benefits of AI technologies in Performance marketing. By enabling complete transparency in your data and making all the patterns easily visible, AI software help marketers to see the actual state of affairs. This means that instead of shooting in the dark, marketers can see what strategies and tactics bring the highest profit and which tactics need to be changed.

Thanks to AI tools, marketers can make decisions faster and with minimal effort.  

How can AI help in Performance marketing

To sum up, it is already clear that AI is no longer just a buzzword but rather a proven strategy that helps marketers achieve better results.

And if today having AI software can be considered a competitive advantage, it will be a must-have for many companies very soon. 

Eager to learn more about AI technologies and their impact on the industry?

Check out our expert interview on this topic!

Wishing to see the real examples of AI implementation in performance marketing? Learn more about the practical side of AI application in our recent case study with Generali!