Performance-based marketing is an advertising model where advertisers pay only when specific results are achieved, such as clicks, leads, or sales. This approach aligns marketing costs with actual outcomes, making it an attractive option for businesses seeking measurable returns on their marketing investments.

Key metrics:

Cost Per Click (CPC): $0.50 - $2.00 (average across industries)

Cost Per Lead (CPL): $20 - $100 (varies by sector)

Cost Per Acquisition (CPA): $50 - $200 (depends on product/service value)

Return on Ad Spend (ROAS): 2:1 to 10:1 (industry benchmark)

Conversion Rate: 2% - 5% (typical for e-commerce)

Zappos, the online shoe and clothing retailer, successfully implemented a performance-based marketing strategy using affiliate marketing:

Zappos partnered with various affiliate websites and bloggers.

Affiliates promoted Zappos products through custom links.

Zappos paid affiliates only when their referrals resulted in sales.

The company offered a commission rate of 7-10% per sale.

This approach led to a 43% increase in affiliate-driven revenue over one year.

Zappos achieved a ROAS of 7:1 from its affiliate program.

By focusing on performance-based marketing, Zappos was able to expand its reach, increase sales, and maintain control over marketing costs, paying only for actual results.