Performance marketing: what it is in plain terms and how it works

What performance marketing means, in plain terms

Yandex Advertising defines performance marketing as a branch of marketing aimed at a specific, measurable result: for example, more inquiries, a lower customer acquisition cost, higher sales, or a better landing-page conversion rate. In plain terms: every campaign has to deliver a benefit to the business that can be counted.

The term is borrowed from English, and Russian-language sources spell it in several different ways. They all mean the same thing.

The main thing here isn’t the channel, but how you manage it. The same search ads can be run «for impressions» or «for inquiries.» The performance approach begins when you decide in advance which user action counts as the result, and that action is measured.

A target action is what you want from a visitor: an inquiry, a purchase, a call, a sign-up. In Yandex Metrica, these actions are set up as goals — visitor actions the site owner is interested in.

Performance advertising is the informal name for ads that are launched and judged by these actions. Yandex itself uses the term: its material on performance marketing has a section on performance-advertising effectiveness metrics.

How performance marketing differs from display advertising

Display advertising covers text, graphic, audio, or video ads that build a favorable attitude toward a brand among the audience. Its job is to make sure people learn about a company or product and remember it. Yandex splits the two jobs this way: PPC advertising works on demand that already exists, while brand advertising works on building awareness and demand.

	Performance approach	Display (reach) advertising
Main goal	Get a specific, measurable action: an inquiry, a purchase, a sign-up	Introduce people to the brand or product, build awareness and demand
What counts as the result	Target actions and their cost	How many people saw the ad and whether their attitude toward the brand changed
Core metrics	Conversion rate, the cost of an inquiry and of a target action, payback (more in the metrics section)	Reach, impressions, frequency; changes in brand awareness and perception
Evaluation horizon	Can be evaluated as the campaign runs, as target actions accumulate	The effect is delayed: display advertising builds demand, so conversions don’t happen quickly

These aren’t competing approaches. Yandex Advertising itself writes that performance marketing can underperform if nobody knows about the product and demand hasn’t formed: in that case, it’s worth raising awareness first, for example with display advertising. Display advertising creates demand; performance campaigns convert it into inquiries and sales.

The principles of performance marketing

The principles below are our own recommendation, drawn from Yandex’s description of the approach. They don’t depend on the channel or the budget.

• The goal is a specific action. Not «more awareness,» but an inquiry, an order, or a sign-up. Yandex advises setting goals that are specific, measurable, and time-bound.
• Measurement is set up before launch. Goals in Yandex Metrica need to be created in advance: without them you can’t calculate the conversion rate, since it’s the ratio of goal-completing visits to all visits. To see which channel and campaign a visitor came from, links are tagged — here’s how UTM tagging by channel and campaign works.
• Decisions are made from data, not from intuition. Hypotheses are tested: the ad, the offer, or the landing page is changed, and the result is compared. In Yandex’s material, the specialist tries new hypotheses, for example changing the offer.
• Budget gets reallocated. Money moves out of campaigns and channels where the action costs more than acceptable, and into ones where it’s cheaper or more valuable. Yandex describes this as part of optimization: improving targeting and creatives, and redistributing budget.
• A link to the business’s economics. The cost of an inquiry matters not on its own, but relative to how much the business earns from a customer. Without that link, it’s easy to «optimize» the advertising toward actions that are cheap but useless.

Performance marketing channels

Performance channels are the ones where spend can be tied to user actions. Among performance marketing channels, Yandex Advertising names PPC advertising, targeted advertising, SEO, and email campaigns. In practice, when it comes to paid advertising, these are the variants discussed most often.

• PPC advertising in search. Ads are shown depending on users’ queries, so this kind of advertising works on demand that already exists. For more on how ad delivery and the auction work in search advertising, see a separate article.
• The Yandex Advertising Network (YAN). A system for placing ads on Yandex’s own services and partner sites. Yandex describes PPC advertising as ads shown in search engines and on websites, based on users’ queries and interests.
• Targeted advertising. It’s used mainly on social media and in messengers. Ads are shown to chosen audiences rather than based on queries — here’s what audience-based advertising on social media actually is.
• Retargeting. The ability to show ads again to people who have already visited the site but didn’t complete a target action.

Which channel fits depends on demand. If people are already searching for the product, it makes sense to start with search. If search demand is low, you need channels where the audience is chosen by interest — and an honest acknowledgment that the result there may take longer to arrive.

The Unified performance campaign in Direct

The Unified performance campaign is a campaign type in Yandex Direct. Direct’s help documentation describes it as a tool for promotion in Search, Maps, and the Yandex Advertising Network that lets you handle performance tasks comprehensively within a single campaign. One such campaign can contain different kinds of ads: product ads, combinatorial ads, graphic ads, and AI-generated ads. Its strategies include options with payment for clicks and for conversions.

The product’s name reflects the approach: the campaign is tuned to a result, not to impressions. But performance marketing is broader than one campaign type. It’s a way of working with every channel where actions can be measured. Campaign type names and their capabilities in Direct change, so check the help documentation before you launch.

Performance marketing metrics

Metrics in performance marketing trace the path from an ad impression to actual money. Below are the definitions from Yandex’s materials, without «normal values»: those depend on the niche, demand, the site, and the business’s economics.

Metric	What it shows	How it’s calculated (in words)
CTR (click-through rate)	What share of ad impressions ended in a click	Clicks divided by impressions, expressed as a percentage
CPC (average cost per click)	What one click on the ad costs on average	Promotion spend divided by the number of clicks
Conversion rate (CR)	What share of visits ended in a target action	Goal-completing visits divided by all visits; Direct’s material expresses the result as a percentage
CPL (cost per lead)	What one contact costs: an inquiry, a call, a message	Promotion spend divided by the number of leads
CPA (cost per action)	What one user’s target action costs	Promotion spend divided by the number of conversions
ROMI (return on marketing investment)	Whether the marketing investment paid off, and how much came back on top of it	The marketing budget is subtracted from marketing profit, the result is divided by the budget, and expressed as a percentage
DRR (ad spend ratio)	What share of ad revenue the ad spend takes up	Ad spend divided by ad revenue, expressed as a percentage

A lead is a potential customer who left contact details: an inquiry, a call, a message. The difference between CPL and CPA is in what counts as the result. CPL is about contacts; CPA is about any action you’ve designated as the goal, including a purchase. For more on how to calculate the cost of an inquiry, see a separate article.

There’s an important caveat with ROMI: Yandex’s materials sometimes plug revenue into the formula and sometimes profit, and the result changes a lot depending on which one. We’ve written separately about how to assess the payback of advertising without mixing up the versions of the formula.

The main point: pick the metric closest to the business’s actual money that you can realistically measure. If sales are visible in your records, look at payback. If for now only inquiries are visible, look at the cost per inquiry, but check how many of them turn into customers. CTR and the cost per click are useful for diagnostics, but on their own they don’t say whether the advertising is paying off.

How to build performance marketing: step by step

The order below is a recommendation. Timelines and budgets aren’t given here: they depend on the task.

• Step one: the goal and the economics. Decide which action counts as the result, and calculate how much you can spend per customer while the advertising stays profitable.
• Step two: measurement before launch. Set up goals in Metrica, tag your links, and, if sales happen outside the site, connect to a CRM — the system that stores customer and deal data.
• Step three: choosing channels to match demand. Check whether people are searching for your product. That determines whether to start with search or with channels where the audience is chosen by interest.
• Step four: launch with hypotheses. Write down exactly what you’re testing: queries, audiences, the offer, the landing page. That way you can compare the result instead of guessing.
• Step five: review the data regularly. See which campaigns bring in target actions at an acceptable cost, turn off the rest, and reallocate the budget.
• Step six: a report on the changes. Record what you changed, why, and how the metrics moved afterward. Without that history, it’s hard to tell a couple of months later which decision actually worked.

Limitations of the performance approach

Performance marketing relies on measurement, so its limits are the limits of measurement. It’s worth knowing them before promising yourself or management exact figures.

• Attribution between channels. Attribution is the rule by which a visit or a conversion is credited to one source or another. Yandex Metrica has several attribution models, and visits are distributed across sources differently depending on which model you pick. That means a channel’s «contribution» partly depends on how the report is set up. The set of models changes too — check Metrica’s help documentation.
• Delayed decisions. Someone may see an ad today and buy later, from a different device, or after talking it over with colleagues. Some of those purchases won’t be linked back to the campaign.
• Offline sales. If a deal closes over the phone or in the office, and the CRM data isn’t passed into analytics, the advertising will look worse than it’s actually performing.
• The effect of brand awareness. Display advertising and a company’s reputation can affect how often people search for and choose you. Measuring that effect needs separate tools, such as Brand Lift, and it doesn’t show up in a performance campaign’s report.
• Optimizing toward cheap actions. If you pick too easy a goal, for example viewing a page, the algorithms and the people running the campaign will chase exactly that. The metric improves, but sales don’t.
• Data quality. A misconfigured goal, duplicate inquiries, or missing tags distort every decision built on them.

So treat the numbers in reports as a guide, not as absolute truth. Compare campaigns within the same channel, over a comparable period, using the same method.

Who a performance marketer is

A performance marketer is the specialist responsible for making sure advertising delivers a measurable result, and for managing channels based on data. By Yandex’s description, they work across several channels, including PPC and targeted advertising.

Their typical tasks, per the Yandex Advertising material:

• analyzing the market, competitors, and the product;
• setting goals and drawing up a media plan — a plan of channels, budgets, and metrics;
• launching campaigns and optimizing them: targeting, creatives, budget allocation;
• testing hypotheses, including through A/B tests of ads, landing pages, and inquiry forms.

Among the tools, Yandex names ad platforms like Direct, web analytics like Metrica, CRM systems, and end-to-end analytics.

How does this differ from a single-channel specialist? A Direct specialist or a targeting specialist knows their own ad platform in depth. A performance marketer looks wider: comparing channels against each other, connecting advertising to the business’s economics, and deciding where the next ruble of budget should go. On small teams, one person often covers both roles.

Frequently asked questions

Are performance marketing and PPC advertising the same thing?

No. PPC advertising is one channel; performance marketing is an approach to managing channels by a measurable result. You can run PPC advertising without a performance approach too — for example, without setting up goals and judging it only by clicks.

Does performance marketing suit small businesses?

Yes, if you have a measurable target action and demand for the product. The Yandex Advertising material especially recommends the approach when a business has a high average order value and customers stay for a long time, or when customer handling is already in good shape. If nobody knows about the product yet and there’s no demand, starting with performance campaigns is risky.

Can you pay only for the result?

Partly. In Yandex Direct, for example in the «Maximum conversions» strategy, you can choose pay-per-conversion: you pay for each target action on the site. But that’s a payment model, not the essence of performance marketing. A conversion is a completion of whatever goal you set up — not necessarily a sale. So you still need to check the quality of the inquiries yourself.

Do you need end-to-end analytics for performance marketing?

End-to-end analytics ties together data on spend, visits, inquiries, and sales in one report. Yandex counts it among a performance marketer’s tools. You can start without it, with goals in Metrica and tagged links. It becomes necessary once sales go through a sales team and you want to calculate payback rather than just the cost of an inquiry.

Which metrics should you look at first?

The one closest to revenue that’s still realistically measurable. Usually that’s the cost of a target action or payback, with CTR and the cost per click as supporting metrics. More on this in the «Performance marketing metrics» section above.

The performance approach starts with measurement, not with picking a channel. If you decide to hand your Direct advertising to a contractor, it’s useful to understand in advance how we run Direct campaigns based on inquiries and their cost.