Performance marketing is a type of internet marketing that ties together direct customer response and revenue generation. It is often considered the most effective form of online advertising because it allows marketers to directly track consumer behaviour from click-throughs, site visits, ad conversions, etc., and provides an instant "customer response" loop so that paid ads can be turned off as soon as costs outweigh income.
Direct response marketing, also known as performance marketing or actionable advertising, focuses on business results like sales, rather than brand awareness. Paid search ads are an example of direct response marketing. When consumers click on a paid search ad, the advertiser is charged only when the consumer acts on that ad (e.g., clicks through to the advertiser's website, makes a purchase, etc.).
The advantage of performance marketing is that advertisers can see exactly how many people clicked on their ads or whether they made a sale. This doesn't necessarily mean revenue is generated for each click; it means that clicks can be qualified or disqualified to reduce the number of people who will end up buying their product, based on how many viewed it.
The goal is to get more money from each marketing dollar spent and get a detailed understanding of what gets customers to purchase.