Characteristics of Performance Marketing

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There are three key characteristics of performance marketing that further illustrate the performance focus of these channels.

Characteristics of performance marketing channels: measurability, modularity and optimization
Measurability
Measurability refers to the question mentioned at the beginning, which naturally concerns all of us as online marketers: What does this advertising actually do for me? Is there a response from the target audience to my ad? Are users clicking on the link to my website? Are they adding the advertised product to their shopping cart? Are they buying it? Are users filling out the nepal phone number data lead form? All of these questions can be answered using key performance indicators. Here are some essential ones for you:

ROAS: Return on Ad Spend is one of the most important metrics in performance marketing. It indicates the ratio of revenue to advertising costs .

ROAS = Sales / Advertising Costs

How much revenue was generated by the advertising costs used? Broken down even more simply, this means: How much do you get back for every euro invested? (It's important to note here: ROAS refers purely to advertising costs; this distinguishes it from ROI , or return on investment, which considers the total capital invested.) A ROAS of 1 means that you receive one euro in revenue for every euro spent on advertising. While this means that the advertising costs are self-supporting, you obviously wouldn't be profitable yet, as you also have product costs, personnel costs, etc. It's therefore important that you calculate your breakeven ROAS for your performance marketing measures.

So the key question is: How much money do you need to generate through your advertising efforts to achieve profitability? Your goal, of course, is to exceed this breakeven ROAS. To do this, it's extremely important to know your margin well!

CPC: Cost per click ( CPC ) is the cost you pay for each click on your website. As PPC ( pay per click ) , it is a common billing model in performance marketing, for example , for Google Ads (SEA), and thus once again demonstrates the focus on performance. As an advertiser, you don't pay for the mere viewing of your ad (cost per thousand impressions, CPM), as you do with print advertising, but rather per action, namely per click. This type of billing naturally makes performance marketing very lucrative for marketers, as you can be sure that you aren't wasting money indiscriminately due to significant wastage. Instead, you only pay when your ad on Google is actually clicked on, meaning someone is genuinely interested in your offer.