Performance Marketing Q&A

What is Performance Marketing?

By performance marketing we mean a continuous improvement of an online marketing campaign strategy by expanding and testing hypotheses in measurable, digital channels.
By measuring the relevant marketing & business metrics, the advertising budget can thus be used efficiently and appropriately to achieve as many conversions (sales, deals, downloads, etc.) as possible.

What are typical channels in Performance Marketing?

Classic performance marketing channels include Google Adwords (SEA) & organic search (SEO), Google Shopping, social media (Facebook, Instagram, Pinterest, Snapchat, TikTok, LinkedIn) but also Amazon Media & streaming media channels (YouTube & Spotify) offer measurable marketing actions.

What are the tools you need in Performance Marketing?

To be able to evaluate the success of the measures, we use the company data (sales, number of new customers) from the respective back of the page and/or from the store. We combine this with the data from the channels and tools like Facebook Business Manager, Google Analytics, Google Ads and Google Trends.

Which KPIs are relevant?

The most important indicators used in performance marketing are impressions, clicks, cost per click (CPC), the click through rate (CTR), the return on ad spend (ROAS), return on invest (ROI), cost per order (CPO) or cost per action (CPA) e.g. a download or install and the conversion rate.

What’s the purpose of testing in Performance Marketing?

Performance marketing aims to improve online marketing campaigns, generate purchases and increase visibility. By creating hypotheses that are supposed to improve the KPIs, carrying out a variety of tests, and evaluating certain key figures, it is possible to determine which target groups a customer belongs to and how they can best be addressed.

What is Marketing?

Marketing is not equal to advertising. Marketing is all the efforts of a company to successfully sell its products and/or services on the market. Marketing is the summary of activities in a company, combined with strategies. Marketing includes analysis of target groups, price management, design measures and advertising itself. Targeted marketing can make a brand, service or product relevant and interesting to specific people in the market. In addition, good marketing has to understand and address the needs of the market or target audience.

What is the difference between Performance Marketing and classical marketing?

In Performance Marketing, we scale business models through online marketing campaigns and ads. In contrast to classic marketing, all performance marketing activities are based on data, key performance indicators (KPIs) and measurable performance. With the support of KPIs such as leads, clicks or purchases, advertising campaigns and ads can be precisely analyzed, evaluated and hence played out more efficiently and with less distribution loss. Performance marketing is not targeted at branding and building a company’s brand, but at customer acquisition and increasing sales.

Why is Performance Marketing important?

In Performance Marketing, the basis is that activities, spendings and successes are measurable. The company understands the needs, demands and behaviors of the users better and can win them as new customers through targeted advertising measures. In this way, Performance Marketing can be used to encourage customers to make a (further) purchase through retargeting and to bind them to the company in the long term. Using common key figures, individual ads or entire campaigns can be evaluated and, if necessary, adjusted or deactivated. With the help of hypothesis tests, individual elements of online marketing measures can be tested, continuously improved and made as profitable as possible.

What are the campaign goals?

Before creating a campaign, the goal of the campaign is identified. For our Facebook Paid Ads, we differ between purchase/sales, traffic, awareness, website clicks, ATC, event commitment, leads (email), interactions (likes, comments) and downloads, as well as new customer acquisition.

What is retargeting?

Retargeting approaches users who have already had a previous digital touchpoints with the brand or product via clicks or add-to-carts, but who have not yet made a purchase. These users can be encouraged to purchase by displaying target-group-specific advertising materials.

What is prospecting?

Prospecting is the identification of new customers based on data from existing customers and users. In doing so, we analyze data from known customers to create a potential new target group that is similar to existing customers. This new target group is called a lookalike audience (LAL). Users with similar profiles often have the same interests and buy the same products.

What is a lookalike (LAL) target group?

The so-called Lookalike Audiences – literally “similar target groups” or “statistical twins” – are generated by the Mega algorithm and are based on existing user-defined target groups. People who “click” are identified in the same way as people in the initial audience. If, for example, they have similar interests and buy equivalent products, they are placed in the LAL category and, thanks to targeted approaches, made aware of the promoted product. The key factor for the success of a Lookalike Audience is the quality of the initial target group (Custom Audience). The rule here is: quality before quantity!

What is a Custom Audience (CA)?

A Custom Audience is generated from user groups that have already interacted with the company’s website, social media profiles, ads or (digital) products. For example, users who have already visited the company’s website are assigned to a website Costum Audience, users of an app to App Audiences, etc.

What is a traffic campaign?

Traffic campaigns are a campaign with click-optimized-ads designed to attract as many visitors as possible to the company’s website and then persuade them to buy a product or service there.

What does CPO mean?

The cost per order (CPO) indicates all costs incurred during the order process. This includes fees for the various advertising measures & marketing tools. It is a measurement fo the efficiency of marketing efforts and is used very centrally in online advertisement.

What is ROAS?

In performance marketing, it is crucial to monitor the efficiency of campaigns and ads on a regular basis. In addition to CPO, return on ad spend (ROAS) provides a meaningful indicator for evaluating and comparing ads and includes not only the number of units sold, but also their value.
The value indicates the actual profit generated per advertising spend in euros; it is often used operatively to put only the revenue generated in relation to the advertising spend.

What is CTR?

The click through rate (CTR) indicates how many clicks on an ad were generated in relation to the total number of impressions. A high click through rate is very important for achieving conversions and encouraging many users to make a purchase – because then more users reach the targeted page with further information. Optimizing creatives and ad copies allows us to achieve a higher CTR and generate more conversions and purchases. A higher CTR also proves a higher interest of the selected target group.

How to calculate the CTR?

The click through rate (CTR) is manually calculated as follows:
(number of clicks / number of impressions) x 100. Example: If an ad is displayed 100 times and is clicked 1 time, this results in a CTR of 1%.

Why you should not underestimate the Call To Action button

The Call To Action (CTA) is one of the most important components of the ad creative. It conveys a direct call to action to the user such as “Shop Now” or ” Get Discount Now”.