In order to check whether your campaigns are successful, you need reliable key figures. Various key performance indicators (KPIs) are available to you for performance marketing. They help you to use your marketing budget correctly and support you in optimizing your performance marketing campaigns.
The click-through rate (CTR) shows how often your ad was clicked after being displayed. The ratio between the number of clicks and the number of impressions is therefore measured. Impressions refer to the key figure that indicates how often an ad is displayed to users.
Click-through rate (CTR) in percent = (sum of all clicks / sum of all impressions) x 100
The higher the CTR, the more appealing and relevant the ad is for your target group. However, it is also possible that users will not find the desired content on your website and will not take the desired action. Therefore, the conversion rate should also always be taken into account.
The CPC is used to find out how high the costs are for a click per ad. Another name for this important key figure in performance marketing is Pay per Click (PPC). It is calculated as follows:
Cost per click in euros (CPC) = sum of all advertising costs in euros / sum of all clicks
The CPC is generated by clicks of all types, whether on text ads, videos or banners. Advertising networks such as Google or social media platforms such as Facebook often work with the CPC for billing purposes.
A click can cost a few cents or double-digit euro amounts. Different factors are included in the pricing:
The CPC helps to maintain an overview of the advertising budget. With an analysis tool such as the Google Keyword Planner you can find out how big the competition is and how much the clicks cost on average.
The CPC can also be used to calculate the ROI.
The problem with this key figure is that competitors can manipulate clicks in order to drive up costs. A click does not always lead to a purchase. And site operators also have to pay for accidental clicks.
In performance marketing, the term conversion refers to a predefined, successfully completed action. Advertisers are free to determine the content of the action. For example, it can be a download or a visit to a specific subpage.
The conversion rate shows the relationship between clicks and conversions. It therefore reflects the success of whether a click on an ad actually led to the desired action on the website or in the online store. This performance marketing KPI is calculated as follows:
Conversion rate in percent = (sum of all conversions / sum of all clicks) x 100
The CPV is another of the most important performance marketing KPIs. It is used to determine the cost of an advertising measure per view. This is how it is calculated:
Cost per view in euros (CPV) = sum of all advertising costs in euros / sum of all active views
The CPV is mainly used for video ads. It is counted when users click on play, skip or expand on a video ad. If a video is viewed for 30 seconds or longer, a view is also recorded. Depending on the network and topic, a video view costs between ten cents and one euro if a view is recorded.
As an advertiser, you have the option of setting the click price and thus retaining full control over the budget. The disadvantage here is the fact that advertising videos are run through again and again without being noticed. Pop-ups with videos start automatically and are often not even noticed. They cause costs, but do not contribute to advertising success.
The cost per action (CPA) is one of the most important performance marketing KPIs. The CPA shows how high the cost of a marketing measure is for a completed action.
The CPA can be calculated as follows:
Cost per campaign in euros= Sum of all advertising costs in euros / sum of all generated campaigns
The CPA can be used to compare campaign successes. It helps to develop bidding strategies and optimize the advertising platform. However, there are also disadvantages: for example, the key figure is distorted if customers cancel or return an order. In such a case, the CPA would have to be corrected manually to avoid drawing false conclusions from the results.
Another important performance marketing key figure is the CPO. It can be used to determine how high the costs of an advertising measure are for an order placed. The CPO is calculated as follows:
Cost per order in euros (CPO) = sum of all advertising costs in euros / sum of all orders
Advertising costs include all costs incurred in the run-up to an order. They include both the costs for the advertising platform as well as the further initiation costs of the order.
The CPO allows the effectiveness of a marketing campaign to be compared with the budget used. This allows campaigns to be compared with each other. In affiliate marketing, the CPO is used as a billing model. Commission costs are due for each sale. The CPO can be used to determine the percentage of a sale that goes to the affiliate partner.
One of the most frequently used performance marketing KPIs is the CPL. It shows how high the advertising costs are for a lead and is calculated as follows:
Cost per lead in euros (CPL) = sum of all advertising costs in euros / sum of all leads
A lead is the contact data that a user leaves on a website by registering in a contact form or subscribing to a newsletter. The CPL is used as an important key figure wherever the primary aim is not to sell, but to obtain contact data. It is also suitable, for example, as a key figure for products that require intensive consultation and/or are high-priced. It can be used to compare the profitability of different advertising campaigns.
One disadvantage of the CPL is that a lead does not yet represent a sales promise. Poor-quality leads are also included in the CPL. In addition, incorrect contact data is included in the CPL even though it is useless.
The ROAS indicates the profit of a campaign after deducting marketing costs. It can be calculated using the following formula:
Return on Advertising Spend in euros (ROAS) = sum of the value of all conversions in euros / sum of all advertising costs in euros
The ROAS is an important performance marketing KPI, as it compares the revenue or value of the leads generated with the advertising costs. However, it is often difficult to measure, as sales values can usually only be recorded directly in online stores and attributed to a specific campaign.
If you want to be successful in performance marketing in the long term, you need to be able to reliably measure the effectiveness of the measures taken. This makes it easier to monitor and adapt them. Important KPIs such as cost per action, cost per order, cost per lead, cost per click and cost per view provide good support for this. The right choice of suitable KPIs enables targeted performance development of marketing measures.
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