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  • Working Planet

Optimizing to Profit: The Real Success Metric

Performance marketing is all about results, and at its heart lies the drive to engage customers effectively. But let's cut to the chase: when we talk about performance in business, we're almost always talking about financial performance. And in the realm of financial metrics, there's one undisputed champion: profit.

CEOs often echo the mantra, "Revenue is vanity, profit is sanity, and cash is king." It's a rallying cry emphasizing the centrality of profit in generating financial stability and long-term success, especially in the face of unpredictable challenges.

Transitioning this profit-centric ethos into performance marketing seems like a no-brainer. However, campaigns optimized for profit are surprisingly rare. Instead, we often see a focus on lead generation, revenue, or operational efficiency (in the form of metrics like ROAS).

At Working Planet, we're firm believers that true success means financial success, so we zero in on profit optimization. Through this journey, we've uncovered some eye-opening truths that set profit-based optimization leagues ahead of other performance marketing models:

Truth number one: Profit-based optimization compels us to assess the quality and value of our customers. Unlike lead-based approaches that may flood us with low-quality leads, we balance quality and quantity. It's not just about leads; it's about nurturing customers who genuinely contribute to the bottom line.

Truth number two: While revenue matters, obsessing over it can backfire if we ignore margins. Simply chasing revenue without considering profitability is a recipe for disaster. Sure, more revenue looks good on paper, but if it erodes our margins, we're in trouble. We need to look beyond revenue figures and understand the true value of each customer to set customer acquisition cost targets that truly serve the growth of the business.

Truth number three: Profit hinges on both efficiency and volume. Metrics like ROAS can be deceptive, showing efficiency without revealing actual profit. We need to balance volume with efficiency to gauge real success.

Truth number four: Profit-based optimization not only reveals limitations but also uncovers growth opportunities. By focusing on profit, we not only understand our campaign's financial performance but also identify pathways to sustainable growth.

In essence, profit-based optimization places marketing at the forefront of business operations, addressing the fundamental challenge of acquiring customers profitably. After all, isn't that what marketing is all about?


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