Beyond the Numbers: Understanding the Metrics That Drive Success
Guest Blog by Jelly Academy Team
Digital advertising has moved to the forefront of many businesses' marketing strategies. With such a robust amount of data, we are now able to track every aspect of a digital advertising campaign, from the number of clicks, various landing page interactions, to the number of sales.
However, with so much data available to us, it can be difficult to determine which metrics are most important to measure and how they’ve contributed to the success of a campaign. In this blog post, we'll explore some of the key metrics to consider and provide insights into measuring the success of your digital advertising campaigns.
Define Your Objectives
The first step in measuring the success of a digital advertising campaign is to define your objectives. What is the purpose of your campaign? These are typically closely aligned with your overall business goals. Are you trying to build brand awareness? Are you trying to increase website traffic? Or are you trying to generate leads or sales? Once you've defined your objectives, you can then determine the appropriate metrics to track.
Track Conversions
If the objective of your campaign is to generate leads, sales, file downloads, etc, it is incredibly important that you are tracking conversions. Without tracking conversions, you won’t be able to measure the success of the campaign. A conversion is any action taken by a user on your website that aligns with the campaign's goals. Use tools such as Google Analytics, to track your conversions. Ensure that you’re tracking the same set of conversions in the ad platforms.
Key Metrics to Measure
Click-Through Rate (CTR)
CTR measures the number of clicks on your ad divided by the number of times the ad was shown. A high CTR indicates that your ad is attracting attention and driving traffic to your website. If your campaign goal is clicks to your website, this is a KPI to be tracked.
CTR (%) = (Total Clicks / Total Impressions) x 100
Cost per Click (CPC)
CPC measures the cost of each click on your ad. The lower the CPC the better as it indicates that your ad is performing well and generating clicks at an affordable price. This KPI is also important to track for campaigns focused on getting clicks/traffic to your website. Keep in mind that a conversion campaign's CPC will be higher than a traffic’s campaign CPC, as a conversion campaign aims to get a user to take a specific action that is usually more complex than just a click of a button.
CPC = Total Cost of Campaign / Total ClicksConversion Rate
Conversion rate measures the percentage of people who take a desired action, such as making a purchase or filling out a form, after clicking on your ad. This KPI is important for conversion-type campaigns (campaigns focused on gaining leads, sales, downloads, etc).
Conversion Rate (%) = (Total Conversions / Total Clicks) x 100
Cost-Per-Acquisition (CPA)
CPA is the cost you pay for each conversion. It is calculated by dividing the cost of the campaign by the number of conversions. This KPI is also important for conversion-type campaigns. Always keep an eye on the CPA throughout the duration of the campaign. The lower the CPA the better, but keep in mind that, depending on your industry, the average CPA could be quite a bit higher than others.
CPA = Total Cost of Campaign / Total Conversions
Return on Investment (ROI)
ROI measures the revenue generated from your campaign compared to the cost of running the campaign. A positive ROI indicates that your campaign is generating more revenue than it's costing, which is a sign of success. This is typically used for eCommerce businesses.
ROI (%) = ((Total Revenue - Total Cost of Campaign) / Total Cost of Campaign) x 100Return on Ad Spend (ROAS)
ROAS is a metric that measures the revenue generated from your campaign compared to the amount spent on the campaign. This KPI can help you determine the effectiveness of your advertising spend. To calculate ROAS, divide the revenue generated by the campaign by the cost of the campaign. Along with ROI, this is typically used for eCommerce businesses.
ROAS = Total Revenue Generated / Total Cost of Campaign
Measuring Success
Once you’ve determined the metrics/KPIs to measure for your campaign type, it’s important to track them on a weekly and monthly basis. This will help you identify any trends and make adjustments as needed. If you’re noticing CTRs and CVRs are going down and CPCs and CPAs are going up, it may be time to switch up your ad creative or make adjustments to your targeting.
CTRs, CPCs, CVRs, CPAs, etc, all vary by industry. It’s normal for some industries to see much higher CPAs than others. To get an idea of averages for your industry, check industry benchmarks. This is a good starting point for measuring the success of your campaigns. You can also compare your current results to previous campaigns you have run to see how they match up.
Measuring the success of a digital advertising campaign requires a combination of metrics that align with your campaign goals.
Defining your objectives, tracking conversions, picking the right KPIs to measure and monitoring them on a consistent basis can help you determine the success of your campaign and make data-driven decisions to optimize future campaigns. To continue improving your campaign measurement skills, check out Jelly Academy’s digital marketing bootcamp.
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