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Mar 26
Demystifying Digital Advertising KPIs and Campaign Data

Demystifying digital advertising campaign data

As marketers, our job boils down to two key elements: telling a great story and reporting data. Often we mix those elements to discuss the effectiveness of our digital advertising efforts with our boss, clients, and co-workers. The challenge is that digital advertising campaign data is indifferent. It’s just numbers. Without proper context or the hands of a gifted story-teller, data can be used to support or refute any position. So at the end of the day, how do you know that your digital marketing efforts have been successful?

It starts with choosing the right metrics based on the goal of your digital advertising campaign. Defining the goal, or the desired outcome, of a marketing effort, is the first step in choosing the right digital advertising KPIs to track to determine if you’re getting results.

The difference between KPIs & metrics

One of the biggest challenges for marketers today is measuring the success and profitability of their campaigns. In an increasingly data-driven industry, marketing strategies need to prove their worth, and this only happens when you can attribute their success to the key metrics and KPIs that matter.

KPIs, or key performance indicators, are quantitative benchmarks you set to track how much progress you’re making towards your marketing goals. To put it simply, a KPI is a goal you are aiming for with your digital advertising campaigns, whereas metrics are simply measurements. They give you an indication of user behavior that you can use to interpret the performance of your marketing strategies, but they can’t tell you the full story.

Metric: a number or point of measurement

KPI: a goal that is most closely tied to the overall business success

Marketers who measure their KPIs frequently can easily identify bad campaigns and flip the switch before it affects the ultimate objective. Likewise, campaigns showing promise through positive key performance indicators can be further explored.

Overview of the most used metrics & KPIs

Overall site traffic: Significant changes in how traffic flows to your site can give you an insight into how effective a particular digital advertising technique initiated is effective or not. When measuring site traffic, don’t just focus or rely on page views or the number of hits your website gets but also on how many unique visitors your website get per week or month. The more unique visitors your site receives, the higher the chances of reaching potential customers.

Click-through rate (CTR): Click-through rate (CTR) measures how many people clicked on your ads. It’s calculated by dividing the number of people who click after seeing your ad by the total number of impressions your ad received. However, something to remember is that it’s hard to compare CTRs across campaigns, accounts, strategies, or companies because it all depends on a few factors.

Bounce rate: Bounce rate measures the percentage of users who land on your website, perform no action on the page and leave. Google calculates bounce rate as single-page sessions divided by all sessions, or the percentage of all sessions on your site in which users only viewed a single page and triggered only a single request to the analytics server.

Cost per click (CPC): Cost per click (CPC) defines how much you are going to pay every time someone clicks on your ad. The terms pay-per-click (PPC) and cost per click (CPC) are sometimes used interchangeably, sometimes as distinct terms. When used as separate terms, PPC indicates payment based on click-throughs, while CPC indicates the measurement of cost on a per-click basis for contracts not based on click-throughs.

CPM (cost-per-thousand impressions): CPM is the bid you pay per one thousand views (impressions) when running ads. Selecting viewable CPM bidding ensures that you only pay when your ads are seen.

Conversion rate (CVR): Measuring how many website visitors get converted into leads is a valuable and tangible metric that defines your digital marketing success. Whether your goal is to gather useful information about your website visitors and potential customers or convert site visits into sales, monitoring your conversion rates can give you great insight as to what particular aspects of your digital marketing campaign will deliver the best results.

Average time on site: You can measure how well you are engaging with your targeted website visitors by how long their average times during each visit to your site is. This is important for gauging what content is relevant and will drive results from site visitors, gaining their valuable trust, and eventually increase these levels of trust into something that would finally entice them to convert.

Cost per acquisition (CPA): Most commonly used for conversion-driven campaigns, cost-per-acquisition is the amount of cost that it takes to close a sale on your site. The formula for CPA is total campaign cost/conversions. In most digital advertising platform, this metric can help algorithms optimize campaigns for cost per action/acquisition.

Return on investment (ROI): Return on investment can be aptly measured by the website traffic that is eventually converted into new paying customers. This metric will also help you identify which area in your digital marketing campaign is driving sales and revenue.

Cost to acquire a customer (CAC): ROI is measured by the number of new paying customers for a given period. The value for acquiring these new customers, on the other hand, is defined by getting the total of your marketing and sales costs for a particular period divided by how many new paying customers were generated during that same period.

Determining what’s important

So, what KPIs should you track? There is a seemingly infinite number of digital advertising KPIs, and it can be easy to end up tracking everything, learning nothing, and not knowing what is important. Often, teams will overcompensate for a lack of data by building out an epic spreadsheet, complete with bells and whistles and more KPIs than you can shake a stick at…only to realize it’s too time-consuming to keep updated and too overwhelming to learn from.

Instead, it’s best to focus only on the KPIs that are relevant to your company, your team, and your current projects. If I had to focus on just one thing, what would it be?

More leads: You don’t just want any new leads, you want the right ones. So, you may also want to track how many of those new leads are likely to purchase your product (marketing qualified leads) and whether those leads stick around (churn rate).

More Sales: Sales are great, but you want to make sure those new customers stick around (churn rate). Moreover, you probably want to know how much these sales earn your company over time (customer lifetime value).

Start with the right KPIs and metrics

These days, most marketers are swimming in more data than they can handle. The problem is that data without context means nothing and prioritizing the right digital advertising KPIs and metrics is a vital start to measuring your marketing efforts with accuracy.

First, define your campaign objectives and goals and then assign the right KPIs that enable you to measure success. Next, identify the metrics that provide the data your KPIs need and filter out anything else. Don’t get bogged down in data that’s irrelevant to the core goals of your campaigns. Everything but the essential data is a distraction.

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