9 Metrics to Measure Ad Performance

If you’re a digital marketer, you already know the task of measuring advertising performance across platforms can be daunting, especially if you don’t have a way to track and measure campaign performance accurately.

This post will cover the key metrics that shed light on discovering the campaigns that give you the most ROI and the ones that may need a little help.

It’s not always easy to understand which metrics will give you the most valuable insights. And, it’s easy to get fooled by high volumes of traffic, however, if your traffic has low click-through rates and conversion rates, the traffic is likely coming from places you shouldn’t be advertising, or perhaps you’re not targeting your audience correctly. Without knowing the right metrics and where to allocate your advertising dollars, it will not be easy to drive any customers to your business or measure growth.

Here are eight metrics digital marketers should consider when measuring ad performance: 

1) Average click-through rate (CTR)

The Click-through rate measures the percentage of people who saw your advertisement and clicked on it. The average CTR for an ad can help you understand how effective your ad copy, design, and landing pages are. A low CTR means your message isn’t resonating with the audience clicking (or not clicking), and make the appropriate adjustments to your headlines, copy, and landing pages to ensure they are all consistent and relevant to your target audience. If your CTR increases, so will your sales opportunities.

2) Conversion rates

Conversion rates are essential to every business; it’s a way to measure sales growth and engagement. Your conversion rate is the percentage of visitors that result in a form fill out or purchase a product through your online shop. If you have a high conversion rate, your target audience wants what you are offering, and you’ll likely see your campaigns performing well.

3) Cost per mille (CPM), also known as cost per thousand impressions

CPM is the cost of getting 1000 ad impressions from a single webpage or, more simply put, Ad views. Impressions are a way to determine how many digital views or engagements you got for an advertisement. It’s been around for a while and is a common pricing method for digital marketing ads.

An advertising platform could charge a $5.00 CPM, which means you’ll pay $5.00 per 1,000 ad impressions. If you run a CPM campaign, it’s important to understand how the publisher defines an impression. For example, a publisher could count duplicate views as single impressions or ads that failed to load. These discrepancies can increase your CPM, and you’ll want to know how to report or dispute them. Impressions should not be confused with clicks; impressions measure how many times an ad was displayed on a site, it does not measure whether someone clicked on an ad or how many sales resulted from the ad. On average, a good CPM is between $1.00-$3.00.

4) Cost per click or CPC

Cost per click (CPC) is a Pay per click (PPC) metric; when someone clicks on an ad in their search results, the advertiser has to pay for that click (even if the visitor doesn’t buy anything). Advertising platforms usually require a minimum bid; this is the minimum you must pay when someone discovers your ad from a keyword you are bidding on. Costs can vary. You bid on the keywords you believe will drive someone to your ad, and the cost per click for that keyword depends on how high the search volume is on the publishing platform you’re using, and the ad type. A good CPC depends on which platform you’re advertising with and what kind of business you have; on Google Adwords, a good CPC can be as high as $20.00 or more, but it could be as low as $2.00 on Facebook.

5) Cost for acquisition or action (CPA)

A CPA campaign is an advertising model where advertisers are charged for a specific action like a click, form submission, a sale, etc., and publishers are paid for the result of the action. CPA advertising is considered low-risk advertisers because they only pay for ads that result in their specified action and not per click.

6. Revenue

Every business has revenue goals for each quarter and year. And, whether you hit your goals or not, rely heavily on how effective your sales and marketing strategy is, and if the teams responsible can execute and deliver the customers, you need to be profitable.

7. Return on marketing investment or Return on Ad Spend (ROAS)

Everybody in the marketing team should use this metric to measure the effectiveness of their campaigns. Knowing the contribution to revenue attributable to marketing spend can help justify and show return on marketing performance. 

8. Return on Investment (ROI)

This metric is often confused with the Return on Ad Spend(ROAS) metric. While ROAS is based on the revenue generated per ad dollar, return on investment is the profit generated per ad dollar. So if you spent $100 on advertising and got $700 in sales, your ROAS is 7, but if your profit is $200 then your ROI is 2.

9. Total customer acquisition

How many customers do you need to acquire? The answer to this question will set expectations for your marketing and sales team, allow them to budget accordingly, and provide them with a common goal to work towards that contributes to the growth and success of the business.

Tracking and measuring these metrics gives employees clarity and direction and invites them to share in your company’s vision.

Contact LayerFive to learn more about how a Unified Data Platform can help teams operate more efficiently.

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