Your marketing campaigns are only as successful as the results you are able to obtain from them. The thing is however much effort you put into your strategy, obtaining, carefully measuring and evaluating results can still seem like somewhat of a chore. How do you know if you have made any progress if you don’t have the tools to measure the outcomes? What metric or indicator do you use to measure your success against?
Key Performance Indicators or KPIs are the answer. KPIs are measurements that tell you whether or not you're on track to meet your objectives. It allows you to chart the success of your campaigns.
So whether you’re an uninitiated explorer in the world of digital marketing or are already in the middle of your marketing campaigns, we’ve summarised five key KPIs that will help you make a logical and rational observation of your connection with the audiences while also enabling you to create a more flawless digital marketing experience. All in all, our singular objective is to provide you with the ultimate tools for acing your business goals.
KPI #1: Impressions
Essential as hell plus convenient to measure, impressions are the amount of times your ad has been sent to an online user. The number of impressions can be more useful than you think if your digital marketing strategies are in fact geared towards improving overall brand recognition.
This metric helps you figure out exactly how many impressions are needed for your brand to be remembered by the average consumers. They don’t say “out of sight, out of mind” for nothing. Plus, the consumer journey in today’s world, bombarded by a literal zillion options that capture attention and change references with every passing minute, is far from straightforward. So as your customers’ journey has its ups and downs, so would your brand recognition.
With an impression-based promotions campaign, you can stay on top of these fluctuations. An impressions centered KPI helps you improve traffic, and puts your traffic woes to rest by generating both leads and conversions.
KPI #2: Conversion Rate (CVR)
Conversion rate or CVR is a measurement derived by dividing the number of users who have made a purchase on your website and have thereby “converted” by the total number of users who have visited your website. It is a pretty simple formula:
CVR = Total Number of People who have made a purchase / Total Number of Visitors on the website
Suppose you are a beauty products business who is seeing close to about 50,000 visitors on your landing page every month. Seems like a good number, right? It appears that you are doing very well. However, on closer inspection you realize that a mere 5% of all your traffic is making a purchase, lowering your expected conversion rates drastically.
A CVR KPI is therefore a great indicator of your company’s performance. You can make use of your conversion rates to explore the “converted” section further and outline the characteristics that drive them to make a purchase. This way, you can modify your target audience and focus on a more refined demographic.
As you can see then, a conversion-based KPI is performance focused KPI that boosts sales by providing valuable insights into the right target audience for your business and helps you formulate future marketing strategies.
KPI #3: Cost Per Click (CPC)
By tracking the total expense of an advertisement campaign and dividing it by the number of clicks you are able to receive by the end of that campaign, Cost per click or CPC determines the amount of money you have spent for each ad click. The CPC metric can be used by programmatic marketers to determine budget and bid numbers in advance, as well as to optimize and capitalize on the number of clicks, per dollar spent.
CPC metrics are remarkable for their hands on results. Even during an ongoing campaign, they can help marketing managers identify the gaps and setbacks of particular actions and make changes on the course - a very valuable indicator for ensuring that you get your money’s worth from the investment.
KPI #4: Cost per action (CPA)
During a marketing campaign, Cost per Action (CPA) calculates the expense of a certain event such as a purchase, click, newsletter sign-up, and so on. In simple words, the money you are shelling out to get the customer to take action. If you want to increase conversions, measuring CPA is an ultimate tool for figuring out which audiences, platforms, and strategies will give you the best value for your money.
There are always going to be users who may visit the landing page but not take any action. If you are paying a lower amount of your CPAs, for example, you may get a lot of traffic on the landing page but almost a negligible amount on actually converting actions.
That is why you'll want to keep an eye on the value of users who have taken the desired action in the campaign. After the evaluation, you might decide that paying a higher CPA for converting users is more profitable than paying a lower CPA for users who are less likely to pick up on your calls to action or become long-lasting customers.
KPI#5: Return on Advertising Spend (ROAS)
The Return On Advertising Spend (ROAS) is a metric that measures how much money you make for every dollar you spend on marketing. ROAS is the absolute true indicator for calculating campaign efficacy for many marketers. If you're wasting money on ads but not earning profit in revenue, it is obvious that your marketing campaign is most definitely flawed. Maintaining a 2:1, 4:1, or 5:1 return on investment (ROI) target would ensure that your marketing strategies attain success.
If you find that you aren't crossing the required ROAS, the solution isn't to give up, like in all cases. Consider your previously established KPIs: how are you faring against your impressions served or CTR targets? Your ROAS can be impacted by limited coverage, not valuable website users, or excessive spending on inefficient networks.
Regardless of which KPIs you want to concentrate on, it's important to see them all at once rather than separately. The KPIs you choose will lay the foundation for determining how effectively your digital marketing investments are driving cost benefit. By providing a single source of facts and a fast road to identification of weak touch points, a cohesive view of your KPIs will be formed, which will save you both time and money.