Important KPIs to Consider When Analyzing Ad Performance
Not all data is created equal. In fact, when it comes to advertising, there’s a lot of useless data mixed in with the important stuff. At times, all the extra numbers and information can be overwhelming—especially when you’re just trying to run a simple core campaign.
When is this particular metric important, and when is it not? What does that metric mean for us right now, and what’s affecting it?
These are all good questions to ask yourself as an advertising expert or in-house marketing manager. You’ve got a lot of data to work with, and it’s helpful to know what are the most important key performance indicators (KPIs). Below are the KPIs that we see ourselves analyzing most often, as well as including in client reports consistently.
Impressions & Reach
Impressions are the number of times an ad was displayed to a user, while reach is the number of people who saw your ad. A single person seeing your ad will only get counted once in reach, but could get counted multiple times under impressions if they saw the ad more than once.
These metrics are really important in brand awareness campaigns, or any campaigns that have a goal of reaching a certain number of people. That being said, they’re also just great basic metrics to analyze how many people your audience is reaching in any campaign.
Clicks
This one speaks for itself—the number of times someone clicked on your ad. Always include this metric in a report, no matter what the goal of the campaign is. It’s a great KPI to watch in the beginning of a campaign, before you’ve received any conversions—if lots of people are clicking, at least you know that the message is getting through to users who feel interested enough to click and drive traffic. However, if no one is converting, you need to double check if the audience is the right fit for your campaign. The problem could also be site speed, pricing, and general user experience of where the audience is clicking through to.
Analyzing the number of clicks your ad received is especially important for a campaign that’s optimized for landing page views.
Click-Through Rate (CTR)
What’s even better than the number of clicks? The average click-through rate (CTR), which is calculated by dividing the total number of clicks by the total number of impressions. So for 100 impressions and 1 click, the CTR would be just 1%.
CTR is important for all campaigns, as it helps to determine how relevant your ad is to your target audience.
However, if your CTR is excellent, and no one is converting, you need to double check if the audience is the right fit for your campaign. Did you go too broad? The problem could also be site speed, pricing, general user experience of where the audience is clicking through to, or a combination of all the above. Time to put your scientist hat on.
Cost per Acquisition (CPA) or Cost per Purchase (CPP)
Depending on what the goal of your campaign is—purchases, video views, engagement, landing page views, etc.—you’ll want to know the cost per acquisition (CPA), sometimes known as cost per conversion, lead, or purchase. This is calculated by taking the total amount invested over the total number of conversions. Essentially, this is measuring how much it costs to acquire a new customer and make a sale.
This KPI is helpful for an agency to manage a client’s budget. On any given campaign, you’ll want to make sure the CPA is lower than the profit margin of the product being promoted.
Return on Ad Spend (ROAS)
Last, but not least, return on ad spend, otherwise known as ROAS. One of the most important KPIs of all, ROAS is the total revenue from a campaign divided by the total amount spent on that campaign. It’s basically value per cost.
Return on ad spend is a similar KPI to CPA in that it can measure the price of your marketing efforts, except that ROAS focuses on the value, the quality, of the acquisition, rather than just the acquisition itself. For eCommerce, ROAS is arguably the most important metric to analyze day-in and day-out out a campaign’s lifetime.
Feeling more comfortable with the myriad of metrics yet? These KPIs, as we stated, can and should be looked at when analyzing any campaign. As always, we’d love to help your business get started with online advertising and create a personalized strategy for your business. If that interests you, please reach out to us.