Are you aware of what makes your company’s marketing efforts successful? This is where tracking Key Performance Indicators (KPIs) comes into the picture.
Optimisation of marketing campaigns requires establishing and measuring key performance indicators (KPIs) for your marketing campaigns.
Marketing’s Key Performance Indicators (KPIs) help focus efforts on what’s working and you can eliminate or minimize spend on underperforming marketing efforts. In other words, you can adjust your strategies and direct spending effectively. Achieving marketing success is the function of directing marketing dollars towards effective campaigns and key KPIs are crucial to identifying successful campaigns. Without this clear visibility, you might end up making decisions based on unclear or misleading information, and you could end up spending on efforts that are not really paying off.
In this two part blog series we list the top 10 important marketing KPIs that every Chief Marketing Officer (CMO) needs to be measuring, but probably isn’t. Here are the first 5 KPIs.
1. Return on ad spend (ROAS)
ROAS is the most important metric as it measures the success of advertising campaigns. It is defined as the revenue generated by a specific marketing channel divided by the media spend on that channel.
The stage of the funnel plays a key role when measuring ROAS as one can’t expect the same ROAS from a new prospect as a long-retained loyal customer.
Profit margins need to be established in order to gauge your ROAS goal. While some businesses require a ROAS of 2x, others require 5x or even 10x, in order to remain profitable. Maximizing ROAS at every stage in your funnel is essential to build an ideal overall blend, and as long as that blend is profitable ensuring business growth, the campaign is in great shape.
This KPI aids in making informed decisions quickly and effectively when it comes to allocating funds for marketing campaigns.
2. Cost Per Acquisition/Cost Per Conversion/Cost Per Action (CPA)
Cost per acquisition (CPA) or cost per conversion or cost per action (also CPA) refers to the amount spent per specified action on any ad and this specified action refers to any click, sign up, form completion etc.
Cost per acquisition (CPA) and cost per conversion are Google Ads metrics while cost per action is a Facebook metric that measures actions users take on ads.
Cost per acquisition is incredibly essential as it allows visibility of the financial impact of marketing campaigns. This visibility is one of the reasons behind a continued migration away from traditional advertising media, shifting toward digital. Digital marketing’s accountability of the channels in terms of ROI is invaluable for assessing your marketing efforts impact. It is essential for CMOs to bring the cost per conversion down. The goal is to reduce your cost per conversion and you must also determine how often to measure CPA – every day, every week, or some other period. Measuring CPA helps adapt strategies and focus on channels that are most effective.
3. Conversion Rate(CvR)
CvR is expressed as a percentage obtained by dividing the number of conversions by the number of clicks. For example, with 300 clicks and 20 conversions, CvR would be 20/300 * 100 or 7%.
For the sake of clarity, it is essential to mention that conversions are not limited to purchases solely. Conversions comprise of various other actions taken by any audience on the website. For example, Ebook downloads, email subscriptions, form submissions, etc. are also considered conversions.
High conversion rates denote that the audience is interested in the offer in question. Low conversion rates indicate that it’s time to tweak the offer. There are mainly two reasons behind low conversion rates:
- Poorly designed landing page hampers proper navigation for the users.
- Website fails to convey value of products or services to the audiences.
This KPI aids in designing better landing pages, in addition to gauging the effectiveness of marketing campaigns. Followings are some of the ways to boost conversion rates.
- Designing relevant landing page for every ad is a smart marketing strategy to direct the audience to the relevant webpage related to the offering in the ad. This leads to enhanced engagement with the landing page, with greater chances of conversion.
- Testing landing pages and websites round-the-clock helps understand what’s working and what’s not. You can perform A/B testing to inspect different elements on the webpage. It is important to make one change at a time in order to compare the performances of the landing pages in question effectively.
- Capturing leads through short forms with required details go a long way in building engagement.
- Including videos on the landing pages prolongs audiences’ interest.
4.Click-Through Rate (CTR)
Click-Through Rate is expressed as a ratio of (Total number of ad clicks)/(Total number of impressions). A high CTR indicates that the audience is interested in the featured ad and offer. Low CTR indicates that the content being shared is not seizing audience’s attention.
A little increase in CTR has a considerable impact on the overall profitability of an account. This KPI helps gauge whether your message is resonating with audiences. It helps see whether your ad is showing for the right keywords. Last but not least, Google and Facebook use this KPI for their scores on quality and relevance.
5.Cost Per Click(CPC)
CPC is the amount paid by the advertiser to the publisher every time any user clicks on an ad. CPC is also otherwise known as pay per click (PPC). CPC is an important parameter in establishing bidding strategies and conversion bidding types. Understanding this KPI aids in maximizing clicks in proportion to budget and target keywords.
There are several varieties of CPC, explained as follows:
Average CPC is calculated as total cost of clicks divided by total number of clicks.
Maximum cost per click is the highest amount that you wish to pay for an ad click.
Manual CPC bidding is setting the maximum CPC for every ad manually in contrast to automated bidding.
Enhanced cost per click utilizes automated bidding strategy for ads appearing on Google’s Search Network and Google’s Display Network.
This KPI aids in optimizing paid marketing campaigns to generate better ROI.
Any purchase or conversion is a journey with multiple steps. Therefore, multiple KPIs are relevant to optimizing marketing efforts. However, you can focus on the most suitable KPIs depending on your end goal. While the end goal is typically sales, there are several goals for different stages of the buyer’s journey or various channels and types of marketing efforts. You can find out more about the other metrics in part 2 of this blog series.
If you’re interested in exploring a platform that gives you key insights to all relevant KPIs, eConnect can help you with total visibility of marketing efforts and KPIs. We deliver value-added, AI–driven solutions targeting larger enterprises. We combine deep expertise in Data Engineering, Big Data Analytics and AI consulting. To learn more, please get in touch
and our experts would be glad to help.