Essential KPIs for Advertising Goals
Feb 12, 2020 ● 5 min read
Tracking KPIs for advertising goals gives you up-to-date and accurate information that will help you make better decisions. Knowing the current data about your current ad campaign’s performance allows you to shift more efforts and ad budget into the most successful tactics and avoid context that’s underperforming.
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Measuring KPIs helps you replicate successes in your digital advertising program while avoiding past failures. It can help you recognize potential improvements for better success in the future. That’s why they are important tools for advertising and marketing.
There are plenty of KPIs or Key Performance Indicators that show a different type of data. While some of them reveal information that’s crucial for the success of your ad campaign, others are not so important and may only waste your valuable time.
So, what advertising KPIs are the most important to track to find out if your campaign works?
The Most Important KPIs for Advertising
1. ROAS – Return on Ad Spend
According to many marketers, ROAS is one of the most important advertising KPI because it shows if your ad campaign is successful or not. It can help you invest your money effectively and see what kind of creativity and copy resonates with people.
It’s simple; you need to know your ROAS to see if you’re getting out more than you put in. The higher, the better. This KPI measures how much money you generate in revenue for the budget you spend. It’s a simple way to keep an eye on the health of your investments.
2. CPA – Cost per Acquisition
All of these three KPIs refer to the money you spend for a certain action on your ad, such as a click, sale, newsletter sign-up, phone call, form completion, etc.
The Google Ads metrics cost per conversion and cost per acquisition are used interchangeably. Generally, you see cost per conversion when viewing reports, and cost per acquisition when bidding for terms. Cost per action, on the other hand, is a Facebook metric that tracks actions people took on your ads.
Cost per acquisition reveals the financial impact of your ad campaigns, giving you an indication of your Return on Investment.
When it comes to cost per conversion, marketers agree that you should try to bring it down. Understanding this KPI allows you to change your strategies based on data.
Knowing the cost to acquire a new customer, client, or lead on a per-channel basis allows you to analyze your existing ad efforts and strategies, create new ones, and reallocate marketing budgets and ad spend accordingly.
3. CAC – Customer Acquisition Cost
This KPI reveals how much you spend to get a paying customer, so it’s different than CPA. You must know your CAC to give your service or product the right price. This metric works hand-in-hand with Lifetime Value or LTV – the revenue you expect from an average customer over their lifetime.
The ideal ratio of these two metrics is about 1:3 (CAC: LTV), so your CAC should always be significantly lower than your LTV for your business to succeed.
4. CR - Conversion Rate
Here’s how to get your conversion rate: divide the number of your conversions by the number of your clicks, expressed as a percentage. This KPI can expose an offer-to-audience mismatch or validate a match.
Knowing who’s converting and what’s working can help you make the necessary changes to increase your ROI. A low CR indicates that you need to return to the drawing board to test your avatar, positioning, and offer.
5. CTR – Click-Through Rate
This KPI shows the number of times users click on your ad per the number of total users who saw it. A high click-through rate indicates your ads are driving many people to your product or service.
The more clicks, the more people are interested in whatever it is you’re promoting. A low CTR, on the other hand, shows that you share content that’s not interesting enough for your audience. So, this is a problem that you need to work on to fix it.
Knowing your CTR can help you understand what types of marketing messages, such as calls-to-action, are resonating with your audience. It also reveals if the keywords you’re using are related enough to your ad text.
6. CPC – Cost per Click
This KPI reveals how much you spend when a user clicks on your ad. You want to find valuable but inexpensive clicks.
7. Quality Score
Quality Score is one of the most important KPIs for PPC advertisers as it shows the relevance and quality of your PPC ads and keywords. This metric is necessary to determine your CPC and ad rank.
The rating ranges from 1 to 10 – the higher, the better. A good quality score has a positive impact on your ad expenses and impression shares, usually a ranking from 7 to 10. It means you pay less for your Google ads. A low quality score means you need to pay more, a ranking that’s lower than 7.
8. Average Rank Position
Average rank position and quality score reveal if your ads make sense. Your average position shows the relevance score for your ads. It tells where you are normally positioned and how you rank against others. This KPI helps you to make the entire funnel relevant to your target audience.
This KPI shows how many times a user sees your ad. Knowing this information can help you understand if you’ve already exhausted your audience and whether you should continue optimizing a specific sales funnel and ad creative.
High frequency increases the risk of ad fatigue and low performance. Tracking frequency is crucial for retargeting audiences. It can tell you if you are wasting your ad budget and annoying your audience.
10. Website Conversions
A user has interacted with your ad, so now you expect them to take another action on your website. It could be making a purchase, starting a free trial, adding an item to a cart, etc.
Website conversions can help you see the actions that users take after clicking through your ad. This is important as it lets you know whether you have targeted the right audience.
You can have 10,000 website visitors every month who click on your ad but then bounce because they are not interested in your ad. This is worse than having only 100 website visitors that find your content relevant and are interested in your service or product.
Website conversions tell you if the people that get to your landing page are taking some type of action, like making a purchase or submitting a form. If they are not taking any action, it’s best to optimize your campaign and reevaluate your targeting strategy.
This KPI reveals the intent and behavior of your audience, and that’s why it’s one of the most important KPIs for advertising.
To Sum Up
There is plenty of advertising KPIs to track to ensure the success of your ad campaigns and business. These are some of the most important KPIs that can tell you if you’re moving in the right direction, or you are just wasting your time and money.