Marrying advertising and data science made the measurability of results and performance of digital advertising feasible. Analytics tools are present to track every action made by consumers and even provide marketers and executives with various data to help in decision making. However, despite the rich data presented to us by these tools, which among these are valuable and vital to measure a campaign's success?
Stay Away from These Metrics
Truth be told, an effective campaign should go away from measuring clicks, impressions or in short, vanity metrics. Sure, these numbers make us feel good because these normally show a large number, but at the end of the day, what do views, likes, or shares even mean?
Imagine running a video campaign with the objective of getting a million views. If you want to optimize your campaign, it will simply mean increasing the budget to reach more audiences. Moreover, given the prevalence of fraud in recent years, are you confident about the channels and networks where your ads are being served?
“Not everything that can be measured matters and not everything that matters can be measured”.
Vanity metrics look good because as the numbers grow, it creates an illusion of success. But if you’re in a C-suite or executive level, you wouldn’t care about website visits or bounce rate. What you’re focused on is about sales and revenue growth. It would be better to have metrics/KPI that provide in-depth and actionable insight.
The Only Goal of Advertising
Whether you agree with this or not, at the end of the day, advertising only has one goal. Claude C. Hopkins, the author of Scientific Advertising, says it best:
"The only purpose of advertising is to make sales. It is profitable or unprofitable according to its actual sales.”
Sales and Marketing Unite
Tying sales and marketing in one objective might sound like a horror story with a lot of pressure on the marketing team. But to give you relief, marketing still works through a funnel and branding has a role to play from raising awareness, to being part of the consideration, up until the customer comes up with a decision to purchase.
As digital campaign runs in periods, goals are commonly measured in short term and instant results. However, with sales and ROI in mind, the marketing team should be able to see the bigger picture: despite the unique goals of every campaign, these should still support sales.
Succeeding with the right KPI
How do you know if your marketing campaign is improving and contributing to sales? Below, we listed down some metrics that bring sales and marketing together. Success, after all, is about beginning with the end in mind. Start keeping track of the metrics that show a business story, reveal insight, and provide guidance on what your next strategy should be.
● Conversion Rate (CR):
Conversions are defined as the completed action by the customer. While integrating it to your marketing funnel may not always instantly lead to purchases, these can help push customers further down the marketing funnel. Events could be a sign-up success, app install, reservation, and so on. Tracking these events would be helpful for future remarketing.
● Cost Per Acquisition (CPA):
How much are you spending per paying customer? This metric is sales-driven and aims to figure out if the money spent is reasonable. Measuring the CPA in a full digital marketing perspective would be better provided that some are focused on non-monetary goals like sign-ups. Over time, monitoring this metric would allow easier optimization by pinpointing non-performing campaigns.
● Return on Investment (ROI):
The king among all metrics and the best indicator for success is ROI. Simply put, it tells you whether your campaign delivered enough revenue to your business. A good digital marketing ROI ratio is 5:1.
● Customer lifetime value (CLV):
A bonus metric is CLV. This projects the revenue a customer will generate during their lifetime as a customer. After all the money spent to acquire a customer, the best way to ramp up a business is to retain them. Retaining a customer also speaks to the quality of the service or product your company provides.