As a marketer what questions do you ask yourselves during a customer acquisition campaign through paid digital channels e.g. Facebook, Google, etc?
Did the Ad create an impact? Do I have a chance of better conversions with this campaign? Do I need to increase the frequency of Ads or should I pull back? Who and what is driving the traffic?
To answer these questions, a scorecard always helps. Marketing metrics help you to measure the performance and impact of marketing efforts. Choosing the right metric not only helps gauge the actual performance but also tells you when to change the course.
So here are the different types of marketing metrics which help you quantify the effectiveness of your marketing campaigns. Let’s go through them in terms of the customer journey, from awareness to consideration and finally conversion.
1. Click-through-Rate (CTR): This is an important metric to understand the performance of your Ad creative. This is calculated as the ratio of a total number of clicks on the Ad to a total number of Impressions or eyeballs. The number of impressions is a good indicator of spreading awareness whereas a number of clicks for consideration in your target segment.
2. Cost per Click (CPC) : CPC is the cost incurred for each click-on ad campaign. This quantifies the money paid by advertisers to get a click on their Ad. This is a fairly important metric that keeps track from a cost perspective. If the cost per click goes up and CTR goes down over time, it implies that one needs to revisit their Ad creative. Keep them fresh and snazzy.
3. Cost per Acquisition (CPA): Another important metric or tool to evaluate the marketing performance is CPA or Cost per acquisition. This is calculated as the total cost of Ad spend by the number of acquisitions. It measures the converting capability of an Ad and guides you through both short and long-term marketing strategies.
4. Return on Ad Spend (ROAS) : ROAS is the return or revenue earned for an Ad spend. It is an important way of measuring if an Ad could convert into sales or not. Video views and Likes can only tell whether your ad was able to create awareness in the target segment or attract the traffic to consider your product or service whereas ROAS reports sales conversion.
How is it calculated?
ROAS = Revenue from Ad spend
Ad Spend
You may be wondering what’s a good ROAS?
A good ROAS depends on many factors e.g. industry, your growth goals to name a few. However, a return that pays off your fixed costs and still leaves you with a decent margin for a growing business will be considered good. Therefore, ROAS becomes one of the most important tools in measuring marketing performance.
A good entrepreneur is one who keeps a tab on the health of his business and these indicators helps him throughout his journey.