An Introduction to Digital Advertising Metrics

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
An Introduction To Digital Advertising Metrics

Choosing the right digital advertising metrics to track and measure is crucial to your campaign’s success. If you aren’t tracking advertising efforts correctly, you’ll never know what’s working and what channels to focus your advertising dollars on.

Determining your core ROI goals means you’ll be able to measure data that tells the story of how your target audience interacted with your ads.

Here are a few of the key metrics to track that will help you measure success and determine ROI:


CPA – Cost Per Acquisition

How much does it cost you to acquire a new lead on any given channel?

Knowing the cost to acquire a client for your business is the basis of your marketing budget, so it’s crucial data to add to your ROI analysis. Combined with other ad data, this will determine whether your business will make a profit.

Ideally, you’ll want to get a sense for which mix of ad channels (Search, Facebook, Display) work best for your business. Then you’ll be able to better optimize your ad budget going forward.

Here’s the formula for CPA:

ROI Analysis - cost per aquisition

CPA is a simple but valuable formula. Knowing how much it costs to acquire a new lead is key to understanding your ad ROI.

However, we still don’t know the actual value of your client’s customers. The next thing we’ll discuss is LTV, which is essential for further ROI analysis.


LTV – Lifetime Value

Do you know the lifetime value of your customers? You should!

Why? Because this will give you a number that represents an approximation of the revenue a new customer brings in, with all associated costs factored in.

If you know your LTV, you’ll be able to compare it directly to the cost of acquiring a new client through your digital ad campaign.

Here’s the formula you can use to determine your LTV.

ROI Analysis - lifetime value ROI


CR – Campaign Revenue

Now that we understand how to calculate and analyze the lifetime value of your customers, we’ll be able to track the revenue generated by your digital advertising campaign. As you can see below, you just need to multiply your campaign’s conversions by LTV and closing ratio (50% would be .5).

Why include closing ratio? Obviously, every new lead you generate isn’t going to become a customer, so you’ll need to factor in how often you are able to close new leads to estimate campaign revenue correctly.

ROI Analysis - campaign revenue ROI


ROAS – Return on Advertising Spend

ROAS is an illuminating metric to use for ad campaigns, and a lot of marketers use it interchangeably with ROI itself. However, there are significant differences between the two. What is the difference between ROI and ROAS?

Tim Mayer, CMO of Trueffect explains:

“ROI measures the profit generated by ads relative to the cost of those ads. It’s a business-centric metric that is most effective at measuring how ads contribute to an organization’s bottom line. In contrast, ROAS measures gross revenue generated for every dollar spent on advertising. It is an advertiser-centric metric that gauges the effectiveness of online advertising campaigns.”

So advertising ROAS is much more focused on the results from specific campaigns, while ROI incorporates the bigger picture relative to the business. This means that it’s much easier for you to be tracking and analyzing advertising efforts with ROAS! You know the cost and you can calculate the revenue.

ROI Analysis - return on ad spend

Setting your own benchmarks and campaign goals based on past performance is the best way to proceed with your advertising efforts.

Want to skip all this confusing jargon and let the experts handle your digital advertising? Contact us today!

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn

Get the latest straight to your email.

Google My Business: You Need It for Local SEO

The current state of the world brought home the importance of e-commerce for local economies. With people spending more time at home and relying on web-based services wherever available, it follows that businesses should also be online. With local businesses doing what they can to be seen first and get noticed online, you need to

Read More »
digital marketing

Benefits Of Outsourcing Your Digital Marketing

Many businesses nowadays are curious about whether they can run their own digital marketing campaign. Yes, it may be possible. But only if you internally have the right people and tools to do so. Such a step may turn out to be a bigger challenge than you expected. Truth is, managing digital marketing in-house can

Read More »

Signs You Should Invest More In Digital Marketing

Today, tons of businesses are focused on establishing good digital marketing. However, do know that investing in such work can be expensive, time-consuming, and challenging. Digital marketing isn’t something you execute once then proceed to work on your usual operations. If you want to get desirable results, you need to continuously work on it and

Read More »

5 Best Practices For Lead Generation During This Pandemic

As of now, there’s still no definite prediction as to when this COVID-19 outbreak will end. And as days go by, more and more businesses are struggling to reach their lead generation targets as in-person activities have been totally suspended. On a positive note though, this means that prospects and customers are spending more time

Read More »

The Increasing Importance of SEO During and After the Pandemic

Since the very first banner ad was posted on the internet in 1994, digital marketing has been growing quickly and steadily. Over time, more effective advertising strategies have been developed to make the most of the internet’s growing reach and the mountains of data continuously being gathered. Because of the pandemic, the need to stand

Read More »
The Importance Of Web Design To Your Marketing Strategy

The Importance of Web Design to Your Marketing Strategy

How important is your web design to your digital marketing strategy? The answer is: very. Your website is the place where most people will interact with your business. Both your online and offline marketing activities will most likely send users to your website. Whether it’s to get information about your services and products, to make

Read More »

Get the latest straight to your email.

Stay in the loop