Understanding the Digital Advertising KPIs that Matter Most

Apr 7, 2022 | DAE & Company, Marketing

You know digital advertising is an important piece of the marketing puzzle, and you know an advertising budget is a must-have in today’s competitive landscape. If you have identified the right channels for your business, established audience targets, and set up and launched your campaigns, good for you! Launching advertising campaigns is huge, but it’s really just the beginning. There’s so much data available to you through digital advertising, it’s important you really understand where your budget is going and what it’s doing for you.

Diving in to really see if your advertising dollars are being spent well is no small feat, but we’re here to help! If you’re running campaigns yourself, you need to understand the metrics and how to take action based on the results you’re getting. And if you’re outsourcing your advertising, you need to make sure the person or team responsible for running your ads is actively managing and optimizing the campaigns. Here are a few metrics and data points that you should be consistently looking at to help determine if your digital advertising efforts are working, or if you need to switch things up!

Digital Advertising KPI: Revenue

If you’re selling on your website, you need to be tracking revenue generated from your digital advertising campaigns. Google Analytics allows for e-commerce integrations that allow you to analyze revenue data by traffic source, drilling down to specific channels and campaigns. Without this, you’ll be flying blind, with no real idea of what marketing efforts are driving real revenue for your business. Keep in mind that revenue alone isn’t an indicator of success. An ad campaign can generate one million dollars in revenue, but if it took three million in ad spend to get there, was it still a successful campaign? Analyzing revenue alongside return on ad spend (ROAS), will give you a more complete picture of what is and is not working.

Digital Advertising KPI: Return On Ad Spend (ROAS)

ROAS calculates how much money is earned as a result of advertising efforts versus how much was spent to generate those efforts. If you’re only going to analyze one metric from your efforts, this is the one! If you can attribute $10,000 in revenue to your advertising efforts and you know you spent $5,000, then your ROAS is 2:1. This means you earned $2.00 for every $1.00 spent. Determine your break-even ROAS by analyzing your profit margins, and then set ROAS goals based on that figure.

Digital Advertising KPI: Cost Per Clicks (CPCs)

Cost per click identifies the average amount you are paying for a single click of your ad. Click costs can vary greatly by platform, industry, keyword, and other factors. High click costs aren’t an automatic red flag that your advertising campaigns aren’t performing well, just as low click costs aren’t a sure sign that your ads are doing well. In some cases, high click costs can’t be avoided (legal and marketing industries are known to be extremely competitive and in turn result in higher click costs). You want to balance paying enough to get visibility for your efforts, but not overspending and wasting advertising dollars when conversions aren’t being generated or conversion costs are too high. If your campaigns are experiencing high click costs, start by testing out long-tail (less competitive) keywords, using different match types, adding negative keywords, experimenting with different bidding strategies, and incorporating new target audiences.

Digital Advertising KPI: Impressions

An impression is counted each time your ad is shown to your target audience. High impressions don’t always mean success. If you are generating high impression volume but few ad clicks, this can often be an indication your target audience needs fine-tuning. If your focus is on brand awareness and casting a wide net to a large audience, as a general rule of thumb, you will want to have a higher number of impressions. However, you will want to balance reach and frequency carefully. Reach is the number of people that see your ad while frequency is the number of times a specific consumer sees your ad. You do not want to oversaturate your potential consumers with ads because ad fatigue can set in. Your potential customers might become slightly annoyed if they see your ads too much. If you are trying to reach a wider audience and are seeing low impression numbers, consider adjusting audiences, testing new creatives, and trying a variety of keyword match types..

Digital Advertising KPI: Conversions

Once a person clicks on your ad and gets to your website, you want them to take some sort of action. This predetermined “action” is a conversion. These actions are typically contact form completions, whitepaper downloads, newsletter sign-ups, booking a hotel room, purchasing an item, etc. When evaluating your digital advertising efforts, look for campaigns generating a high volume of clicks but little to no conversions. This might indicate that consumers are not finding what they need on your landing page or it is too complex, your target audience is not ready to convert and needs more nurturing, or your campaign settings need to be reconfigured.

Conversion volume is great – but don’t forget to keep an eye on your cost per conversion, or the amount of ad spend it takes to generate a single conversion. If you’re paying more for a conversion than the amount of revenue an average conversion brings into your business, you will quickly burn through your advertising budget without seeing a return.

Digital Advertising KPI: Clickthrough Rate (CTR)

CTR is calculated by taking the number of clicks that your ad received and dividing it by the number of times your ad was shown. This metric is important to keep track of because it can be an indicator of ad relevance. A high CTR usually means that your ads are pertinent and that you are engaging with the right audience. However, a Google search ad that generates a lot of impressions but no clicks probably means that you are either bidding on the wrong keywords, or your ad copy needs to be rewritten. A low CTR on Facebook might indicate that you are not reaching the right audience, or your ad creative/text needs some work.

Digital Advertising KPI: Impression Share

Impression Share is calculated by taking the number of impressions that your ad received and dividing it by the number of impressions it was eligible for. Any number above 0% indicates that you’re missing out on available impressions, either due to low ad quality or not enough budget. Impression Share lost due to budget can be improved by raising budgets. Campaigns that are generating a strong ROAS or low cost per conversion should be capitalizing on all available impression shares. Impression Share lost due to rank can be improved by optimizing your key phrases, ad copy, and overall campaign performance.

Need some help?

Does it seem a bit overwhelming thinking about trying to keep track of whether or not your advertising efforts are paying off? DAE & Company can help! Whether you’re launching a brand new campaign or need to turn performance around for an existing campaign, our team of digital advertising specialists knows how to make sure you are seeing a return for your investment. Reach out to us to learn more about our services and how we can help.

contact DAE & Company in South Lake Tahoe

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