The world of paid media marketing lives and dies by data & metrics. But knowing which metrics to pay attention to (and why they matter) can get incredibly complex and overwhelming as there seems to be an endless list of them.
In this article, we are going to highlight some of the key metrics which you should be tracking, what they mean and why they are important.
Know your goals
If you or your company is new to paid media advertising, it’s important to reiterate that the metrics that are important to you will change depending on your company’s goals. We’d recommend setting which key performance indicators (KPIs) are important to you and your company before starting your campaign.
For example, if brand awareness is important to you, perhaps you would only focus on metrics like reach, impressions and ad recall lift (the last metric only being available on Facebook ads).
If sales are most important to you, metrics like conversions, cost per conversion and conversion rate may be what you want to pay special attention to.
Now that is out of the way, let’s jump into it.
Valuable paid media metrics that you should track (and why they matter)
Impressions
An impression is the number of times your ad was served on a paid advertising platform like Google or Facebook Ads. Impressions can sometimes get confused with reach, but there is a difference. Reach is the total number of people who see your ad, Impressions are the number of times your ad was displayed.
Why it matters?
Impressions are where paid media advertising begins and where you’ll likely see the highest numbers because an impression is generated every time your ad is shown. While reading impressions by itself doesn’t tell you much, low impressions mean that your target audience isn’t seeing your ad.
Clicks
Apart from campaigns focused solely on brand awareness, the overwhelming majority of paid advertising campaigns’ sole purpose is to bring visitors to a website or landing page. Getting clicks on your ads not only brings your website traffic, but it’s also the beginning of the sales process if your goal is conversions.
Why it matters?
It’s important that your ads are seen, but if they aren’t generating any clicks, then this could indicate that there are issues with your ads, targeting or there may be a seasonal dip.
Alternatively, if your ads are generating a lot of clicks but these clicks aren’t resulting in an increase in conversions, there could be an issue with your website or landing page or perhaps the clicks are of low quality or the wrong audience that is less likely to buy from you.
Cost Per Click
The clue is in the name of what this metric means. Quite simply, it is how much it costs you every time someone clicks on your ad. Cost per click (CPC) will vary for each industry but it’s important to measure this metric because it will determine the financial success of your campaigns.
Why it matters?
CPC tells you how much it’s costing to get someone to click on your ad. These clicks and costs can add up very quickly, if your CPC is too high, it’s going to be difficult to run profitable campaigns and achieve a return on your investment.
Click-Through Rate
Clicks will tell you how many people have clicked on your ad, but click-through rate (CTR) will tell you the percentage of people clicking on your ad related to the number of times it was shown. In other words, click-through rate is a good indicator of how relevant, attractive or attention-grabbing your ads are.
Why it matters?
Not only does a low CTR negatively affect your search engine ad rank, but it also means that you may be missing out on a lot of potential traffic to your site. A quick example of this is if your ad served 1000 impressions, a CTR of 1% would get you 10 people on your landing page. Raising that CTR to 5% will get you 50. That’s an extra 40 people from the same amount of impressions.
Conversion Volume
Conversion volume can also be expressed as the number of conversions received during a certain period. This metric is vital for tracking the overall health of your campaign and a lack of growth (or even worse, a decline) here could indicate that your campaign needs some considerable optimising.
Why it matters?
Out of all the metrics, increasing conversion volume is one of the easiest ways to increase the revenue from your campaigns. If you can increase the number of conversions while keeping your CPA the same (or even better, decreasing it) you can start generating more revenue from less ad spend which will do wonders for ROAS and campaign profitability.
Conversion Rate
Conversion rate is one of the most important paid media metrics that can help you measure how well your campaign is doing. It’s measured as a percentage and tells you what number of people are performing the actions you want them to. That could be purchasing a product, subscribing to your newsletter or signing up for a webinar. The list goes on. For example, if 5 people perform one of those actions after your ad was clicked on 100 times, your conversion rate would be 5%.
Why it matters?
Your conversion rate provides great insight into whether your campaigns are successful at getting people to perform the actions you care about, or if they need improving. For example, if you notice you have a high CTR (lots of people clicking on your ads) but a very low conversion rate ( few people taking the desired actions once they land on your site) It’s a sign that there could be something wrong.
There could be an endless list of things causing a low conversion rate and covering them all would be beyond the scope of this article. However, some common issues are: the offer in your ads doesn’t match the offer in your landing page, your landing page is weak or un-trustworthy or your site is very slow to load and difficult to navigate or purchase from.
ROAS
Return on ad spend (ROAS) is an incredibly useful and easy metric to measure. Quite simply, it’s the total revenue generated divided by the total spend. A quick example would be if I spent 1000 pounds on paid search last month and generated 5000 pounds of revenue, my ROAS would be 5 (5000/1000 = 5).
Why it matters?
ROAS tells you if your current campaigns are profitable and unlike some of the other metrics, the higher the number the better. In clearer terms, it tells you how much revenue you generate off of each pound spent on advertising.
Because every business is different, the ROAS needed to remain profitable will be different too. A ROAS of 2 might be great for some businesses, while some may need a ROAS of 8 to keep their doors open long term. I’d recommend figuring out what’s right for your business, and then optimising the campaigns to achieve the target ROAS.
Conclusion
These are just some of the paid media metrics that I find important to track on a daily basis. There are many more out there which I didn’t cover but in the end, most (if not all) paid media campaigns have one common goal: To get more money back in revenue than you spend on advertising.
And while metrics are great at telling you the health and success of your campaign, this is only true if you look at the variety of metrics available to you and don’t get hung up on just one or two. The more you analyse, the more of an informed decision you can make about your campaigns and if they are working for your business.
