“You cannot control what you cannot measure”- this is especially true when it comes to online marketing campaigns.
Thus, it is essential to have a range of metrics at your fingertips for evaluating the status quo at the beginning of the campaign, monitoring the measures being implemented and defining the success rate at the end of the campaign.
1. Paid Advertising response KPIs (Key Performance Indicators).
Here I want to group KPIs relevant for display and keyword advertising (e.g. Google AdWords and AdSense).
- The number of impressions (measures how many times your ad was displayed (it is debatable if the number of impressions actually measures the number of times a user saw your ad).
- The number of clicks (measures how many times the ad has been clicked on).
- Ratio impressions to clicks. In display advertising this measure is known as CTR (click-through-rate) and is of high relevance. Though this ratio is often disregarded in SEM, it can deliver some insights into how attractive or understandable your ad is.
- Cost per Click (CPC) or Cost per Mille (cost per thousand impressions, CPM). Which of them is used will depend on your pricing plan, but CPC has established itself as the industry standard in many cases. CPC may be converted into effective Cost per Mille (eCPM), by dividing the total cost of the campaign per number of impressions and multiplying the value by thousand.
- Cost per Lead (CPL); this measure is relevant for some types of online marketing and refers to the cost of winning an e-mail address, a subscriber to a newsletter or a contact form filled out by a prospective customer.
2. KPIs for user interaction in Social Media
- Number of views. Most of social media channels allow tracking how many customers have viewed a post, a metric similar to the number of impressions.
- Number of “Likes”, clicks on links, and comments.
- Number of shares, retweets, etc – probably the most desirable type of interaction.
3. KPIs for website performance
- Number of visitors (subdivided into new and returning visitors), or website traffic.
- Pages viewed pro visit and bounce rate (percentage of users who left after visiting just the landing page). This metric shows both how well your campaign has been targeted and how usable or customer-friendly your website is (see the post about 10 criteria for a good website).
- Traffic sources data (such as traffic resulting from search, campaigns, etc.) allow evaluating how your website is mainly discovered by the users as well as the relative performance of different internet marketing channels driving the traffic.
4. Conversion rate
Conversion is probably the most important but at the same time the most arguable KPI in online marketing. A very simplistic method to calculate the conversion rate in e-commerce is dividing the number of orders or purchase tickets by the number of website visitors.
Does this metric actually measure the effectiveness of an online campaign? Probably not, since it does not consider the “soft” factors, such as increasing the share of heart or mind, leading to purchases at a later time or through a different channel. Neither does it integrate the number of acquired user leads that can be contacted later or targeted through online re-marketing.
Such conversion rate (visitor to purchase) is extremely hard to calculate in non-e-commerce area, where online campaigns do not lead directly to purchases or bookings but are used to increase brand awareness and brand loyalty, or as a means of generating leads for off-line sales.
5. Online sales funnel
In addition to the above mentioned visitor to purchase rate, other types of conversion rates can be calculated to build a conversion funnel or online sales funnel where the potential customer is guided through several stages, such as: ad view – ad click – site visit – site interaction -purchase initiation – purchase completion.
One last word that can be said on online marketing KPIs is that the frequency of measuring and time horizon relevant for evaluating the effectiveness of campaigns will depend on the nature of your business. For example, for businesses where the sales fluctuate depending on the day of the week (e.g. restaurant bookings), weekly measurements will provide a more credible result than daily ones.