Updated: Apr 19, 2020
Every business wonders: "What metrics should I be tracking online?" We've broken down 18 key metrics that will help you to crush your online efforts.
Zova Marketing and analyzes 18 key metrics to determine the success of an ad campaign. Each metric holds valuable information and should be analyzed to see the full picture of what’s really going on in an ad campaign.
The number of times an ad is loaded and displayed onto a web page. (There’s some debate that it should be the number of times it is viewed once by a viewer, but that is impossible to track without a large margin of error.)
Why are impressions important?
This metric shows how many potential views your ad received. It’s also required for calculating some of the other metrics.
The number of times an ad is clicked on. Pretty straightforward.
Why are clicks important?
It’s a metric of how effective an ad is. If it’s effective, more people will click.
3. Click-Through-Rate (CTR)
The number of clicks divided by the number of impressions.
Why is CTR important?
CTR is one of the strongest indicators of your ad’s effectiveness. A higher CTR indicates better effectiveness because a larger percentage of those who saw your ad were interested and clicked. High CTR can be attributed to any of the following:
Good Audience Targeting
Good Copy/ Creative
Components of Quality Score are good
4. Cost Per Click (CPC)
How much it costs for 1 click on average. CPC is dictated by multiple factors, and differs from platform to platform (Facebook is different from Google).
Why is CPC important?
This is a great financial metric to determine how much it costs to capture someone’s attention. Keep in mind, this does not mean they made a purchase or took any other action than clicking on an ad.
How many transactions took place as a result of an ad (we use transactions, some use units sold.)
How can this be measured online?
The number of conversions can be tracked by installing a conversion tracking code or pixel from the ad platform onto the post-conversion page of a website, Ie. “Thank you for your purchase.” It can also usually be installed universally across the website. When someone clicks an ad and then makes a purchase within a given time (called a conversion window – is usually 7 – 30 days) the code tracks that as a conversion caused by the ad.
Why is the number of conversions important?
It shows how many transactions there were as a result of the ad!
6. Conversion Rate
The number of conversions divided by the number of clicks. This highlights lower-funnel activity (as opposed to higher in the funnel with CTR.)
Why is Conversion Rate important?
It highlights the effectiveness of the landing page and the conversion process at the end of the funnel. It also shows, as a whole, how good your sales funnel is set up.
7. Value Per Conversion
The average revenue generated from one conversion (transaction.)
Why is Value Per Conversion important?
It’s required to calculate other metrics (ROAS and ROI) when forecasting, and it shows how many items are purchased on average in one conversion. For example: If tickets to a concert are $15 and the value per conversion is $30, then on average, 2 tickets are bought per conversion.
8. Cost Per Acquisition
The cost of 1 conversion. It can be calculated by taking the total cost divided by the number of conversions.
Why is Cost Per Acquisition important?
It’s is a financial metric that can plainly show if you’re making money or losing money per conversion. For example: If the average revenue from a conversion (value per conversion) is $30 and the cost per acquisition is $35, then for every conversion made there is a loss of $5.
9. Profit Per Conversion
The average profit generated from one conversion (transaction.)
Why is Profit Per Conversion important?
It’s essential to know your bottom line return from each conversion. This equals Value Per Conversion minus (less) Cost Per Aquisition.
10. Conversion Value
The total revenue generated from ads. This is determined through conversion tracking.
Why is Total Conversion Value important?
It tells you how much revenue the ads generated. It’s a measurement of how valuable the ads were.
11. Advertising Cost (Ad Spend)
The cost of the ads. How much money was spent on the ad delivery. All this money goes to the platform (ie. Google, Facebook etc.) This does not include the cost to make the ad or set it up in any way.
Why is Ad Spend important?
It’s important to know how much you've spent directly on advertising.
12. Work Cost
The cost of any work on the ads. Example: Zova Marketing charges $300 to set up a Google Ad (This is an example and not an actual quote.)
Why is Work Cost important?
It's important to know how much you've spent directly on your marketing labor cost.
13. Total Cost
The Advertising Cost and Work Cost added together.
Why is Total Cost important?
It's important to know your total marketing cost.
The total conversion value minus (less) the total cost.
Why is profit important?
This is how much money you made. If you made money, that’s a good thing! And if you lost money… well, that’s not so good.
15. Advertising Cost of Sales (ACOS)
The Advertising Cost (Ad Spend) divided by Conversion Value. This represents as a percentage how much you've spent on advertising as a percentage of your Conversion Value.
Why is ACOS important?
This metric will help you budget your advertising cost. For example, if you want to spend 10% of the conversion value of your product directly on advertising, your goal is a 10% ACOS.
16. Return on Ad Spend (ROAS)
The Total Conversion Value divided by Ad Spend. This metric is usually expressed as a multiple, ie. 3.1x. That means for every dollar spent on the ad, there is $3.10 in return. If the number is larger than 1x, there is a profit on the ad spend (not necessarily the work cost.) If the number is smaller than 1x, ie. .34x, the ads are losing money and should be changed or stopped. There is no way to have a profit or positive ROI if the ROAS is less than 1x. (ROI cannot be larger than ROAS.)
Why is ROAS important?
It shows how effective the ads are as a whole. However, sometimes ROAS is high when other metrics show that the campaign isn’t doing well. This could be due to a high product price. For example, if a product is expensive, but the conversion rate and CTR are very low, ROAS could still be high. This is particularly a problem with ticketed events. A goal may be to sell as many tickets as possible, but if the tickets are high priced a firm may believe their ads are doing great with a high ROAS and ROI, but tickets may not be selling at the rate needed.
17. Total Cost of Sales (TCOS)
The Total Cost divided by Conversion Value. This represents as a percentage how much you've spent in total as a percentage of your Conversion Value.
Why is TCOS important?
This metric will help you budget your total cost. For example, if you want to spend 15% of the conversion value of your product on both advertising and labor cost (total cost), your goal is a 15% TCOS.
18. Return on Investment (ROI)
The Total Conversion Value divided by the Total Cost. This shows as a whole how much money was made on the campaign, including both ad spend and work cost. This metric is usually expressed as a multiple, ie. 4x. In this example, that means for every dollar spent on the campaign (ad spend and work) there is $4.00 in return. If the number is larger than 1x, there is a profit and if the number is smaller than 1x, the campaign lost money.
Why is ROI important?
ROI is important because it is the bottom line financial metric that shows how a campaign performed. This is what most companies look at. Be careful not to only look at this metric though. Sometimes ROI is high when other key metrics show that the campaign isn’t doing well. This could be due to a high product price. If a product is expensive, but the conversion rate and CTR are very low, ROI could still be high. This is particularly a problem with ticketed events. A goal may be to sell as many tickets as possible, but if the tickets are high priced a firm may believe their ads are doing great with a high ROAS and ROI, but tickets may not be selling at the rate needed.