There are many ways to measure success in a digital advertising campaign. Whether you are looking to grow leads, increase revenue, or promote brand awareness, setting your account up for success is crucial. Below are a few different ways to measure if your advertising is meeting your company’s goals.
CPA – Cost per Acquisition
Formula: Cost / Conversions
- What: Measures how much money on average you are paying per conversion
- Why: Great for setting target goals for spend per customer if you have an idea of what each customer is worth to you, ie. lead or trial based conversions
- Cons: Each conversion is counted the same. If you know that one conversion may be better than another, you may want to have your CPA goals based on Campaign or Ad Groups so that you can set numbers different goals for different conversions.
CTR: Click Through Rate
Formula: Clicks / Impressions
- What: Measures how often someone clicks on your ad
- Why: Great for brand awareness, newer products, or ad copy/display tests.
- Cons: Since this does not account for a conversion, it is hard to see the whole picture. You may want to look at other metrics such as bounce rate or time on site to determine success.
CVR: Conversion Rate
Formula: Conversions / Clicks
- What: Measures how often someone clicked on your ad and converted
- Why: This metric can help you determine how relevant an ad or landing page is to the customer – ie. Are a good majority of people clicking and not converting?
- Cons: Each conversion and click is treated the same. This also doesn’t give you a full picture. It can be hard to determine what made someone convert or not. You may need more information to determine what conversion rate means to your company.
ROAS: Return on Ad Spend
Formula: Revenue / Cost
- What: Measures your spend versus cost
- Why: Easy to make decisions based on positive revenue
- Cons: This does not calculate profit. If you want to make decisions based on profit you should use ROI [below]. Also, this does not account for volume. ie. selling only 1 item could still have positive ROAS
ROI: Return on Investment
Formula: (Profit – Cost) / Cost
- What: Measures your profit versus cost
- Why: Focuses on actual profit versus revenue. This number can give you a better sense of how much you should spend and still stay within your companies profit margins
- Cons: Not good for companies that are not ecommerce or money focused. It can become complicated when there isn’t an exact number to base your decisions off of.