Digital marketing is used by businesses of all sizes, allowing them to reach your ideal customers through various online channels. However, to maximise your digital marketing efforts, you need to be able to accurately measure campaign performance. This is where knowing your marketing metrics comes in.

But what do all these metrics actually mean? Which ones do we prioritise? How can we use them to improve our marketing capabilities & efficiency?

We live in a data driven world, and these digital performance metrics play a huge role in helping you understand how your marketing is performing, while also identifying areas for improvement to minimise wasted resources. However if you focus on the wrong ones it can be the undoing of your success. Follow along as we breakdown the key marketing metrics you should be tracking, and why they matter.

Website Traffic

Website traffic is the number of visitors to your website. Tracking website traffic helps identify how many sets of eyeballs see your webpage. If your website is set up for conversion, the more eyeballs, the more leads or sales you will SHOULD receive. This is why it is so important that your website is fully optimised and user friendly, otherwise you risk losing them before they can convert.

Tools like Google Analytics can monitor website traffic, and also identify which of your pages are getting the most traffic. While not considered as important as other metrics, Website Traffic is a good gauge for brands to judge their growth over time, and how well their current ad campaigns are bringing the RIGHT customers to their site.

Click-Through Rate (CTR)

Click-through rate is the percentage of people who click on your ad after seeing it. This is a good one. In the very big, very noisy online marketing world, these people noticed your ad amongst ALL the others and decided to click on it! This is crucial, because it shows you how eye-catching your ad is to your target audience, it could even help you identify or redefine your target audience, by showing you what users find your content engaging.

A low CTR indicates that you need to adjust ad creative and/or the audience you are targeting. There is no silver bullet here, you will need to dedicate some time to testing different approaches, and finding what the fix could be. But hey, knowing something isn’t working is the first step to stopping and resolving it.

If you have a high CTR, congratulations! It means that you’re creating the right ad content and serving it to the right audience. Your ad is so relevant and engaging, that your audience has stopped scrolling because they want to get to know you better. The next, very important step, is now turning their interest into conversions.

Conversion Rate

Conversion rate is the percentage of people who take a specific action on your website, such as signing up to your email database or making a purchase. This shows how well optimised your website and landing page is, and how effective they are at driving your users to action. There is quite often a big drop off from most organisations CTR to their Conversion Rat. This could be because users don’t resonate with the page they land on and the user journey from ad to page is inconsistent, or they see the actions required by them on that webpage to be too high of an effort or confusing. Or perhaps your product involves a high decision making process and they need more of something to convert.

This is why website optimisation is so important. Getting picked by consumers through all the noise is the hardest part, but having a poor webpage experience can make all that marketing effort worthless. A high conversion rate means that your website is engaging, persuasive, and is driving results for your business (good stuff!). A low conversion rate, means you NEED to improve your website design, messaging or optimisation, a poor website could very well be turning your own customers away.

Cost Per Click (CPC)

Cost per click is the amount of money you pay each time someone clicks on your ad. In essence, how much are you spending to drive attention to your brand (like the monetary version of CTR). A high CPC means you’re spending a lot of money, for  little user engagement, and may mean your ad targeting needs adjusting, or your ad creative/copy is not engaging enough for users you are reaching. Or it could simply mean you are operating in a competitive market place. It is important to know what the average is for your industry to be able to troubleshoot effectively when it comes to CPC.

A CPC metric is usually great for judging the efficiency or your marketing

Return on Ad Spend (ROAS)

We’ll keep this short as it’s the one everyone lives and dies by, Return on Ad Spend is the amount of revenue you generate from your marketing efforts, compared to the amount of money you spent on them. A high ROAS means that your campaigns are profitable (yay!), while a low ROAS, means that they aren’t (boo!).

Different industries and different marketing channels all have different ROAS measuring sticks that are considered “good”. This metric is also very dependent on your margins and costs of operation. Doing the math here is a critical starting point before you go out and begin running ads.

Customer Lifetime Value (CLV)

CLV is how much revenue a customer generates for you, over the time they’re a customer of yours. It factors in their average purchase amount ($), against their average lifespan as a customer of yours, to help you understand the long-term value they have. By tracking CLV, you can identify which customers are most valuable, and can adjust your marketing efforts accordingly, to better focus on acquiring (AND RETAINING) those customers with a higher lifetime value. This is also important to consider when setting out metrics like ROAS. If you have a high repeat order rate then you can cast a longer lens over your performance and soften ROAS requirements i.e. pay a bit more to initially  fill the funnel for the longer term gains.

Cost Per Action/Acquisition (CPA)

CPA refers to how much it costs you, to get a customer to take an action that you have predefined. Now this will typically depend on the action you want them to perform (e.g. buying a product),but it is important to understand what you are prepared to pay for every customer/client based on your average order value.

Cost Per Lead (CPL) 

Take your total marketing spend on the lead generation activity, divide it by the total number of leads you have received, and you’ll get your Cost Per Lead. This is a more specific version of CPA, more often used for businesses who provide subscription services, as well as lead gen campaigns obviously. 

Surprise surprise, the higher your CPL the lower your performance is, however a good CPL can be difficult to determine, as it very heavily depends on your industry. In an ideal world, your CPL should be less than your gross profit per sale, however that can vary. 

Hopefully we helped you better understand some of the ways to measure marketing performance on different channels. If you have more questions now than you did at the beginning, then that’s okay too (we know it’s a lot). Feel free to reach out to us, and we’ll happily make the time to better explain what these metrics mean to you, and your brand’s own situation.