Digital Advertising: What Metrics You Should Be Measuring

By Madison Taylor
December 7, 2022
Hands on a keyboard while looking at a data analytics dashboard

Digital advertising has remained a priority for many businesses, with 72% of the overall budget invested in the channels. The power of digitization enables marketers to connect with audiences from across the globe through accessible and interactive online channels. Therefore, marketers need to learn the most effective means of how to measure digital advertising effectiveness.

While digital advertising brings unmatched conveniences, it is necessary to monitor the effectiveness of their campaigns for justified spending. Metrics are the indicators of success for digital advertising. However, marketers need to identify the primary purpose of their campaigns before concentrating efforts on the most value-added metrics.

Focusing on Digital Advertising Measurement Metrics

Digital marketing refers to various forms of advertising involving internet-based and online digital technology. These strategies include email marketing, pay-per-click, social media marketing, search engine optimization (SEO), and mobile marketing. Each channel requires marketers to focus on the measurement metrics in digital advertising required to drive consistent results.

Cost-per-click (CPC)

Cost-per-click, or pay-per-click, refers to the daily budget digital advertisers allocate to a campaign. Marketers usually collaborate with third-party vendors like Google Ads for their CPC needs. The formula of CPC is the advertising cost of a campaign divided by the number of clicks.

CPC determines the cost and effectiveness of paid search marketing campaigns. High CPC cost due to a high frequency of clicks may compromise overall ROI.

Total reach/Impressions

The total reach refers to the number of viewers for a specific digital ad, while impressions determine the number of instances where the ad gets displayed on a user’s screen.

A high total reach value increases an ad’s chances of reaching the ideal audience for improved outcomes. The total impressions indicate an audience’s interest in an advertised offering, suggesting the timeliness and relevance of a campaign. Users may access total reach and impressions via the Facebook Ads Manager for real-time monitoring of ongoing campaigns.

Average daily/Monthly Cost

These determine the budget invested in an ongoing ad campaign according to daily and monthly cost breakdowns.

A clear understanding of average and monthly advertising costs will help marketers plan their digital engagement strategies in detail, prioritizing channels with the highest ROIs.

Click-through rate (CTR)

CTR refers to the ratio of visitors who clicked on a specific website link compared to the total number of users with access to the link. The formula of CTR is click-throughs divided by impressions X 100. For instance, if 100 out of 1000 site visitors click on a specific product hyperlink, the ad has a CTR value of 10%.

CTRs can help marketers determine the effectiveness of a specific website, email campaign, or PPC search results. Low CTRs may indicate a poorly targeted audience and require a re-evaluation of current digital advertising channels. Search engine platforms like Google collect CTR as user feedback in determining the quality score of paid ads.

Average Duration/Page views per Visitor

The average duration per visitor refers to the total number of page views divided by the total number of visits during the same timeframe. Some marketers may monitor average page views per visitor as an indicator of interest.

However, page views as a marketing metric might result in inaccuracies since a reloaded page or a user’s immediate return to a page may get interpreted as unique page views.

Lead Conversion Rate

The lead conversion rate, sales conversion rate, or lead-to-customer conversion rate refers to the percentage of qualified leads within a company that resulted in a successfully closed sale. According to market research, the average landing page has a conversion rate of 2.3%, while the top 10 companies may exceed 11.25%.

Lead conversion rate determines the effectiveness of a website or digital touch to help brands increase the total revenue per visitor. A PPC campaign that gains 200 leads with 20 conversions has a lead conversion rate of 10%. Marketers may use the calculated lead conversion rate to manage similar marketing campaigns.

Average cost-per-acquisition (CPA)

CPA refers to the average advertising cost marketers spend on acquiring a customer. Marketers may calculate the CPA of their campaigns by dividing the total cost spent on a campaign by the number of new customers acquired in the same period. For example, a $2000 digital marketing campaign with 100 closed sales has a CPA of $20.

These digital advertising measurement metrics enable marketing managers to plan and allocate budgets for cost-effective lead-nurturing practices. CPA directly measures the revenue impact of digital marketing campaigns.

Cost-per-conversion (CPC)

CPC, or cost-per-action, offers marketers a reliable gauge of the effectiveness of online advertising efforts. Marketers calculate CPC by dividing the total cost of generating online traffic by the number of successful user conversions.

A high CPC, like elevated cost-per-click, may indicate poorly targeted audiences or ineffective advertising copy. An increase in conversion rates reduces the CPC while improving online advertising ROI.

Conversion Rate by Channel

Companies can calculate conversion rate by channel by dividing the number of leads from a marketing channel by the total number of visitors passing through the channel within a year. Marketers can optimize conversion rates for each channel by applying specific engagement strategies. For instance, sending emails every two weeks can maximize conversion rates for B2C email marketing.

A comprehensive breakdown of conversion rate by channel enables marketers to determine the most effective ad platforms. Marketers may refer to the conversion rate by channel for allocating budgets for cost-effective outcomes.

Closing Thoughts – Measuring Digital Advertising Effectiveness

The inherent complexities in online advertising often require marketers to monitor multiple metrics for a given campaign. Additionally, some metrics provide the most value when tracked alongside other observations. For instance, CPA may prove effective when applied against internal benchmarks like the Customer’s Lifetime Value (CLV).

Ultimately, measuring digital advertising effectiveness depends on analyzing metrics across various channels. Marketers can prioritize advertising channels that create the most positive impact to provide quality user experiences without exception.