08Dec

Avoid the metrics mishap in Digital Marketing! Understand which ones matter and which ones don’t

Vishnu Prasath Digital Marketing 546

When I was flying to Las Vegas from India to attend a marketing conference, I was formulating a model for my internal team to master the metrics & help them understand metrics that matter. Coincidentally, during my trip to Vegas, I met the founder of a once-successful e-commerce store that generated millions of dollars in revenue in rideshare. In friendly conversations with the founder over a coffee, I discovered his business got shut-down as his revenue/profits weren’t sufficient enough to cover the costs, particularly Google Ad Spends. What was surprising is that he was getting a lot of impressions, clicks & sales through his website. His revenues were constantly growing to cross a million dollars on the same year he had to shut down the business. Diving deep into it, I understood the ever-increasing cost of advertising crossing his profit-margins that he earned out of his business to eventually put his business in bankruptcy.

I not-only offered to help him but also wanted to work on summarizing an article on Metrics Mishap, that would stand as a guidebook for everyone who’s looking to master Digital Marketing Metrics.

From days when Digital marketing was centered around Search Engines to the era of digital transformation comprising of “everything digital” – one of the biggest challenges businesses face is measuring the right metric.

You might be thinking your digital marketing strategy is paying off – but is it really?

Let’s explore the metrics that are used by most agencies to measure performance, and track success.

Digital Marketing Metrics

  1. Widely used Metrics of Measurement
    1. Impressions
      1. The number of people seeing your advertisement (in the form of text, display, or video) is the total number of impressions your campaign generates. This could help you measure brand awareness & understand the reach of your campaign.
    2. Clicks
      1. This is the total number of clicks on your listing (link) on any platform. This could include the same user clicking multiple times. Google Search Console helps you measure the number of clicks you’re getting from Google, organically. For any campaign you run with Google/Facebook – you can measure the number of clicks reported for each campaign in the Dashboard. You can track the number of clicks you get from different sources through Google Analytics if you set-up the UTM tracking parameters. This can help you effectively measure the results of any marketing initiative you undertake.
    3. Traffic
      1. This is the total number of visitors who’re visiting your website. There are different ways through which people would visit your website that can be broadly segmented into:
        1. Organic Search
        2. Social media
        3. Paid Ads
        4. Referral
        5. Type-in
        6. Others (E-mails, text messaging, etc)
    4. Click-Through Rate (CTR)
      1. CTR is the (total number of clicks / total number of impressions). If your campaigns have a lot of impressions and very few clicks, that’s indicative of a low Click through rate. Attractive & persuasive ad copies get the highest CTR. It’s important to have your ad copy persuasive & relevant for the audience you’re targeting. Does high CTR always deliver great value? No! Sometimes if you offer a freebie or publish something sensational, that might attract a lot of users to click on your ad and they’d not end up converting. If your campaign objective is only to generate a lot of visitors – this could be your objective. Otherwise, not! Then what matters? Your ROA (return on ad spends).
    5. Conversion Rate
      1. Conversion rate is the (total number of conversions / by the number of clicks). Your defined conversion objective could be a lead (or) a sale (or) simply a missed call.
    6. Cost per click
      1. Your cost per click is the amount of money you spend to get one click on your ad. This could be the (total amount of money spent/total number of clicks).
    7. Cost per conversion
      1. Your cost per acquisition is the amount of money you spend on acquiring each lead/customer. This is also called the CPA, in case of a sale being the conversion.
    8. Vanity Metrics
      1. There’s “n” number of metrics that could lead you into a pitfall. You can refer to digital marketing glossary to understand about Bounce rate, Imp Share, View-through conversions, and a whole lot more! They maybe valuable in achieving one of your sub-objectives, but if you’re scoring high on the first three points in the next section – you’re on the right path.
  2. What others don’t generally talk about? (Shhhhh…)
    1. Value/conversion
      1. Whatever your conversion objective is, you’ve to define the value of the conversion. If you’re trying to sell cars online and get people to test drive the vehicle, then a lead would be your conversion objective. If out of 4 leads you’re able to sell one car that generates you $1000 in profit, your lead to transaction rate is 25% and the value of each lead is $250 to your business. If you’re an e-commerce website selling something online, you’ve to find out your average transaction value & attribute your profit per transaction as the value of each conversion.
    2. Immediate ROI
      1. ROI is the return on investment, not to be confused with ROA. Your immediate ROI on your advertising campaign is the (total amount of money spent vs. total net-profit earned) in your business from the particular campaign. However, your long term ROI can include customers buying from your business repeatedly, new customers buying your product through word-of-mouth, cross-selling, etc. If your profit per conversion is high enough for you to be able to acquire new customers to buy your product at a cost that’s less than your value/conversion – it’s time to scale.
    3. Lifetime value
      1. Making your customers use your product, as frequently as possible is an important product goal. You need to understand your customer’s lifetime value to make the most out of your digital advertising efforts. Advertising has become super-competitive with multiple businesses bidding for the same audience that’s in-market looking out to buy anything like a car, home, enroll in college, apparel, jewelry.
    4. TOFU, MOFU & BOFU
      1. There’s no brand, I’ve ever come across that’s successful only with Performance Marketing over the long run. If you’re a brand, it’s important for you to create awareness around the Brand Values Pyramid of your business. If you’re into performance marketing, you might be missing outon capturing the immense invisible gain you could be getting with branding as your objective. You’ve to understand the amount of awareness you need to create with Top of the funnel advertising as a new brand in order to constantly push people to MOFU & eventually BOFU. Continuous awareness building will make your brand/business the FIRST choice that comes to the customers mind. Rory Sutherland, Ogilvy has delivered a controversial presentation in the AdWorld conference emphasizing the inefficiency in measurement & attribution leading to campaigns not working & businesses failing.
    5. We’ll blog on the following cases soon, and put-forth the best way you can address the following scenarios:
      1. Case A – Growing Traffic, Growing Revenue, Falling Profits
      2. Case B – Growing Traffic, Falling Revenue, Falling Profits

Staying ahead of the curve

We at Bright Bridge have built a framework around revenue optimization & profit maximization that can be applied to any business boosting the profits by up to 300%. We’ve implemented this solution on some of our clients, and they’re already seeing wonderful results.

Reach out to us to understand more about our secret-recipes we’ll unviel to unlock your potential with Digital!