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The Basics of Ad Metrics

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In this age of data and automation, using metrics allows you to properly gauge campaign results and improve on them in the future. As a result, there are plenty of metrics used in advertising. However, not everything is relevant for your business. Depending on the platforms, your campaign goals, and data availability, some are more useful than others.

In this newsletter, we’ll provide a one-stop shop discussion on some of the most important metrics in digital advertising.

Why you need to measure your campaigns

The development of tools and technologies in advertising helped bolster digital ad campaigns. However, it also made tracking and measuring performance a lot harder because of the multiple channels, different actions, and wide audiences that need to be accounted for in the customer journey.

Understanding these metrics is crucial for the growth of the company. In learning what works and what doesn’t, effective strategies can be replicated, ineffective ones recalibrated, and underperforming campaigns can be dropped. This leads to higher returns for investments and lower risks.

Impressions and Clicks

Among the most common metrics across platforms and channels in digital marketing are impressions and clicks. Impressions are basically the number of people that reached the ad, whether it’s on social media or on websites. For the latter channel, it’s usually called page impressions.

On the other hand, you have clicks which is the next step after impressions wherein the audience interacts with your content by clicking towards a desired destination. Incorporating a concise but persuasive call to action can pull in more clicks.

Clickthrough Rate (CTR)

For someone to click on your ad, there needs to be a corresponding impression count. However, not everyone who sees your ad–be it a display ad, a search ad, or any other form–will click on it. Clickthrough rate measures the number of clicks you attained divided by the number of views or impressions your ad has.

Knowing your CTR can help you adjust your keywords and creative collaterals in order to resonate more effectively with your audience.

Cost Per Thousand Impressions (CPM)

CPM, known as both Cost Per Thousand Impressions and Cost Per Mile, is among the three methods used to price online ads. The other two are CPC and CPA which we’ll discuss below. CPM is the total cost of 1,000 impressions garnered through an ad.

Although CPM can’t accurately measure campaign effectiveness like CTR, it’s very useful in building brand awareness. Rates vary among channels, with social media CPM being higher than website CPM due to the traffic they obtain.

Cost Per Click (CPC)

CPC measures how much it costs whenever someone clicks on your ad. The metric is equal to the total budget spent on the ad divided by the clicks it obtained.

A low CPC means that you gain higher returns because you are getting more clicks with the money you are spending. As Guiding Metrics discussed in their article, some of the ways that can bring down your CPC include:

  • Lower bids
  • Finding additional keywords to increase reach
  • Creating a more resonant copy and creatives for more clicks

Cost Per Action (CPA)

Like CPM and CPC, Cost Per Action is derived from dividing total ad spend by something. In this case, it’s an action or conversion. Depending on the channel, these actions differ–whether it’s subscribing to your course, buying a product from your website, or following your page from Facebook ads.

Besides these metrics, there are plenty of others that are specific to platforms and even industries your business is in. Having advanced knowledge of these measurements can be extremely useful but only if you have the right strategies to back it up.

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