What Makes A Good KPI?

When it comes to marketing I often get asked, "What makes a good KPI"? The answer really depends on the industry and business. Different businesses and industry are going to generate different data, so comparing them that way is not going to help.

The best way to start is to first identify what KPIs you want to measure. Then you need to find comparable industry data to set as a baseline. And finally, you need to create some sort of a tracking and analysis system, whether that be daily, weekly, or monthly, once you have the data you need to look at it and determine changes.

It's critical to establish your marketing goals before planning out a marketing campaign. This will provide you with a better understanding of which advertising metrics to track and display in your dashboard.

Let's consider the principal marketing life-cycle stages: Awareness, Consideration, and Conversion. We’ll use these as the primary key performance indicators for us to measure our marketing efforts and make them relevant for our business goals.

Who knows about your product or service? This is the first step in KPI advertising; getting potential customers into the top of your funnel. Spark attention; plant a seed, and inspire customers to take action.

Did you build brand awareness? Did anyone care? Whether customers engaged with your brand or not can help us measure a couple of different things. Was your offering attractive enough? Have you presented it to the right people, in the appropriate way? Did they take interest and take action?

We're at the final stage now, time to close the sale! Did the user perform the intended action when they got to their destination? Was all the prior marketing investment worth it? Did you increase sales revenue?

These standard advertising KPIs can easily be extracted from common digital campaign performance metrics.

Although most of the major search and social media advertising platforms have their own unique media metrics, let's focus on the ones that always stay tried and true across all marketing channels.

In DashThis, you will find plenty of pre-set widgets available to easily display these paid media metrics across many integrations.

Although you can essentially create a KPI for anything, there are a few standards that are used across the industry.  Here are 5 of the most populat KPIs used to track paid media.

This is related to the top of the marketing funnel that can speak directly to brand awareness.

Impressions are how many times your ad unit was displayed to a user. Sometimes this will be associated with a cost-per-1000-impressions or CPM.

Reach is the number of people who saw your ad unit. This is different than impressions as multiple impressions to the same person would still result in a Reach of 1.

For campaigns that are focused around increasing awareness or have a goal of reaching a target number of people, Impressions and Reach are the primary KPIs.

Clicks are what happens when your ad unit interested your intended target audience enough to inspire them to take action. Overall, this is the total number of times your ad was clicked.

Clicks usually follows with the user being taken to your landing page for more information or to take further action.

This KPI will have a major influence on your website traffic if that is what your goals are. To bring it one step further, you can use this volume of traffic against the bounce rate of the landing page in order to better understand the quality of traffic being captured.

This is a percentage calculated on clicks/impressions.

If your ad had 1000 impressions and received 10 clicks, that would result in a 1% click-through rate.

This KPI can be an informative measuring tool to determine how relevant your ad is to your target audience. If optimized for clicks, the CTR should be high, if optimized for impressions the CTR would be lower.

The nature of the placement and platform is also very important. You cannot compare this KPI equally across all channels. If buying into a PPC campaign with Google Ads you can expect a much higher click-through rate compared to a Display campaign with Google Ads.

However, when comparing it to itself over time within the same marketing channel, it can help you measure the relevance of your creative adjustments. Especially, if you're A/B testing different creative units at the same time.

A Conversion KPI is commonly the desired result of the customer’s interaction. What are you encouraging the user to do when you attract them to your brand and product?

An e-commerce platform may consider a conversion to be a purchase made through an online store.

An automotive dealer may consider a conversion to be a form-fill lead for an interested buyer.

A property developer may consider a conversion to be a mailing list registration for an upcoming new home release.

Depending on the platform, tracking this may require installing a pixel (like Facebook’s) on your website or utilizing successful 'thank-you' page traffic metrics.

Other paid media metrics you can pull from conversions are:

• Are you attracting new customers or returning customers?
• How many conversions are considered qualified leads?
• How much gross revenue did you generate?

The conversion rate KPI is calculated by click traffic/number of conversions. This gives us insight into the marketing performance of our click traffic. For example, in a PPC campaign, even if you can generate a large volume of search traffic through search engine marketing, at what rate are those users taking the desired action which drives your bottom line?

The CPA, or sometimes referred to as cost per lead is the most important paid media metric KPI to calculate the return on investment.

It is usually averaged out over the course of a campaign by taking the total amount invested over the total number of conversions. Depending on the campaign KPI’s, it can tell you how much it cost to gain the average customer or email campaign registrant. Of course, the lower the number, the better.

Knowing your margins is integral to run any business. Measuring how much revenue was generated from your digital marketing campaign can help you make better investment decisions in the future. Depending on how you've spread out your paid media, your CPA can also help you filter out which media outlets gave you the greatest return on investment.

This is easy to track in your DashThis advertising metrics dashboard. It can give you insights into how the campaign is going to ensure you CPA is coming in with margin for revenue. You can even put the CPA from every platform into one simplified view. If there's a specific marketing channel that is underperforming, you can look into some of the earlier funnel KPIs that were mentioned above or choose to move your budgets into higher performing channels.

We have only just skimmed the surface when it comes to the variety of KPIs that are trackable and useful when it comes to digital marketing campaigns. It's important to know your platforms and understand the different types of data points that each one brings to the table. Always ensure to educate your clients as well; they may be able to find ways to better strategize how they run their business or build their brand creatives based on the campaign performance insights you are able to offer them.