The importance of metrics in digital marketing and how to measure ROI.

One of the most common situations that we find as an agency, when providing advice and evaluation of the status of digital marketing campaigns for a new client, is that the metrics and objectives of these are not clear, resulting in a feeling that advertising in digital media does not work.

But, with a correct reading of the metrics obtained and ordering the desired objectives for future campaigns, it is easy for us to turn the campaigns around and improve their results.

Basic terms of digital marketing metrics

In order to better understand how to read the reports and data dashboards of the various digital tools, it is important to know the basic terminology.

• IMPRESSIONS:
  These are the number of times an ad has been viewed. Impressions count each time they appear, so they differ from the number of users who have seen it.
• SCOPE:
  This metric dictates the number of unique people who have seen the ad. It is then expected that the reach will be less than the impressions, as a good campaign shows the ad multiple times to the same user to maximize the chances of conversion.
• CPM:
  The cost per thousand means the cost to obtain 1000 impressions in a campaign and is a standardized unit in most advertising platforms. This cost helps us to verify that our ROI is positive.
• CLIC:
  Most digital campaigns use this metric to determine actions in the campaign, such as website visits, form fills, etc. Sometimes the click-through can be replaced with other objectives such as video views, social media interactions and others.
• CTR:
  It stands for "Click Through Rate" and means the percentage of clicks your campaign is getting. To calculate it, you divide the amount of clicks that your ad receives by the number of impressions you have obtained, and it is expressed as a percentage. So, for example, if you have had 450 impressions, and you have 65 clicks, you will have a CTR of 14%.
• CPC:
  This acronym stands for "Cost per Click" and is basically the way to know what is the cost of each click that a campaign receives. This type of data is vital to determine if the cost of acquiring these actions is profitable or not.

What is ROI and why should it be measured?

This acronym stands for "Return On Investment" and corresponds to the return on investment. That is to say, it measures whether what has been invested in advertising campaigns is generating a return on investment that means profitability for the company.

Not calculating the ROI of campaigns is a serious mistake, since without this measurement it is impossible to really understand the scope and success of an advertising action.

Usually, to calculate this measure, previously defined KPIs must be taken into account, whether it is the number of purchases or actions on the web or social networks, quotes, etc. in relation to the cost of the campaign.

There are average costs for social media actions that can help to understand if a campaign was successful, as well as it is possible if you have an amount allocated internally or an ecommerce integration, for example, to compare the revenue of the actions against the amount invested.

Why should I pay attention to metrics?

The best way to understand this is with practical examples.

AB Company has decided to have a campaign for the sale of 150 tickets to an event to be held in 3 months. Each of these tickets costs $16. A campaign has been planned in META with a budget of $200 per month. At the end of the campaign, 40 tickets have been sold and 100,000 impressions have been reached.

When analyzing this example, one could initially feel satisfied, since a large number of impressions were achieved and the cost of the advertising investment was covered, i.e. 40 entries generate $640 and the total investment was $600.

However, when analyzing the metrics we find that the ROI is only 1 and the gain from the advertising effort was only $40.

If we also analyze the cost of the impressions we see that we have a CPM of $6 which is quite high especially for the little purchase that these impressions generated.

In the end, we realize that, although we reached many people, possibly the segmentation was incorrect and generated few actions, the amount sold barely covered the advertising investment and 110 tickets remained unsold. In addition, every company must consider that there are also additional efforts in the campaigns, such as the development of advertising material, payment of suppliers, organization of events, taxes and more that can further reduce profits.

Learn how to interpret and leverage metrics

One of the most profitable areas of digital marketing is undoubtedly the management and analysis of data, in Click Digital Marketing we offer basic and advanced reporting services, which allows you to better understand the analytics of your campaigns. We will also recommend concrete actions to improve your results, and we can help you analyze past campaigns to understand your results in a real way.

This service allows you to move away from perceptions and get closer to your real data, enabling you to make informed decisions, take better actions and above all invest efficiently and intelligently.

Contact us at right now to schedule a meeting and provide you with advice.