Key Metrics for a Campaign
1) IMPRESSIONS: Number of times an ad was served to a user on the Internet
2) CLICKS: number of clicks on a campaign ad
3) CONVERSIONS: Number of conversions in the campaign. But what is a conversion? It varies according to what the customer defined at the beginning of the campaign. It can be the click on a specific button, the completion of a form or the purchase of a product. Conversions are classified into two categories, which will be explained next. Post Click Conversions: this is when the user clicks on the banner and in the same navigation, does the conversion. Post View Conversions: This is when the user clicks on the banner but does not convert. However, up to 30 days later, the user returns to the site and performs the conversion, which will then be accounted for.
4) CTR – CLICK THROUGH RATE: This is the campaign clickthrough rate. Represented in percentage terms (%) is calculated by dividing the number of clicks by impressions. The result of the division is then multiplied by 100 to be transformed into a percentage.
For example: A campaign has 100,000 impressions and 200 clicks. The CTR will be 0.20% -> 200 divided by 100,000 = 0.002 x 100 = 0.20%
And what does this percentage really represent? The rate represents the number of users who clicked on the ad. In the example above, it means that 0.20% of the people who saw the banner clicked on it. So the higher the CTR rate, the better: it means more people are getting interested in the ad message. What is considered a good CTR? In display campaigns, rates from 0.05% are considered good. Rates from 0.10% are considered excellent. For Sponsored Links campaigns (Google Adwords) CTRs from 2% are considered good. The rates vary with the strategies adopted in the campaign, of course, but they also depend a lot on the creative used, since it is the message built into it that should draw the user’s attention.
Watch out for the CTR trap! As one of the most widespread metrics in the online world, CTR is sometimes considered the only relevant metric in the campaign. But doing so can lead to misinterpretations about the outcome of the campaign. A high click-through rate that generates few conversions, for example, is a sign that the people who click on the ad are not the people ready to buy at the time. This is a classic of the mess of metrics! The goal is always to observe the goal of the campaign and analyze the metrics related to it.
5) CPM – COST PER THOUSAND: is the main form of pricing of online media buying. Represented in monetary terms (R$), it shows how much it cost to buy a package of thousand impressions. The CPM is calculated by dividing the amount spent by the number of impressions delivered. The result is then multiplied by a thousand.
For example: A campaign spent $ 2,000 and had a delivery of 200,000 impressions. The CPM will be of R $ 10,00 -> 2,000 divided by 200,000 = 0,01 x 1,000 = R$ 10.
How should I interpret this metric? The lower the CPM value, the better. If in a campaign the CPM is R$ 10 and in another the CPM is R$ 20, it means that the first one bought the same amount of impressions with half of the money of the second. In other words, it was more cost-effective.
Beware of CPM comparisons! One has to be very careful comparing CPMs between campaigns with very different goals or audiences. And this has to do with the programmatic data cost. In a large campaign, which wants to delivery a message to the general public and generate site visits, it is not necessary to use very specific data to deliver the media. In the other hand, in a sales campaign or for a very specific audience and difficult to be identified on the Internet, strategies that use much more specific – and therefore, more expensive – data will have to be used. With a reduced target audience, bids for media buying will also have to be higher than a wider campaign, for example. For all this, different campaigns can start with very different levels of CPM, making it impossible to compare.
6) CPC – COST PER CLICK: is how much each click of the campaign – and the consequent visit to the site – cost the client. Represented in monetary terms (R$), the CPC is calculated by dividing the amount spent by the number of clicks obtained. For example: A campaign spent R$ 2,000 and had 1000 clicks. The CPC will be R$ 2.00 -> 2.000 divided by 1,000 = R$ 2.
How should I interpret this metric? The lower the CPC value, the better – it means that it’s being cheaper to get the flow to the customer’s site. However, the same CPM comparison rule is valid for CPC: beware of cost-per-click comparison of campaigns with very different goals or audiences.
7) CPA – COST PER ACTION: is how much each campaign conversion cost to the customer. Represented in monetary terms (R$), the CPA is calculated by dividing the amount spent by the number of conversions obtained.
For example: One campaign spent R$ 2,000 and had 200 conversions. The CPA will be R$ 10.00 -> 2,000 divided by 200 = R$ 10.
How should I interpret this metric? The lower the CPA value, the better – it means that conversions from the campaign are getting cheaper. But the value of the CPA should be evaluated according to the product being advertised. For example, a CPA of $ 100 in a real estate campaign is very cheap: it means that it was invested R$100 reais and a sale of a property was made,that costs a lot more than that. In the other hand, this same CPA in a campaign of lower value products, may not be so advantageous as this.