The Core Four Metrics Your Marketing Team Should Report On
There are hundreds upon hundreds of metrics that are available within the digital marketing landscape. Many times we have new clients that come to us confused about how to accurately measure the effectiveness of their digital marketing campaigns.
The reality is, any metric that does not directly relate to customer acquisition, customer retention, or revenue is a vanity metric.
What is a vanity metric? Impressions, reach, and other flashy analytics that traditional agencies report on are satisfying on paper, but don’t really impact bottom-line revenue.
Untitled is here to go over four core metrics that should be in every marketing report. And most importantly, we believe that these metrics should be on the front page of every single eCommerce digital marketing report.
1. Conversions (Purchases)
After conversion tracking has been set up properly, an important metric to track is how many conversions resulted directly from digital marketing efforts. Instead of measuring clicks, follows, or reach, what actually shows the success of a campaign is how many online purchases resulted.
It’s critical to know which ads are generating paying customers instead of which ads are just producing non-revenue generating traffic.
2. Cost Per Result (Cost Per Purchase)
Cost per result, also known as cost per acquisition (CPA) or cost per conversion, is how much advertising spend it takes to acquire an online purchase. This obviously can be impacted by factors outside of advertising (seasonality, product, learning phase of campaign, etc.), but overall is a great metric to benchmark and focus on walking down over time.
It is important to note that every result, or purchase, is not always of equal value. Online retailers that offer multiple products at various price points may be more interested in the next two core metrics.
3. Conversion Value (Total Purchase Value)
Conversion value is the exact amount of revenue generated from advertising campaigns. This metric is important because not every conversion is of equal value.
For example, if I am an online retailer that offers products ranging from $10 – $300, a single purchase of a $300 item is much more valuable to me than a single purchase of a $10 item. It is important to know not only which campaigns are generating purchases, but the exact value of those purchases as well.
4. Return On Advertising Spend (ROAS)
Return on ad spend (ROAS) is arguably the single most important metric in understanding the effectiveness of paid advertising campaigns. It simply measures how many dollars you generated in actual revenue for each dollar spent on advertising.
It is calculated by dividing the total revenue generated from a campaign by the cost of running that campaign.
The Core Four Marketing Metrics In Summary
Conversions, cost per result, conversion value, and ROAS are essential metrics that should not only be included on the front page of every marketing report but used to further optimize advertising campaigns and overall business strategy towards revenue generation.
Do you have questions about how to obtain these metrics or where to find them? Is your legacy marketing agency not reporting on these metrics? Untitled would love to help. Schedule a free, no-obligation, 30-minute virtual consult with our team today.