Are You Measuring the Right Things? Discover Top Advertising Metrics

The amount of metrics in advertising can often feel overwhelming and advertisers are known to experience analysis paralysis. One of my very first projects at my first agency was developing our internal client review dashboard. This dashboard had over thirty metrics measuring everything from spend, cost per lead, revenue, revenue per lead, lifetime value, and so on.  

Since then, I’ve realized while that level of detail is at times important (when diagnosing issues or doing an in depth audit), the primary KPIs come down to only a handful of important metrics. Knowing these metrics when spending any amount of money on advertising is supremely important.

While every business is different, the following KPIs can be applied to all direct response campaigns. 

Direct Response is the process of sending ads to get a specific response. Common examples are lead generation to an e-book or sending traffic directly to a special sales page.

Cost Per Lead (CPL): Nearly every business can run a lead generation campaign. This could include newsletter signups and no-cost offers (ebook, guide, checklist, etc). 

Example: You spend $100 and get 10 leads, your CPL is $10

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Cost Per Acquisition (CPA): CPA is a generalized term used to describe the cost to acquire a primary action. A primary action is one step past lead acquisition. For example this may include your lead scheduling an appointment with you, submitting an application, filling out a form, making a purchase, and other primary actions depending on your objectives. 

Example: Your spend $100 and get 2 appointments, your CPA is $50

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Conversion Rate: This is typically broken down by a specific metric like lead and acquisition. At Hinterlands Digital, we will shorthand it like “Lead CR” and “Acquisition CR”. Since Acquisition is after Lead, it would be measured as such.

Example: 

Lead CR: 100 clicks were sent to your landing page and you generated 10 leads. That’s a 10% conversion rate. 

Acquisition CR: Of the 10 leads you generated, 2 became appointments so your Acquisition CR is 20%.

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Revenue Per X: Also broken down by a specific metric but normally isolated to lead and acquisition. Measures how much revenue is generated per metric. This is invaluable when determining if your Return on Investment (ROI) goals are being hit. 

Example: You generated $500 from one of the appointments. 

Revenue Per Lead (RPL): Generated 10 leads and $500 in total revenue therefore your RPL is $50. 

Revenue Per Acquisition (RPA): Made 2 appointments from the 10 leads and generated $500 in revenue so the RPA is $250. 

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Return on Investment (ROI): The amount of revenue you want to generate from every dollar spent. Typically written as revenue:spend or as a decimal of revenue/spend.

Example: In reference to the previous examples, $500 in revenue with $100 spend is a 5:1 ROI (or 5 ROI). 

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Combining all of these metrics begins to paint a picture of the effectiveness of the money being spent on the advertising campaigns. There are many ways to drill even further to find leading and lagging indicators to catch campaigns that are starting to veer off course AND find the campaigns that are over performing so we can increase spend.

In future blog posts we will be going over more content around digital marketing so you can keep whomever may be running your advertising accountable.

A few examples will include:

• Advanced Customer Segmentation for Enhanced Targeting

• Innovations in Email Marketing

• Examples of Successful Sales Funnels

• and much more!

I'd love to hear from you, good or bad on the content we're providing and if you'd like a specific topic, feel free to email or leave a comment below.

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