After launching an online advertisement, brands must measure the results to determine whether the campaign is effective and if it helps achieve the brand’s objectives.
This article will present various metrics that brands can use to analyze the performance of their campaigns, featuring over 18 types categorized into three levels according to the Buyer Journey Framework. This framework will serve as a guide to explain the various metrics more clearly, starting from the Awareness Stage, moving on to Consideration, and concluding with the Decision stage.
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What Are Digital Advertising Metrics? How Important Are They?
Advertising Metrics are key performance indicators for online advertising that indicate whether a campaign has successfully met its objectives. They also assist brands in analyzing which aspects of their advertising strategy need adjustments.
Some strategies may not align with the objectives after actual implementation.
The key essence of gathering data on these metrics is that brands must leverage the insights gained to develop and create more effective advertisements. By understanding their target audience better through case studies of previous advertising metrics, brands can identify which types of content resonate and which do not. This empowers them to set clearer and more ambitious goals for their next strategies, building upon the successes of past initiatives.
These key performance indicators are essential numbers for every business and industry engaged in online advertising.
Awareness Stage Metrics
In the initial stage of the Buyer Journey Framework, known as Awareness, the target audience begins to recognize the existence of the brand—what it represents and the products and services it offers across various channels. During this phase, the brand aims to invest in advertising to spread awareness of its offerings, ensuring that potential customers become familiar with its products and services, increasing visibility and engagement.
The metrics for this period include:
- Page View
- Cost Per View (CPV)
- Reach
- Impression
- Cost Per Impression (CPM)
Page View
The first key performance indicator for online advertising in the Awareness stage is Page Views, or the number of times visitors access the brand’s website or page linked in the ad. This can also be referred to as Traffic. Page Views are counted in Analytics Tools every time someone clicks to view the webpage, regardless of whether it’s from one person or multiple visitors.
For example, Mr. A visited a website he saw through an advertisement a total of 10 times. This means that the website will have a total of 10 Page Views.
This figure indicates the level of awareness for the website or webpage and how much it has increased after the advertisement was published. Additionally, some tools can provide insights to the brand about where these page views are coming from.
Cost Per View (CPV)
This metric calculates the cost of video advertising specifically, determining how much a brand spends for each video view. It indicates how many times the brand’s product and service ads have been recognized and assesses the value of the budget in relation to these impressions.
The formula for calculating Cost Per View is as follows
Cost Per View = Total Amount Spent ÷ Total Measured View
composed of
- Total Amount Spent divided by
- Total Measured View
For example, Brand A’s video advertisement on YouTube garnered over 2,000 views, with a total ad spend of 1,500 USD. This means the cost per view for the video comes to just 0.75 USD.
The calculation methods for each online channel can vary significantly.
- YouTube charges advertisers after viewers watch skippable ads for more than 30 seconds or for varying durations based on other video ad formats. For a detailed understanding of YouTube’s Cost Per View metrics, further research is recommended.
- Facebook, on the other hand, starts charging once users view ads for more than 2 seconds. You can explore the performance metrics for online ads on Facebook and Instagram for more insights.
- TikTok offers a unique approach by allowing brands to choose whether to charge after 2 seconds, 6 seconds, or for the full video. TikTok’s CPV Bidding operates on a per one thousand views basis, calculated as the campaign cost divided by the total views multiplied by 1000.
When choosing to use a Cost Per View pricing model, brands need to have a clear understanding of the bidding methods for each platform. It’s crucial to know how many seconds must pass before costs are incurred and what the pricing structures look like. This knowledge will help ensure that your campaign does not rack up unnecessary expenses.
Reach
This metric indicates the total number of unique individuals who have accessed and viewed the brand’s advertisement, excluding repeat viewers.
For example, if Brand A runs an ad through Facebook Ads and reaches 2,000 people, the Reach would be 2,000.
Reach can help brands analyze their advertising effectiveness. If Reach is high but there’s no sign of action from the target audience, it might be time for the brand to adjust its strategy or revamp the ad to create a stronger incentive.
At the same time, there are metrics that seem similar to Reach but are distinctly different.
Impression
This is another key performance indicator for online advertising in the Awareness stage, indicating the ‘number of times the brand’s advertisement has been displayed’ and how many times this ad has caught the attention of people on the selected online channels.
For example, the advertisement of Brand A was displayed on Facebook, reaching 200 users with a total of 500 impressions. This means the total number of impressions is 500.
Even though impressions don’t guarantee conversions like reach does, they can help brands analyze issues or anomalies in their advertisements. If the ads have a low number of impressions or hardly any at all, it indicates there’s a problem that needs to be addressed.
The difference between these two metrics lies in the fact that Reach counts the number of unique individuals who view an advertisement, while Impressions tally the total number of times the advertisement is displayed.
Cost Per Impression (CPM)
Now, let’s move on to another key metric that calculates the cost of advertising aimed at reaching a large audience. This metric is calculated per 1,000 impressions, indicating how much a brand will spend (according to The Online Advertising Guide, which uses the abbreviation M, as M is the Roman numeral for 1,000, also known as Mille).
The formula for Cost Per Impression is
Cost Per Impression = (Total Amount Spent ÷ Total Measured Impression) * 1000
Composed of
- Total Amount Spent divided by
- Total Measured Impressions multiplied by
- Amount 1,000
For example, Brand A purchases online ad space on a popular website for a total campaign cost of 200,000 USD, achieving 2,000,000 impressions. This means the cost per impression charged by the website is 100 USD per 1,000 impressions.
Therefore, in addition to calculating the total expenses of the campaign, it’s equally important to analyze and study CPM across each online channel. The cost per 1,000 impressions varies significantly by platform.
Consideration Stage Metrics
The second stage of the Buyer Journey Framework is when the target audience is deciding whether to convert into customers of the brand. They are already aware of the brand’s presence online and may show interest in certain products or services through various actions, such as clicking on ads, liking posts, commenting, or even signing up and providing information to the brand.
ในช่วงระยะนี้โฆษณาออนไลน์ของแบรนด์มีหน้าที่ในDuring this phase, the brand’s online advertising plays a vital role in building relationships and fostering deeper interactions with the audience. The goal is to become their number one choice in mind and pave the way for converting them into future customers.
The metrics for this period include
- Bounce Rate
- Engagement Rate
- Cost Per Engagement (CPE)
- Click Through Rate (CTR)
- Cost Per Lead (CTL)
- Cost per Click (CPC)
Bounce Rate
If you want to know how interesting the content or UX/UI of a website is in the eyes of the target audience, and the Bounce Rate will answer that. Bounce Rate is a metric that calculates the percentage of site visits that land on a single page without navigating to any other pages or interacting with the page in any way, such as clicking to another page or making a purchase.
The formula for Bounce Rate is
Bounce Rate = (Total Visitors Who Didn’t Do Any Action ÷ Total Visitors On Website) * 100
Composed of
- The number of website visitors who did not take any action on the page divided by
- the total number of website visitors multiplied by
- Amount 100
For example, a teen clothing website recorded a total of 20,000 visits this month. However, there were 15,000 instances where visitors did not engage with the site at all (such as not clicking to another page or clicking a purchase button). This results in a Bounce Rate of 75%, which is considered quite high.
How can you tell if your brand’s website needs to be reviewed or revised?
The ideal Bounce Rate should be low, as it indicates that users are engaging with multiple pages on your website. Conversely, a high Bounce Rate suggests that users are spending time on a single page without finding anything compelling enough to explore further. According to Gorocketfuel, a typical Bounce Rate ranges from 26% to 70%. A rate between 26% and 40% is considered good, 41% to 55% is average, 56% to 70% is starting to get high, and anything above 70% is quite disappointing. This calls for immediate action to identify and fix the issues.
Therefore, the Bounce Rate can indicate how well the brand’s webpage meets customer needs and whether it fosters a good or poor interaction. This ultimately influences the conversion rate from the target audience to actual customers.
Exit Rate
The metric akin to Bounce Rate, Exit Rate allows website owners to check the percentage of users who leave a specific page on their site. Unlike Bounce Rate, which focuses on overall site engagement, Exit Rate is page-specific, giving you insights on how users interact with each individual page.
The formula for Exit Rate is
Exit Rate = Total Amount Exit ÷ Total Amount visit* 100
Comprises
- Total Amount of Exits divided by
- Total Amount of Visits multiplied by
- Amount 100
For example, Website A has 3 pages: Page A, Page B, and Page C. Today, 4 visitors accessed the website, and each visitor displayed the following browsing behavior:
- Mr. A visited Page A > Page B > Page C > Exit
- Mr. B visited Page B > Exit
- Mr. C visited Page A > Page C > Page B > Exit
- Mr. D visited Page B > Page C > Exit
Therefore, Page B had a total of 4 visits, with users exiting Page B 2 times. This means that the Exit Rate for Page B is 50%.
The key difference between Bounce Rate and Exit Rate is that Bounce Rate is calculated based on users, while Exit Rate is calculated for each individual page on the website. Importantly, there are no strict rules regarding what constitutes a good or bad Exit Rate. Each page serves a different purpose; thus, a high Exit Rate on some pages may be completely normal, while on others it may indicate an issue. It’s essential to evaluate each page on its own merits.
Engagement Rate (ER)
If you want to know whether your target audience is engaging more positively with your brand, take a look at the Engagement Rate (ER). This metric calculates every interaction between customers and the content or messaging in your advertising, including likes, comments, shares, and more.
The formula for Engagement Rate is
Engagement Rate = Total Engagements ÷ Total Impressions* 100
Composed of
- Total Engagement, or the total number of interactions (counting every interaction), divided by
- Total Impressions, or the total number of times people have accessed the ad, multiplied by
- Amount 100 (to convert it to a percentage)
For example, Brand A’s advertisement reached 8,000 times this month, resulting in 800 engagements. This includes 700 link clicks and 100 comments. Therefore, the Engagement Rate for this ad is 10%.
The higher the engagement rate percentage, the more brands can analyze whether their advertisements have reached their target audience effectively. This valuable insight allows them to refine their content and leverage it for future growth.
Each platform will have its own unique Engagement Rate, whether it’s calculated for Facebook, Instagram, Twitter, or LinkedIn. Brands utilizing these online channels can explore and learn more about the calculation methods on their own.
Cost Per Engagement (CPE)
Now let’s move on to the calculation method for how brands will determine their expected advertising costs per engagement within their target audience. This includes all forms of engagement, whether it’s Clicks, Likes, Comments, Shares, or Follows.
The formula for calculating Cost Per Engagement is
Cost Per Engagement = Total Amount Spent ÷ Total Measured Engagement
Composed of
- Total Amount Spent or the total amount paid for this campaign divided by
- Total Measured Engagement or the total engagement metrics
For example, Brand A invested 15,000 USD in a campaign to reach their target audience and achieved a total of 10,000 engagements, which included 5,000 likes, 2,000 comments, and 3,000 shares. Therefore, at the end of the campaign, the cost per engagement amounted to 1.5 USD.
Brands can use Cost Per Engagement to analyze their advertising in several ways. They can assess whether the cost per engagement is too high, evaluate the overall value of the results, or determine if a low level of engagement justifies changing the ad components or adjusting the target audience.
Click Through Rate (CTR)
A key metric that helps brands evaluate the attractiveness of their advertisements is the Click Through Rate (CTR). This metric indicates the ratio of clicks on an ad to the total number of times the ad is displayed. CTR serves as a valuable tool for brands to assess the cost-effectiveness of their campaign spend.
The formula for calculating Click Through Rate is
Click Through Rate = (Total Clicks ÷ Total Measured Impressions) * 100
Composed of
- Total Click or the total number of clicks on the ads divided by
- Total Measured Impression or the total number of times the ads were displayed multiplied by
- Amount 100
For example, Brand A’s advertisement was displayed on Facebook, generating 500 impressions and receiving 30 clicks. Therefore, the Click Through Rate (CTR) for this campaign is 6%.
The higher the CTR of a campaign, the better it reflects on the brand, as it indicates that the target audience is genuinely interested in the ad. Conversely, if impressions are high but clicks are low, the brand needs to reconsider the effectiveness of the ad’s content or evaluate whether the selected audience truly aligns with the brand’s target market.
Cost Per Lead (CPL)
For brands aiming to exchange information with their target audience through advertising, such as filling out forms or registering to generate leads, calculating the Cost Per Lead (CPL) becomes a crucial metric. This allows brands to analyze whether the price paid for each lead is justified and worthwhile.
The formula for calculating Cost Per Lead is
Cost Per Lead = Total Amount Spent ÷ Total Number of Lead
Composed of
- Total Amount Spent divided by
- Total Number of Leads
For example, Brand A runs an advertisement to give away a free E-book of English vocabulary for exam preparation in exchange for registration, spending 10,000 USD. They acquired 4,000 leads from the advertisement, which means the cost per lead is 2.5 USD.
Cost Per Click (CPC)
The final online advertising metric for the consideration stage that brands can use to calculate ad costs indicates how much they need to spend for each click from a target audience showing interest in this ad. It helps assess whether the investment in the campaign is worthwhile.
The formula for calculating Cost Per Click is
Cost Per Click = Total Amount Spent ÷ Total Measured Click
Comprises
- Total Amount Spent divided by
- Total Measured Click
For example, Brand A runs a campaign on Google Search Ads with a total budget of 6,000 USD, which results in 2,000 clicks to their website. Therefore, the Cost Per Click (CPC) is calculated to be 3 USD.
It’s essential to understand that the Cost Per Click (CPC) prices across different online advertising channels vary. For instance, Google Ads determines CPC through an auction system where brands that bid the highest for keywords achieve a higher Ad Rank. This increases their chances of having their ads clicked by their target audience, leading to more traffic to their website.
Therefore, brands need to thoroughly understand each platform before deciding to advertise.
Decision Stage Metrics
As interactions deepen, the opportunities for decision-making increase correspondingly. At this stage, the target audience of the brand is ready to transition into being customers. This is evident through various actions, whether it’s subscribing or making purchases of products and services.
During this period, the ads that brands typically present often include stimuli or triggers that encourage the target audience to make decisions that lead to the desired outcomes. This is achieved through Call-To-Action phrases like ‘Buy Now’ or ‘Shop Immediately.’ Brands can measure the results of their advertising during this time using these key metrics.
- Conversion Rate
- Cost Per Acquisition (CPA)
- Cost Per Result (CPR)
- Return On Ad Spend (ROAS)
- Return On Investment (ROI)
- Lifetime Value (LTV)
Conversion Rate
After launching an advertisement aimed at encouraging the target audience to convert into customers, the brand wants to assess how effectively the ad has increased their customer acquisition from this target group. Therefore, the key metric that will assist the brand is the Conversion Rate, reflecting the rate of change from the target audience to customers.
The formula for calculating Conversion Rate is
Conversion Rate = (Total Conversion ÷ Total Visit) * 100
Consists of
- Total conversions divided by
- Total visits multiplied by
- Amount 100
For example, Brand A aims to boost sales through advertising. After launching the campaign, 2,000 people visited the website, and 100 people made a purchase. Therefore, the conversion rate for this campaign is 5%.
The Conversion Rate is a key metric that can help brands analyze their performance. A high Conversion Rate indicates that you’re on the right track, targeting the right audience, and presenting an engaging website. Conversely, if the Conversion Rate is low relative to the number of visitors, it suggests that adjustments or improvements may be necessary.
Cost Per Acquisition (CPA)
In every action taken by customers, brands can calculate the cost associated with each action from their advertising efforts. This is done through a metric known as Cost Per Action or Cost Per Acquisition. These actions depend on the brand’s objectives, such as whether they want to convert customers by having them make a purchase or sign up for a membership, among others.
Calculating Cost Per Action is
Cost Per Acquisition = Total Amount Spent ÷ Total Conversion
Composed of
- Total Amount Spent divided by
- Total Conversions reflects the advertising campaign’s cost effectiveness
For example, a brand runs ads across multiple online channels aiming to motivate the target audience to purchase products on their website. The total campaign cost is 5,000 baht, and 200 purchases are made. Therefore, the Cost Per Action (CPA) is set at 25 baht.
For those involved in advertising on Facebook, you may have encountered similar metrics but under different names, specifically Cost Per Result in Facebook Ads. The calculation method is as follows:
Cost Per Result = Total Amount SpentTotal Results
This formula calculates similarly to CPA by aggregating the total campaign costs divided by the total number of results generated by that advertisement. This will give you the cost per desired outcome that the brand aims for.
Return On Ad Spend (ROAS)
If you really want to know how much revenue brands generate from their advertising budget. The answer lies in Return On Ad Spend, or ROAS for short. This metric helps brands calculate the return they get from their total ad spend, giving insight into whether their advertising efforts are worth the investment.
The formula for calculating ROAS is
ROAS = Total Amount Gain ÷ Total Amount Spent
Composed of
- Total Amount Gain refers to the total revenue or profit that the brand has generated, divided by
- Total Amount Spent, which is the overall cost incurred by the brand for the campaign
For example, Brand A sold products on its website and earned a total of 20,000 USD, spending 5,000 USD on ads. Therefore, the ROAS, or return on advertising spend, is 4.
Calculating ROAS is essential, and a ROAS value greater than 1 is crucial. If your ROAS falls below 1, it indicates that your advertising performance or underlying strategy isn’t succeeding; it’s failing to generate profit or results for your brand. This situation calls for immediate attention and adjustments.
Return On Investment (ROI)
If you want to take a bigger picture view of your investments, considering everything from advertising costs, materials or product expenses, presenter fees, and all other expenditures that your brand incurs, you might be wondering how much return you can expect.
Calculating ROI involves
ROI = (Total Amount Gain – Total Investment) ÷ Total Investment
Consists of
- Total Amount Gain, or the total profit the brand has received, minus
- Total Amount Spent, or the total investment made, divided by
- Total Amount Spent again
For example, a popular bakery on Instagram sells pastries at 200 USD each, totaling 200 pieces and earning 40,000 USD. However, their costs include 10,000 baht for ingredients, 500 USD for transportation, and 1,000 USD for advertising, amounting to 11,500 USD in expenses. Therefore, the ROI achieved is 2.47.
The difference between ROI and ROAS lies in their focus: ROI measures the total profit relative to all investments made, while ROAS specifically calculates the profit generated from advertising expenses. In summary, ROI provides a broader overview of profitability.
Lifetime Value (LTV)
The most significant metric for calculating the long-term value of a customer is Lifetime Value or LTV. This metric is used to analyze the value that a brand can gain from each customer throughout their relationship. Calculating LTV provides a broad perspective on the business, as it considers the potential for customer retention with the brand as well.
Calculating LTV is
Lifetime Value = Average Customer Value * Average Customer Lifespan
Composed of
- Average Customer Value multiplied by
- Average Customer Lifespan
But where will we find the average values? Let’s take a closer look.
For example, Brand A sells games with an average customer purchasing a new game once a week. The average price of the games that customers tend to buy is 500 baht. The brand has determined that the customer lifespan is 10 years.
So now we know that
- Customers make weekly payments of 500 USD.
- If we calculate this on an annual basis, customers will pay 500 USD for 52 weeks, totaling 26,000 USD per year.
- Therefore, the average annual price is 26,000 USD, and with a lifespan multiplier of 10, the LTV of Brand A amounts to 260,000 USD.
Therefore, the higher the Lifetime Value, the greater the chance of having Loyal Customers. To generate a high LTV, you can:
- Create or enhance customer interactions in Customer Service across multiple channels that allow customers to connect with us.
- Consistently provide valuable content or media, such as blogs or social media posts, that capture their interest.
- Listen to customers more attentively, paying attention to how they talk about the brand, and use their feedback for continuous improvement.
- Add services that foster customer loyalty, ensuring they feel a sense of belonging throughout their customer journey.
Summary
Each metric at each stage of the Buyer Journey Framework serves as a crucial calculation tool that helps brands track and analyze their strategies, as well as the overall advertising expenditure required for their investments.
Without the need to rely solely on a single metric per objective, brands can employ multiple indicators to gain a broader perspective. This approach can be applied to both the strategy itself and the overall business landscape.
Brands need to understand the key performance indicators that align with their campaign or business objectives to facilitate sustainable growth.