Choosing the Right Digital Advertising Metrics to Track and Measure

Ad Targeting, Analytics, Digital Advertising
  • Brian Hult

If you’re investing money in digital advertising campaigns, it’s essential to track and measure the right metrics. Without proper tracking, it’s challenging to know what’s working and where to focus your advertising budget. Determining your core Return on Investment (ROI) goals will help you measure data that tells the story of how your target audience interacted with your ads. In this article, we’ll discuss the key metrics to track that will help you measure success and determine ROI.

Why Tracking Digital Advertising Metrics is Crucial for Your Campaign’s Success

Digital advertising is one of the most effective ways to reach your target audience and drive traffic to your website. However, measuring the success of your digital advertising campaign is crucial. Without proper tracking, you may waste valuable advertising dollars on channels that don’t work for your business. By tracking your advertising metrics, you can identify what’s working and what’s not and optimize your advertising budget to achieve better results.

Key Metrics to Track for Measuring Success and Determining ROI

There are several metrics to track for measuring success and determining ROI for your digital advertising campaign. In this section, we’ll discuss the key metrics that you should track.

Cost Per Acquisition (CPA)

Cost per Acquisition (CPA) is the cost you pay to acquire a new lead on any given channel. Knowing the cost to acquire a client for your business is the basis of your marketing budget. This data is crucial to add to your ROI analysis because it helps you determine whether your business will make a profit. Ideally, you’ll want to get a sense for which mix of ad channels (Search, Facebook, Display) work best for your business. Then you’ll be able to optimize your ad budget going forward. The formula for CPA is straightforward:

CPA = Total Ad Spend / Total Conversions

CPA is a simple but valuable formula. Knowing how much it costs to acquire a new lead is key to understanding your ad ROI.

Lifetime Value (LTV)

Lifetime Value (LTV) is the approximate revenue a new customer brings in, with all associated costs factored in. If you know your LTV, you’ll be able to compare it directly to the cost of acquiring a new client through your digital ad campaign. The formula you can use to determine your LTV is:

LTV = Average Order Value * Average Purchase Frequency * Average Customer Lifespan

Knowing your LTV is essential for further ROI analysis.

Campaign Revenue (CR)

Campaign Revenue (CR) is the revenue generated by your digital advertising campaign. To calculate your campaign revenue, you need to multiply your campaign’s conversions by LTV and closing ratio (50% would be .5). You need to factor in how often you are able to close new leads to estimate campaign revenue correctly.

Return on Advertising Spend (ROAS)

Return on Advertising Spend (ROAS) is a metric that gauges the effectiveness of online advertising campaigns. It measures the gross revenue generated for every dollar spent on advertising. ROAS is much more focused on the results from specific campaigns, while ROI incorporates the bigger picture relative to the business. Setting your own benchmarks and campaign goals based on past performance is the best way to proceed with your advertising efforts.

Still boggled by analytics? Need expert help?

Choosing the right digital advertising metrics to track and measure is crucial to your campaign’s success. By tracking the key metrics mentioned in this article, you can measure success and determine ROI. This data is essential to optimize your advertising budget and achieve better results. Contact us today if you want to skip all this confusing jargon and let the experts handle your digital advertising!