6 months ago | Digital Advertising
Success is achieved when an individual or team has accomplished their goals. But in the digital marketing industry, measuring success becomes a little more nuanced because we use key performance indicators (KPIs) to benchmark our successes along the way.
KPIs can vary depending on a project's digital marketing tactics and the bar against which success will be measured. For us, this is achieved by first taking a look at the marketing funnel, setting appropriate KPIs for each tactic, and then measuring and adjusting our marketing efforts against these KPIs along the way as we analyze the data.
The Marketing Funnel
Before we can understand each tactic, it’s important to understand the marketing funnel. The marketing funnel is centered around the buyer journey, and is often depicted, as the name implies, in the shape of a funnel.
At the top of the funnel sit the broadest of our marketing efforts, those aimed to cast a wide net and grab mass consumer attention. As we move down the funnel, our marketing tactics narrow, becoming more specific and personal to the consumer. Awareness sits atop the funnel, followed by Interest, Decision, and then Action at the bottom.
The term “high-funnel” often refers to Awareness or Interest-level marketing. These are typically branded ads. They may or may not be trying to sell you something, but at the very least they are thought-provoking and increase brand awareness.
“Low-funnel” often refers to the Decision or Action levels of the funnel. These types of advertisements use a call-to-action to persuade the consumer to complete a desired outcome such as a purchase or a form submission.
Once we have made the determination as to how our marketing funnel will look and where we are aiming our efforts, we then nail down the marketing tactics we will use to reach our audience using paid search, paid social, and programmatic marketing types.
Paid search is a form of digital marketing in which we use search engine platforms like Google Ads and Microsoft Advertising (via Bing) to bid on keywords and show ads to relevant audiences. These platforms have the capability to target users based on location, demographics (such as age, gender, etc.), and some interests or hobbies.
However, paid search is a low-funnel tactic that only has the capability to target ads to those who are actively searching for a related product or service. Those forms of targeting are also less common on paid search and not as robust as similar capabilities available on paid social platforms.
The real heart and soul of paid search lies in keyword targeting, a platform that relies on showing ads to audiences that are searching for a product or service by paying for ad views by using the terms they enter into a search engine.
The advertiser sets a dollar amount to indicate how much they’re willing to pay for a click on each individual keyword. If the user’s search term matches the advertiser’s keyword, the user is shown the ad.
Demographics, location, and interest targeting is secondary on paid search. These don't require parameters like keywords but instead use additional information the advertiser can apply to narrow or widen their audience.
- For Google and Microsoft Advertising, the demographic targeting only works if the searcher is signed into a Google or Microsoft account, respectively. The demographic data is then factored into the equation when a search is executed, and appropriate audiences are filtered in or out.
- Location targeting can only be used if the searcher has enabled their location with the search platform. Oftentimes users do have their location enabled and Google or Bing can filter them in or out of the equation when a search is executed.
- Interest targeting is a bit more broad. If the user has been doing research about college degrees, for example, Google or Bing will pick up on it and mark that as an interest for the user’s profile. When the advertiser tells the platform to only show their ad to users interested in earning a college degree, the aforementioned user will be included because Google or Bing knows they’ve been doing research related to that interest.
Paid social uses social media platforms like Facebook, Instagram, and Twitter to advertise to a target audience. These platforms don't use keywords but rather audience-targeting parameters such as location, demographics, and interests or hobbies that are much more robust than paid search. Paid social can be effective for any level of the funnel depending on what the goal is.
Custom audiences, including website retargeting, lookalike audiences, and custom lists, are very effective methods for advertisers to specifically target a particular audience.
- Website retargeting is a method that allows the advertiser to target users that have visited a particular website or even a specific page on that website. This is very useful for retargeting efforts, such as when an advertiser knows that an audience who has seen certain information needs a nudge to come back and complete a purchase.
- Lookalike audiences are helpful if the advertiser likes Group A, but wants a similar group of people to target, who we’ll call Group B. Group A may have all the perfect parameters of what the advertiser is looking for, while Group B is slightly different in age, location, interests, and more. It aids in branching out the audience targeting.
- Custom lists are a great way to target a very specific group of people. A common example is an email list. Perhaps you’re a vendor who went to a public event and gathered contact information from prospective customers. Compiling a list of their email addresses will allow you to target them with ads on Facebook, for example.
Programmatic advertising is the automated bidding and purchasing of digital ad space for images and videos across the internet. These images and videos are often high-funnel and receive a high amount of impressions compared to clicks, by design. Programmatic advertising is effective for prospecting — the act of finding potential customers.
Platforms like Google Campaign Manager and Display & Video 360 are used to disperse an advertiser’s images or videos across hundreds of thousands of websites. A wide net is cast and aims to spread awareness about the product or service to bring in customers who may not have known about it.
Goal: Drive Conversions
If the goal is to drive conversions (i.e., lead form submissions, purchases, etc.), then the defining metrics of success include Cost per Conversion (a.k.a. Cost per Lead, CPL), as well as Conversion Rate (how often, on average, an ad interaction leads to a conversion). Cost per Conversion is calculated by dividing the total cost by the total conversions, resulting in an average dollar amount that indicates how much it costs for one conversion. An acceptable CPL varies by client or advertiser.
Conversion Rate, while not as impactful as CPL, puts into perspective the percentage of traffic that is actually completing the action that was set as a priority for the client or advertiser. This is calculated by dividing the amount of conversions by the amount of clicks, resulting in the average number of clicks that convert.
Goal: Drive Traffic
If the goal is to drive traffic (i.e. clicks, impressions), then Clickthrough Rate (CTR) will aid in determining the effectiveness of the ads being used to bring in the traffic. CTR is the measurement of how often users click an ad when it is shown to them. That is to say, five clicks and 20 impressions equals a 25% Clickthrough Rate. A high CTR indicates that users are finding the ad text compelling enough and relevant enough to their search or interests to click on it.
Whereas, a low CTR indicates that the ad text is not resonating with the audience. Possible solutions to make the ad resonate include editing its text so it is more relevant and/or compelling, and, for paid search in particular, adjusting the keyword and negative keyword lists to expel any searches that are not quite what the client or advertiser deems as relevant.
Average Cost per Click is the measurement of the average cost for one click on an ad. Average CPC is helpful when determining the cost-effectiveness of particular keywords. The goal is to aim for the lowest cost per click, which can be achieved through impactful ad text, a relevant landing page, and the willingness to pay a competitive price for the click.
Goal: Impression Share
If the goal is market exposure, then Impression Share, Impression Share Lost to Rank, and Impression Share Lost to Budget are three impactful percentage metrics to measure.
- Impression Share, the core metric of the three, is the number of impressions the ad was eligible to receive divided by the number of impressions the ad actually received. This number is always influenced by competitors. If there are a significant number of competitors, higher Impression Share can be harder to achieve. If there are not many competitors, it may be possible to achieve maximum Impression Share (100%). At the end of the day, Impression Share indicates how much of the existing market is seeing the ad, and is most commonly found on Paid Search platforms.
- Impression Share Lost to Rank indicates the percentage of searches an ad did not show up for because Ad Rank was too low. Ad Rank is a score between one and 10 that indicates the quality of the ad, and is influenced by the number of competitors in the market, the quality of the ad text, the maximum price willing to be paid for one click, and more. A high Impression Share Lost to Rank indicates that the ad is not competitive enough and is consistently losing to better ads from competitors. Solutions include editing ad text, increasing the maximum amount of money willing to be paid for one click, or adjusting the keywords that are being bid on. Impression Share Lost to Rank is most commonly found on Paid Search platforms.
- Impression Share Lost to Budget indicates the percentage of searches an ad did not show up for due to a lack of budget. This is most closely related to the maximum bid of the keywords and the daily budget of the campaign. A higher maximum bid and/or daily budget means a lesser chance of not appearing in an auction due to its cost. This number aids in determining if a budget increase is needed, if keyword bids should be increased, or if a keyword should be paused due to its higher price tag. Impression Share Lost to Budget is most commonly found on Paid Search platforms.
There are many factors in digital marketing that indicate success, and many platforms available to achieve that success. At Oodle, we have a friendly team of digital marketing experts ready and excited to help your business grow and achieve its goals.
Whether you have just started a new business or are an established business looking for more success, we’ve got the strategy for you! Whatever you need, Oodle is here to help. Contact us today!