Key metrics for measuring the effectiveness of digital marketing campaigns

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To monitor the success of a digital marketing campaign, performance metrics are essential. Below are some of the most commonly used metrics.

Impression (Display)

Impression refers to the frequency with which your ad/content is displayed. Impressions are counted each time an ad is shown, regardless of whether the user sees it or not.

Impressions = Reach * Frequency

Reach – the number of people your ad/content reaches.

Frequency – the average number of times your ad is shown to one person.

When someone sees your ad/content, that counts as 1 impression. If they see it twice, that’s 2 impressions. Meanwhile, Reach is the number of people who see your post. For example, if your ad is shown once to 10 people in group A and twice to 5 people in group B, that means the total impressions are 20, but the total reach is only 15.

CPM (Cost Per Thousand)

How to calculate CPM:

CPM = (Total advertising spend / Number of impressions) * 1000

So, if you spend 10 million VND on one ad and get 10,000 impressions, your CPM cost will be 1 million VND.

In short, CPM is a metric per 1000 impressions; advertisers pay for every 1000 impressions. The system will charge you after that exact number of impressions, regardless of whether users see the ad or not.

CPM is particularly effective for brand marketing campaigns, with the main goal being to appear “deep and lasting” in the customer’s mind.

CTR (Click Through Rate)

CTR = ( Click / Impression ) * 100

Click-through rate = (Clicks / Impressions) * 100

So, if your ad content has been displayed 1000 times and received 100 clicks from users, our CTR is 10%. If you want to increase the CTR, there are two ways: increase impressions to have more click opportunities or improve the quality of your content to receive more engagement.

The CTR (Click-Through Rate) is primarily used to measure the effectiveness of advertising campaigns, and it is also used to measure the quality of landing page content.

According to the study, the average CTR on Facebook across all industries is 0.9%.

Industries with above-average CTRs include: Retail (1.59%), Clothing (1.24%), Beauty (1.16%), Technology (1.04%), and Fitness (1.01%).

CPC (Cost Per Click)

CPC = Ads Amount Spend / Click

Cost per click = Amount spent / Number of clicks

CPC (Cost Per Click) is the amount of money you spend for each click on your advertising link.

For example, a click on a link on Facebook is counted as any action taken by a user when interacting with your ad. Interactions include actions on Facebook such as clicking on images, videos, Canvas, commenting, liking pages, etc.

CPC is also very important when used to measure the effectiveness of digital advertising campaigns, as this metric shows how much you have to spend for a specific action you want your target customers to take.

CR (Conversion Rate)

CR = ( Conversions / Visits ) * 100

Conversion rate = (Number of orders / Number of potential customers) * 100

Conversion rates show us a business’s ability to convert potential customers into actual customers on any given advertising channel.

For example, if you are a shoe store and have 12,000 potential customers that month with 250 orders sold, then your conversion rate would be 2.08%.

The benefit of regularly monitoring your conversion rate (CR) is that it helps you measure the effectiveness of your advertising campaigns at different times, compare different products, and find out which product is performing best in terms of conversion rate.

CPA (Cost Per Action)

CPA = Amount Ads Spend / Action

Cost per action = Money spent / Action

CPA (Cost Per Action) is the amount of money that must be paid for an action received on an advertisement (such as making a purchase, filling out an information form, installing an app, registering as a member, etc.).

Similarly to CPA, industries such as education, real estate, insurance, etc., will view CPA as CPL (Cost Per Lead)  because most of the actions they expect are for customers to provide feedback after learning about the product.

Therefore,  in the digital industry, KPIs are often based on CPA/CPL metrics to measure effectiveness,  as we can clearly see the number of potential customers reached for an advertising campaign.

RR (Run Rate)

Goal completion rate = (Actual time / Planned time) * 100

RR = ( Actual / Planning ) * 100

The Run Rate metric tells us how quickly the overall campaign’s goals are being achieved compared to the initial plan.

For example, if your shoe shop’s goal is 100 orders per month, spread over 4 weeks, you need to aim for 25 orders per week. After a week of advertising, the shop sells 20 orders with a budget of 10 million VND. Therefore, our Risk-Reward ratio (RR) is 20%, meaning we’ve completed 20% of the campaign with a budget of 10 million VND.

This metric will help you see how much of your budget you’ve spent to accomplish a portion of your set goal.

ROI (Return on Investment)

Profit margin = (Revenue – Expenses) / Expenses

ROI = (Revenue – Cost of Investment) / Investment

For example, you have a product that costs $100 to manufacture and sells for $200. You sell 6 of these products as a result of running an advertisement. Your total sales are $1200 and your advertising costs are $200. So, your ROI is:

(1200 – (600 + 200)) / (600 + 200) = 50%

ROI helps you determine how much profit you’ve made from your ads compared to the amount you’ve spent on them. Understanding this metric will help you better understand which channels are generating profit so you can allocate your budget more effectively.

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