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Analyzing the Performance of Your Digital Advertising Campaigns

If you’re investing in digital marketing, chances are you’re running some type of digital advertising campaign or campaigns. So you probably already know that digital advertising is an effective way to improve brand awareness and, in the case of paid search, to drive instant traffic that can be turned into sales and leads.

It’s relatively easy to get started with digital advertising. Minimum spend thresholds can be low, which means that it’s realistic for small businesses to start advertising on most platforms. But unless you’re a paid media specialist, how do you know which metrics to pay attention to in order to measure the success of your campaigns? Being able to analyze campaign performance is critical to maintaining the overall health and return on investment of your advertising initiatives. Here are a few ways to ensure you’re looking at the metrics that can help you analyze the effectiveness of your campaigns.

Goal-setting

Establishing goals is a critical first step to understanding the performance of your digital ad campaigns. Knowing what your goals are will enable you to hone in on the specific metrics that are the best indicators of performance.

Campaign goals may be quite different depending on a variety of factors. For example, a campaign you run on Instagram will likely be less focused on direct response than your paid search campaigns will be. Success with a brand awareness push is measured differently than success with direct response.

It’s important to understand upfront what your goals are so you can identify metrics to measure performance against those goals. Clear goals enable you to focus on the right metrics that will indicate success or failure of your campaigns.

Traffic metrics

Traffic metrics like clicks, impressions, and engagement are valuable in measuring the success of brand awareness campaigns.

Monitor upticks in traffic

Traffic generated from your ad campaigns indicates you are have been successful in attracting users through a combination of ad creative and messaging. Traffic that comes directly from paid sources is obviously to be expected (it’s what you’re paying for, after all), but you should also monitor for increases in branded search and direct visits that coincide with campaign launches. Branding campaigns can often lead to user interest that doesn’t result in immediate clicks, but does cause users to search for your company name later or to visit your website directly.

Analyze click-thru-rate

Click-though rate, or CTR, measures the number of times your ad is clicked compared to the number of times it has been shown to users. If your ad is shown to 100 people and 1 person clicks on it, then you have a 1% CTR.

CTR can help you determine the effectiveness of your targeting and ad creative. Low CTRs are an indication that something isn’t working -- either that your message isn’t reaching the appropriate audience, or that your message is reaching the right audience but is failing to compel them to click on your ad.

On the flip side, strong click-through rates generally indicate that your ads are reaching the right people and are doing a good job of appealing to their needs or desires. You can use this information to analyze what’s working and apply it to future campaigns, or existing campaigns that are under-performing.

Conversion metrics

Conversion metrics are the ones that are most closely tied to ROI, and for that reason they’re the ones you should pay the most attention to. It should go without saying that you want to have conversion tracking set up to be able to accurately tie conversions to ad dollars and clicks.

Conversion rate

Conversion rate tracks the rate at which users take a desired conversion action on your website. A conversion action might be a purchase, the completion of a request-a-quote form, or a phone call. Your business defines your own conversions based on whichever user actions are valuable to you.

Monitoring your campaign conversion rates will tell you how successful each campaign is at getting a user to take the desired action you’ve specified. Strong conversion rates indicate that your campaigns are targeting the right people, and that the information they encounter on your landing pages when they come to your website from an ad is working to convince them to take an action.

Weak conversion rates can be indicative of a problem somewhere in the path to conversion. It might be that there is a problem with your landing page, or that your ad copy is misleading. That said, ads that target users who are higher up in the purchase funnel will likely have lower conversion rates because users are simply not yet ready to buy or get in touch.

Cost per conversion

Cost per conversion, also known as cost per acquisition or cost per action, is the overall cost of the campaign, divided by the number of users who take an action defined as a conversion. Basically, what it costs to acquire a conversion. So if your campaign cost $100 and you get 2 conversions from it, your cost per conversion is $50.

Cost per conversion helps you understand how much you have to spend in order to acquire a lead or customer. You can compare this cost to the value of an average sale in order to get a sense for whether the amount you’re spending on that acquisition is worth the return.

Conversion value

Ideally, you want to also be able to track the value of a conversion. Not all conversions have the same value. Different service or product offerings can attract different types of customers -- some with needs that are more expensive than others. Certain services might be short-term ones that do not attract as much repeat business as other services that attract long-term clients. This means that the value to your business of different types of conversions can vary. Identifying conversion value and tying conversion values to your campaigns allows you to see which campaigns perform the best in terms of attracting high-value clients.

Return on Investment

The bottom line is that most businesses should be looking at return on investment (ROI) as the key to analyzing the performance of their advertising campaigns. ROI measures the profit generated from an investment. In our case that means the company profit generated by a digital ad campaign. In order to calculate ROI, you need to be tracking the conversion metrics covered above. In order to attribute ROI to specific campaigns, you need to be tracking ad clicks all the way through to the close of a sale. Doing that will allow you to tie sales to campaigns, which is much more powerful than simply tying conversions to campaigns, especially in cases where a conversion may be a simple request for information.

Analytics is a complex field, one that can be difficult to navigate if you’re new to digital advertising. Having a grasp on the fundamentals laid out above is a great first step to understanding which of your ad campaigns are performing and which still need to be improved if they’re going to bring you results.

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