kpis and metrics of online and digital marketing
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METRICS AND KPISListed here are common metrics and performance indicators used by online marketers, affiliates and site
owners to measure and optimise marketing strategies and site performance.
Being able to track and report on these metrics daily is key to being on top of any online business; often it’s
easy to overlook some of these when things are working well. But as soon as revenue drops, or marketing cost
start to escalate, understanding these metrics will ensure activity can be optimised and tweaked for efficiency
so site performance can continue to be profitable.
Click Through Rate (CTR) % = Clicks / ImpressionsWHAT IT IS – This metric is generally used to measure the rate at which visitors are clicking through after
seeing a piece of media or link to a site, for example a paid search ad, a display banner, or an email. Generally,
CTR’s will vary depending on the media channel. Branded search CTR’s can be high at around 10%, whereas
prospecting display banners would look more like a 1 hundredth of that at 0.1%
HOW IT’S USED – It’s not wise to compare ad success across different media channels using CTR’s. However
comparing CTR’s for the same media type will give indication of which creative message is encouraging the
most clicks for the audience of traffic it is being displayed to. For example, for a display campaign using 4
different designs of creative, optimising which creative to show when using CTR can help to increase the clicks
through to landing page.
Post Click Conversion Rate (CR) % = Conversions / ClicksWHAT IT IS – This metric is used to show the portion of site traffic which is undertaking the required goal for
the page or site. A conversion can mean a range of actions, the most common being a purchase, a registration,
a download, a video play, a Facebook like or a twitter follow. Clicks in the above formula can be interchanged
with visits depending on the source of the data. For example, Google Analytics reports on page visits. Whereas
media activity more generally focuses on clicks.
HOW IT’S USED – Understanding conversion rate is an important aspect of running any website, since a
conversion is usually the main revenue driver. The overall day on day conversion rate is a good health indicator
of any site, and peaks and troughs should be observed and acted upon. It’s also important to be able to break
down conversion rates into smaller segments, typically by traffic source. The more granular you can get, the
more visibility and understanding you can have on how each traffic source is performing, meaning it’s easy to
take steps of optimising – ie trying to grow traffic from good converting sources, and tweaking traffic from poor
performing ones.
Conversion rate also plays an important part in understanding site usability. A key factor in getting visitors to
undertake desired goals, is to develop a site conversion funnel which works at an optimal level. You might be
seeing a great CTR and traffic volume to your site, but if your pages are hard to navigate and do not promote
your product in a clear fashion, you will see a high Exit rate and low conversion rate.
Post Impression Conversion Rate (PICR) % = Impression based Conversions / ImpressionWHAT IT IS – This metric is mainly used as another form of understanding conversions in display or email
advertising. Users may be seeing ads that then influence them to visit a site at a later date, perhaps via search.
HOW IT’S USED – This metric can be used in sneaky ways! For example, the performance of a display
campaign can be seen to be working well even if clicks are low, by looking at PICR. However, on the flip side it
can give an understanding of any uplift in conversions.
Cost Per Click (CPC) £ = Marketing Cost / ClicksWHAT IT IS – Cost per click is quite literally, the amount that each ad click is costing to generate. It is a very
common metric in Search advertising, and also used in display networks. CPC’s are commonly used as the
bidding metric in search auctions as the maximum click price advertisers are prepared to pay, varying
depending on the competitiveness and buoyancy of the market.
Cost Per Acquisition (CPA) £ = Marketing Cost / # AcquisitionsWHAT IT IS – This metric is a key performance indicator for understanding how much it’s costing to generate
an “acquisition”. The term acquisition is just another word for conversion.
HOW IT’S USED – An effect way of planning marketing budget is to know in advance how much can be spend
on generating a single conversion based on the revenue as a result of a conversion. Knowing this will mean
marketing budgets can be planned efficiently. Also, once campaigns are running, it is important to be able to
calculate the CPA to understand what areas of the marketing plan are performing at the desired CPA levels.
A point to note is that calculating the true CPA is not always a simple task, especially when a number of
marketing spends are being used. Understanding which marketing costs contributed towards generating the
acquisition has opened up a whole industry of marketing tracking tools, and sparked much debate over
conversion attribution. Overall it’s important not to be too narrow in analysing CPAs, but rather look across all
touch points a user had (and their associated costs) before converting on site. Read more from one such
attribution tool DC Storm.
Cost Per Lead (CPL) £ = Marketing Cost / # LeadsWHAT IT IS – usually used by affiliates to quote a fixed price for the cost of a lead, where a lead is some form
of customer detail for example an email address or mobile number. It is also a KPI for indicating how much it is
costing to generate leads for a site doing marketing to build a customer database.
HOW IT’S USED – Understanding the value achievable off the back of lead is the Holy Grail for business where
their models require revenue generation from a customer database. And knowing this figure can dictate (in a
similar way to CPA above) how much can be afforded on generating these leads.
Return on Investment (ROI) % = ( Revenue – Marketing Cost ) / Marketing CostWHAT IT IS – ROI shows how much return is being achieved for the cost of generating the revenue. The reason
it’s important to consider along with CPA is that is takes into account the amount of revenue produced. CPA
does not, and therefore treats every sale with the same value
HOW IT IS USED – Similarly to CPA, ROI should be used to analyse the performance of marketing spend. An
ROI benchmark should be set for marketing budgets, so that activity can be quickly reviewed for it’s efficiency
and suitability for the business.
Email Specific KPIsDelivery Rate % = # Delivered Emails / # Sent EmailsWHAT IT IS – When sending emails to large databases, not all email addresses in the list will gain delivery. The
delivery rate is a measure which shows the portion of emails that were delivered out of the total emails
broadcast.
HOW IT’S USED – First off, it gives insight into the quality of the database being emailed. It also will give
insight into the sending score of the Email sender. Large ISPs pay close attention to sender score, and will
potentially block or blacklist senders that appear to be spammers. Delivery rate is the first line in
understanding the efficiency of your send, and if your emails are getting into real and live inboxes.
Bounce Rate % = # Email Bounces / # Sent EmailsWHAT IS IT – A bounce is when an email is tried to be delivered, but does not reach the email inbox and hence
“bounces” back to the sender. Bounces come in 2 main forms – hard and soft. A hard bounce is when the email
is returned to the sender because the email address is invalid and does not exist. A soft bounce is when the ISP
can find the email inbox, but can’t deliver it for some reason, for example the inbox is full. In general, good
database hygiene should involved monitoring and filtering bounced emails out of a list.
Email Open Rate % = # Emails Opened / # Emails ReceivedWHAT IT IS – Email open rate measures the percentage of people who open an email as part of an email
marketing send. Opening an email implies that the opener is interested in some way in the email, hence an
email open shows positive interaction. It’s worth nothing that not all open stats will be real people, for example
some email clients such as outlook have “auto open” options when the email is viewed in a preview pane.
HOW IT’S USED – Email open rate is the first KPI up an email marketers sleeve for feedback on an emails
ability to gain interest – and a large part of this comes down to the email subject line. So email open rate is a
primary KPI for accessing the effectiveness of subject lines.
Email Click Through Rate (Email CTR) % = # link clicks / # emails openedWHAT IT IS – Similar to ad CTR above, email CTR is a measure of the portion of people undertaking a desired
click on a link within an email, out of all the people who opened the email.
HOW IT’S USED – Email CTR indicates if the email content is encouraging and sufficient enough to get a
reader to click to the desired landing page. Usually, a clear Call To Action is required to get an increase in Click
Through Rate, and also the email subject line must be relavent to the actual email content. Often emails will
have a number of links potentially in different places in the email. Tracking Email CTR down to each link means
it is possible to assess the performance of each link, and therefore the email can be optimised to encourage
maximum CTR.
Unsubscribe Rate % = # Unsubscribe requests / # Emails SentWHAT IT IS – Unsubscribe rate shows the proportion of people that an email caused them to unsubscribe from
the mailing list, indicating that they feel they email was irrelevant to their interests and unwanted.
HOW IT’S USED – I have previously written about the importance of watching email unsub rates in relation to
database management – ensuring you have a simple unsub mechanism is important, as is also ensuring that
your unsub is either not too high compared to other emails sent, or does not rise due to changes in email
sending strategy.
Cost Per Thousand Emails (CPM) £ = ( Email Cost / Emails Sent ) x 1,000WHAT IT IS – This is the cost of sending 1,000 emails.
Revenue Per Thousand Emails (RPM) £ = ( Email Revenue / Emails Sent ) x 1,000WHAT IT IS – This is the revenue generated per 1,000 emails sent.
HOW IT’S USED – RPM is used where the goal of email marketing is to generate revenue. It is a measure that
shows the revenue performance relative to the size of the send, and can be offset against the CPM to show the
profitability of the email send.
Display Ad Click Metrics Can No Longer Be DefendedPosted by Robert M. Brecht, Ph.D. | May 15, 2012
Impressions and clicks have long dominated the metrics of online advertising. Yet these two metrics may be the least important metrics in measuring the effectiveness of any particular banner or display ad.
Ad Impressions reported by ad networks simply reports the number of ads that were sent from the ad server to the user’s browser. The term is misleading because it doesn’t mean that the ad was ever seen by the user. The ad may have never rendered within the browser or may have loaded below the fold where the user could only have seen it if they had scrolled down the page.
Clicks on display or banner ads are still the standard way success is measured when reporting results from online ad campaigns. It’s a logical assumption that clicks on ads that lead to pages designed to convert visitors would be the most important measure in attributing the value of a lead or sale.
A study released in April by ComScore and Pretarget questions these two fundamental metrics. Over a 9 month period, Pretarget and ComScore undertook a large scale study of 263 million ad impressions across 18 different advertisers. They gathered not only typical ad reporting data such as impressions and clicks but also other data including viewability and hover data. Clicks and cookie-based conversion data were also collected for the ads served. Conversion was defined as either a purchase or a request for information.
A Pearson correlation analysis of ”gross impressions,” “views” (defined as 75 percent of the pixels of an ad being visible in a browser either above the fold or after scrolling), “time-in-view,” “hover/engagements” and “total hover/engagement time,” ”clicks” and ”conversions.”
The Pearson product-moment correlation coefficient is widely used in statistics to measure the strength of linear dependence between two variables. The correlation coefficient value ranges from minus one to plus one (-1 to +1). A value of plus 1 denotes a direct linear relationship between the two variables while a value of minus 1 shows a direct inverserelationship between two variables (as one goes up the other goes down).Ä coefficient value of 0 means no linear correlation between the two variables.
What they found should lead to a reevaluation of Key Performance Indicators (KPIs) for online display and banner advertising campaigns. The metric with the highest correlation with conversion was ad hover/interaction with a correlation coefficient value of 0.49. Viewable correlations had the second highest correlation (coefficient value = 0.35) followed by a significantly lower gross impressions correlation (coefficient value = 0.17).
What should be most interesting for online advertisers is that the correlation coefficient value between the variables of clicks and conversions was 0.01! Let me repeat this finding: this study found no statistical correlation between ad “clicks” and conversions!
This study, along with other studies with similar conclusions should make online advertisers change the metrics they are using. MediaMind’s “2009 Benchmark Report" released in 2010 revealed that increasing average Dwell (hover) time from 5 percent to 15 percent increased conversion rate by 45%. In another study, Casale Media’s 2011 “Ad Visibility Report” showed that ads that appear above the fold were 6.7 times more effective at producing conversions than ads appearing below the fold.
It’s time for advertisers to look at their attribution models and definitions of KPIs. If you measure the success of your online advertising by looking at the last click to determine a display ad’s
effectiveness you are missing the boat entirely. If you are using ad impressions as a KPI, there are better metrics to use.
Advertisers and their agencies should be paying close attention to how they measure the effectiveness of their online advertising campaigns. Clicks would appear to be a poor indicator of resulting conversions. These studies bring a new dimension to the shift away from last click to multi-touch attribution modeling underway.
32 Key Performance Indicators (KPIs) for EcommercePerformance should inform business decisions and KPIs should drive actions.
Key performance indicators (KPIs) are like milestones on the road to online retail success. Monitoring
them will help ecommerce entrepreneurs identify progress toward sales, marketing, and customer
service goals.
A performance indicator is simply a quantifiable measurement or data point used to gauge
performance relative to some goal. As an example, it may be a goal for some online retailers to
increase site traffic 50 % in the next year. Relative to this goal, a performance indicator might be the
number of unique visitors the site receives daily or which traffic sources send visitors (pay-per-click
advertising, search engine optimization, brand or display advertising, or a YouTube video).
For some goals there could be many performance indicators — often too many — so often people
narrow it down to just two or three impactful data points known as key performance indicators. KPIs
are those measurements that most accurately and succinctly show whether or not a business in
progressing toward its goal.
Setting Goals and Identifiying KPIs
Selecting KPIs begins with clearly stating goals and understanding what areas of business impact
those goals. Of course, KPIs can and should differ for each of an online retailer's goals, whether those
are related to boosting sales, streamlining marketing, or improving customer service.
Here are a few examples of goals and associated KPIs:
GOAL 1 — Boost sales 10% in the next quarter. KPIs include daily sales, conversion
rate, site traffic.
GOAL 2 — Increase conversion rate 2% in the next year. KPIs include conversion
rate, shopping cart abandonment rate, associated shipping rate trends, competitive
price trends.
GOAL 3 — Grow site traffic 20 percent in the next year. KPIs include site traffic,
traffic sources, promotional click-through rates, social shares, bounce rates.
GOAL 4 — Reduce customer service calls by half in the next 6 months. KPIs include
service call classification, identify of page visited immediately before the call, event
that lead to the call.
It should be easy to see that there are many performance indicators, and the value of those indicators
is directly tied to the goal progress measured. Monitoring which page someone visited before initiating
a customer service call makes sense as a KPI for GOAL 4 since it could help identify areas of
confusion that when corrected would reduce customer service calls, but that same performance
indicator would be almost useless for GOAL 3.
With the idea that KPIs should differ based on the goal being measured, it's possible to consider a set
of common performance indicators for ecommerce. Here are 32 common ecommerce key
performance indicators. Just remember that the performance indicators listed below is in no way
exhaustive.
32 Key Performance Indicators
Sales Key Performance Indicators:
Hourly, daily, weekly, monthly, quarterly, and annual sales
Average order size (sometimes called average market basket)
Average margin
Conversion rate
Shopping cart abandonment rate
New customer orders versus returning customer sales
Cost of goods sold
Total available market relative to a retailer's share of market
Product affinity (which products are purchased together)
Product relationship (which products are viewed consecutively)
Inventory levels
Competitive pricing
Marketing Key Performance Indicators:
Site traffic
Unique visitors versus returning visitors
Time on site
Page views per visit
Traffic source
Day part monitoring (when site visitors come)
Newsletter subscribers
Texting subscribers
Chat sessions initiated
Facebook, Twitter, or Pinterest followers or fans
Pay-per-click traffic volume
Blog traffic
Number and quality of product reviews
Brand or display advertising click-through rates
Affiliate performance rates
Customer Service Key Performance Indicators:
Customer service email count
Customer service phone call count
Customer service chat count
Average resolution time
Concern classification
Once you have set goals and selected KPIs, monitoring those indicators should become an everyday
exercise. And most importantly: Performance should inform business decisions, and you should
use KPIs to drive actions.
The 10 Marketing KPIs You Should Be TrackingEstimated Reading Time: 5 minutesWhen it comes to setting and tracking your marketing KPI's, many marketers and business owners are fully aware of the usual suspects.
Sales revenue. Leads. Cost per acquisition.
But there are a number of other KPI's that you should be tracking in order to execute a more successful marketing campaign.
No one wants to support a marketing activity that's losing their company money. By tracking the right marketing KPI's, your company will be able to make adjustments to various strategies and budgets.Without the right KPI's, your company might be reporting and making decisions based on misleading information. In addition to this article, we've also detailed how to fix the 6 critical marketing KPIs your boss actually cares about here.
The 10 Most Important Marketing KPI's to Track
1. Sales Revenue
How much revenue has your inbound marketing campaign brought your company? Understanding your sales revenue is important to know how effective your inbound marketing campaign is, no company wants to spend money on something that isn't generating money.
For the moment think of inbound marketing as pay per click, if your sales revenue from direct mail was less than the money you spent for that campaign, why would you continue using direct mail? Most likely you would move that money to other marketing activities. To determine your sales revenue from inbound marketing you would have to define what you mean by inbound and outbound marketing.Inbound marketing activities include:
Developing premium content Podcasts Blogging Infographics Social Media Engagement Pay Per Click
Outbound marketing activities include: Direct mail Television ads Advertising Telemarketing
Another critical element is capturing sales data directly via your CRM integration and closed loop reporting. You can calculate your sales revenue from inbound marketing by utilizing the following calculation.(Total sales for the year) - (Total revenue from customers acquired through inbound marketing)
2. Cost Per Lead
Not only do you want to calculate your customer acquisition costs for inbound marketing, but outbound marketing as well. How much is it costing you to acquire a customer through inbound marketing versus outbound marketing? When calculating your customer acquisition costs, it requires the integration of your marketing automation and CRM platforms as well as accounting for all relevant costs associated with ERP integration.
Calculating CAC for inbound marketing, relevant costs include: Manpower (creative and technical) Technology and software General overhead
Calculating CAC for outbound marketing, relevant costs include: Advertising Marketing distribution Manpower (sales and marketing) General overhead
Once calculating the costs associated with your inbound and outbound marketing campaigns, you can directly account for new sales, as well as allocate particular budgets for each campaign. If you company is utilizing mostly inbound marketing, you can break down that component further by campaign types assess how successful and profitable each activity is.
3. Customer Value
With inbound marketing, there is no better way to reach out to your current customers. Not only can it help you keep in contact with leads, but it also helps reduce churn and expand your customers lifetime value.
You can calculate the lifetime value of your customers by utilizing the following calculation:
(Average sale per customer) X (Average number of times a customer buys per year) X (Average retention time in months or years for a typical customer)A great way to increase the lifetime value of your customers is by developing lead nurturing campaigns that reach out to existing customers. Providing you and your sales team the opportunity to inform existing customers about new services, products and resources.
4. Inbound Marketing ROI
Every company wants to see their return on investment! Calculating your inbound marketing return on investment is huge to help assess your monthly and annual performance. Equally important is the ability to start planning strategies and budgets for the following year or even months. No matter what marketing activity your company is using, your return on investment will determine the future with that activity. You don't want to continue adding money or increasing your budget for a marketing activity that is costing your company money.
5. Traffic to Lead Ratio
Understanding your website traffic, especially knowing where your traffic is coming from, whether it's organic, direct, social media or referrals is extremely important. Is your trafficcontinually increasing or is it dropping? Not only do you need to ensure that your traffic is meeting the goal you set for the month, but also make sure your visitor to lead conversion rate is between 2 to 4 percent.
6. Lead to Customer Ratio
After all of your marketing efforts, it's important to know how many leads your sales team is able to close. You will want to calculate both your sales qualified lead conversion rate and sales accepted lead conversion rate.What's the difference between the two?
Sales Qualified Leads are leads considered to be sales ready based on their lead score or specific activities/triggers they completed. Most companies would consider a lead who filled out a form, such as "contact a rep" a lead who is ready to buy your service or product. For example, a waste management company with a lead who filled out the form "rent a dumpster", would be considered a sales qualified lead.
Sales Accepted Leads are leads your sales team considers opportunities, and have either contacted the lead directly or a scheduled call.This marketing KPI is extremely useful for sales and marketing to help determine how successful their campaigns are.
Ask yourself the following questions:
Is my campaign capturing leads? Is our CRM successfully passing qualified leads to sales at the right time? Do you have high close rate?
7. Landing Page Conversion Rates
Is your content generating conversions? A great well to tell if your landing pages are converting visitors is to see how many people are visiting each landing page and identifying how many of those visitors are completing your lead capture forms.
One reason people might not be converting is your content! Are you creating remarkable content that will make your visitors convert into leads? If your landing pages aren't generating conversion rates around 10-20% you might need to edit your content. Another great way to increase conversions would be to optimize your landing pages and call to actions by performing A/B tests.
8. Organic Searches
What percentage of your traffic is from organic searches?
The traffic to your site generated by organic searches can be directly correlated with your search engine optimization strategy. Some great metrics to help you identify where you organic search traffic is coming from include:
Number of lead conversions assisted by organic search Number of customer conversions assisted by organic search Percentage of traffic associated with branded keywords Percentage of traffic associated with unbranded keywords
Those are four really great metrics to help your company gain a better understanding of your brand awareness, content marketing effectiveness, as well as the impact of your SEO strategy.
9. Social Media Reach
You might be wondering what your social media reach and engagement have to do with your marketing KPI's. Well, social media is a huge component of your inbound marketing strategy, allowing you to engage and share content with users. You can show your senior management team the value of social media through the growth and engagement of your social media profiles. Social media engagement can include anything from likes, comments, retweets, shares, mentions and many more.
Metrics you can utilize to show the importance and impact of social media on your marketing efforts include:
Number of lead conversions assisted by each social media channel Number of customer conversions generated through your social media
channels Percentage of traffic associated with social medie channels
With social media sites like Twitter, Facebook, LinkedIn Google+, Pinterest and Instagram you might not have all the time in the world to effectively utilize every platform. Break down the number of leads, customers and percentage of traffic coming from each platform.
Why would you spend 10 hours a month engaging and interacting on Google+ when 55% of your traffic generated through social media is coming from LinkedIn?
10. Mobile Traffic, Leads and Conversion Rates
You cannot forget the increasing amount of traffic, leads and customers being produced through mobile devices like Smartphones and tablets. Is your website effectively optimized for mobile? One way you can tell if your company is generating traffic and leads through mobile is to calculate the following metrics:
Number of lead conversions from mobile devices Bounce rates from mobile devices Conversion rates from mobile optimized landing pages
You don't only want to see how many visitors are converting through mobile but you also want some indication of how effective your mobile presence is.
Understanding Key Performance Indicators (KPIs) – Complete Guide
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What I am going to do next is, explain KPIs to you in a way that is instantly useful and I am planning to make
you a KPI Champion in just 10 minutes
What is a KPI?KPI stands for ‘Key performance Indicator’.
It is a metric which is used to determine how you are performing against your business objectives.
A metric can be a number or a ratio. So we can have ‘number metrics’ and we can have ‘ratio metrics’.
For example: Visits, Pageviews, Revenue etc are number metrics because they are in the form of numbers.
Bounce rate, Conversion rate, Average order value etc are ratio metrics because they are in the form of ratios.
Since KPI is also a metric, we can have KPIs in the form of numbers and ratios. So we can have ‘number KPIs’ and we
can have ‘ratio KPIs’.
For example: Days to purchase, visits to purchase, Revenue etc are number KPIs.
Conversion rate, Average order Value, Task completion rate etc are ratio KPIs.
Difference between a Metric and KPIA metric graduates to KPI.
However in order to make this happen the metric must hugely impact the business bottomline. This is possible only
when the metric has the ability to provide recommendation(s) for action which can a huge impact on the business
bottomline. So
Your KPI must have the ability to provide recommendation(s) for action which can hugely impact the business
bottomline.
For example, ‘Average Order Value’ can be used as a KPI because it hugely impacts the business bottomline. You can
greatly increase sales at the present conversion rate just by increasing the size of the orders.
Revenue per click, Revenue per visit, Revenue per acquisition, Cost per acquisition, Task completion rate etc. are other
examples of metrics which can be used as KPIs.
How to find a good KPI?1. Before you start the process of finding KPIs, you must acquire a very good understanding of your business and its
objectives.
2. Then you need to translate your business objectives into measurable goals.
3. Once you have determined your goals, you will select KPIs for each of these goals.
You will use these KPIs to measure the performance of each goal.
Goals are specific strategies you used to achieve your business objectives.
Your business objective can be something like ‘increase sales’. Your goal could be something like ‘increase sales by
5% in the next 3 months by increasing the average order value from x to 2x’.
Any metric which has the ability to directly impact the cash flow (revenue, cost) and/or conversions (both
macro and micro conversions) in a big way can be a good KPI.
For example if you sell display banner ad space on your website and display advertising is the main source of revenue
for you then ‘pageviews’ can be used as a KPI. The more pageviews you get, the more you can charge for every
thousand impressions (CPM) from your advertisers.
If you are not sure whether or not a metric can be used as a KPI, then try to correlate it with revenue, cost and/or
conversions over a period of time (3 or more months).
You need to prove that there is a linear relationship between your chosen KPI and revenue, cost and/or
conversions
i.e. as the value of your KPI increases or decrease there is a corresponding increase or decrease in revenue,
cost and/or conversions.
Can you use ‘number of twitter followers’ as a KPI?
The answer is ‘NO’, not unless you can correlate number of twitter followers with revenue, cost and/or conversions i.e.
as the number of twitter followers increases or decreases there is a corresponding increase or decrease in revenue,
cost and/or conversions.
Even if somehow you are able to correlate the number of twitter followers with revenue, cost and/or conversions you still
need to prove that the correlation has huge impact on the business bottomline.
Just because a metric impacts the business bottomline, does not automatically make it a good KPI.
Can you use ‘number of facebook fans as a KPI?
The answer is ‘NO’, not unless you can correlate number of facebook fans with revenue, cost and/or conversions
i.e. as the number of facebook fan increases or decreases there is a corresponding increase or decrease in revenue,
cost and/or conversions.
Even if somehow you are able to correlate the number of facebook fans with revenue, cost and/or conversions you still
need to prove that the number of facebook fans has huge impact on the business bottomline.
Just because a metric impacts the business bottomline, does not automatically make it a good KPI.
Can you use ‘Phone Calls as a KPI?
The answer is ‘yes’ provided majority of your revenue comes through Phone calls.
You can easily track phone calls through ‘phone calls tracking’ software and then import phone calls data into Google
Analytics. Once the data is imported you can tie phone calls to revenue, cost and/or conversions to determine
correlation.
Here there is one thing to keep in mind.
A KPI doesn’t need to be a metric available in Google Analytics reports.
You can use metrics from other analytics tools too.
For example ‘Phone call’ metrics is not available in Google Analytics reports by default but this doesn’t mean that we
can’t use it as a KPI.
Similarly, ‘Task completion Rate’ metric is not available in Google Analytics reports. However you can calculate ‘Task
completion Rate’ through a survey tool like Qualaroo and use it as a KPI.
Task completion rate is the percentage of people who came to your website and answered ‘yes’ to this survey
question: “Were you able to complete the task for which you came to the website?”
Can you use Clients’ Happiness as a KPI?
The answer is ‘NO’. This is because a KPI is a metric and metric is a number or a ratio. In other words,
metrics is something which can be measured in the first place.
How you can possibly quantify a human emotion like ‘Happiness’?
Types of KPIs
There are two broad categories of KPIs:
1. Internal KPIs
2. External KPIs
Internal KPIs
These KPIs are internally used by team members to measure and optimize their marketing campaigns’
performance. They are not always reported to clients/boss/senior management.
Internal KPIs don’t need to be business bottomline impacting either.
For example following KPIs can be used to measure your link building outreach campaigns :
1. Delivery Rate
2. Open Rate
3. Response Rate
4. Conversion Rate of outreach
5. ROI of outreach
Often marketers make this terrible mistake of reporting internal KPIs to clients/senior management.
For example ‘Bounce Rate’ is a good Internal KPI for optimizing landing pages. But it is not something which you will
report to a CEO. We report only hugely business bottomline impacting KPIs to senior management.
Related Post: How to become Champion in Data Reporting
External KPIsThese are the KPIs we report to clients/senior management and use them to create ‘Web Analytics Measurement
Models’ (strategic roadmaps) for businesses.
External KPIs must be hugely business bottomline impacting.
Whenever we talk about KPIs in general, we are referring to external KPIs. Some examples of external KPIs:
1. Average Order Value
2. Conversion Rate
3. Revenue
4. Revenue per acquisition
5. Cost per acquisition
6. Task Completion Rate
7. Goal conversions
Note: External KPIs can also be used as internal KPIs. There is no hard and fast rule here.
Attributes of a Good KPI
A Good KPI has following attributes:
1. Available and Measurable
You can use only those metrics as KPIs which are available to you in the first place. For example if ‘Net Promoter
Score’ metric is not available to you then you can’t use it as a KPI.
Similarly if you come up with something which is impossible to measure (like ‘frustration level of customers who
abandoned the shopping cart for the 3rd time’) then you can’t use it is as a KPI.
So when you are finding your KPI,
you need to be 100% sure that there is a mechanism/tool available out there to measure and report your KPI in
the first place.
2. Hugely business bottomline impacting
If a metric does not greatly impact the business bottomline then it is not a good external KPI.
3. Relevant
If your KPI is hugely business bottomline impacting then it is got to be relevant to your business objectives. Conversely,
if your KPI is not relevant to your business objectives then it can’t be business bottomline impacting either.
4. Instantly useful
If your KPI is hugely business bottomline impacting then it is got to be instantly useful i.e. you can quickly take actions
on the basis of the insight you get from your KPI.
5. Timely
Your KPI should be available to you in a timely manner so that you can take timely decisions.
For example if you are using a compound metric (a metric which is made up of several other metrics) as a KPI and it
takes several months to compute it once and then another several months to compute it second time then it is not a
good KPI as you can’t take timely decisions on the basis of such KPI.
Examples of Good KPIs
KPI Meaning Formula
1 Gross Profit
It is the profit after production and manufacturing cost.
Gross Profit = Sales Revenue – Direct Cost
Direct cost can be something like cost of manufacturing a product
2Gross Profit Margin
It is used to determine the effectiveness of your business in keeping production cost in control. Higher the gross profit margin, more the money is left over for operating expenses and net profit.
Gross Profit Margin = (Gross Profit/ Revenue) * 100
3Operating Profit
It is the profit before interest and taxes.
Operating Profit = Sales Revenue – Operating Cost
Operating cost is the ongoing cost of running a business, product or system. It can include both direct and indirect costs.
4Operating profit margin
It is used to determine the effectiveness of your business in keeping operating cost in control. Higher the operating profit margin, more the money is left over for net profit.
Operating Profit Margin = (Operating Profit/ Revenue) * 100
5 Net Profit
Also known as net income, net earnings, bottomline. It is the profit after interest and taxes.
Net Profit = Sales Revenue – Total cost (this includes any direct and indirect cost + interest + taxes)
6 Net Profit Margin
Also known as profit margin, net margin, net profit ratio. . It is used to determine the effectiveness of your business in converting sales into profit. Low profit margin indicates higher risk, that a decline in sales will erase the
Net Profit Margin = (Net Profit/ Revenue) * 100
profit and result in net loss.
7Revenue Growth Rate
Also known as sales growth rate. It is the measure of the percentage increase in sales between two time periods.
Revenue Growth Rate = (Current month’s Revenue- Last month’s Revenue) / (Last month’s Revenue) * 100
8
Total Economic Value
It is the total value added by your product/service/campaigns to the business bottomline. It also take into account the role played by micro conversions and conversions which assisted and completed the sales.
Total Economic Value = Total Revenue+ Total value of the assisting conversions + Total value of the last click conversions
9
Return on Investment (ROI)
It is used to evaluate the efficiency of your investment or to compare the efficiency of different investments.
ROI= (Gain from investment – cost of investment)/cost of investment
10Net Promoter Score
It tells how likely it is that your customers will recommend your business to a friend or colleague. Click here for more details.
Net promoter score = % of promoters – % of detractors
11Customer lifetime value
It is the projected revenue (repeat business) a customer will generated during his lifetime. Different types of customers have different life time value (LTV). One of the best ways to boost LTV is by improving customer satisfaction.
(Average order value) X (Number of Repeat Transactions) X (Average customer life span in months/years)
Average customer life span means how long he/she remains your customer.
12Customer retention rate
It is used to determine how good your company is in retaining customers.
Customer Retention Rate = [1- (Customers lost in a given time period/total number of customers acquired in the same time period)] * 100
13
Customer profitability score
This score is used to separate profitable customers from unprofitable customers.
Customer profitability score = Revenue earned through a customer – cost associated with customer’ management/service/retention
14 Cost per lead
It is the average cost of generating a lead. Cost per lead = total cost/total leads
15Cost Per Acquisition
It is the average cost of acquiring a customer or generating a conversion
Cost Per Acquisition = Total Cost/ Total acquisitions
16Revenue Per Acquisition
It is the average revenue earned through an acquisition
Revenue Per Acquisition = Total Revenue/Total acquisitions
17Per Visit Value
It is the average value of a visit to your website. Per Visit Value = Total Revenue/Total Visits
18Conversion Rate
It is the percentage of visits which results in goal conversions or ecommerce transactions.
Conversion Rate = (Total Goal conversions/ E-commerce transactions/ total visits) *100
19Average Order Value
It is the average value of an ecommerce transaction. Through this metric you can measure how effective your upselling and cross selling efforts are and whether you are helping people in finding the product they are looking for.
Average order value = Total Revenue/Total ecommerce transactions
20 Task Completion
It is the percentage of people who came to your website and answered ‘yes’ to this survey
Task completion rate = (number of people said ‘yes’ to the survey question/ Total number of
Rate
question: “Were you able to complete the task for which you came to the website?” survey responses) *100
There is virtually no limit to the number of good KPIs you can find.
It all depends upon the nature of the business and the industry you work in.
For example if you work in an industry where majority/all of the conversions happen offline via phone calls then you can
use ‘Phone Calls’ as your KPI.
Read more: http://www.seotakeaways.com/understanding-key-performance-indicators-kpis-just-like-that/#ixzz31hSlO8Bv
Forget Click-Through Rate: 10 Metrics To Track For Display AdvertisingOctober 14th, 2013 - 12:05 amBy AdExchanger
"Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.Today’s column is written by Sean Callahan, marketing director at Bizo and editor at Digital Marketing Remix.Digital ad spending continues to climb, with US budgets expected to reach $42.5 billion this year and grow to $60.4 billion in 2017, according to eMarketer. Despite this growth, marketers still struggle to prove their digital efforts are working.Digital advertising has been and continues to be one of the most difficult ad mediums to measure. Advertisers often feel unsure about what metrics point to success. To prove their digital investments are worthwhile, they rely heavily on
measurements such as the click-through rate, which is thought to demonstrate a target audience’s interest.There’s a problem with this approach. While marketers create brand awareness at the top of the funnel and focus on educating prospects in the middle of the funnel, success is still pinned on click-through rates and other metrics that point to leads and conversion, which are historically bottom-funnel metrics. This is especially true with display advertising.With the B2B sales cycle getting longer, it’s imperative that marketers measure programs based on what they want to achieve at each stage of the funnel. This will enable them to take a true pulse of their growth and stay focused on drawing new prospects into the funnel.Using CTR to measure display ad performance may make sense for the bottom of the funnel, but it doesn’t work for the top or middle of the funnel.Here are 10 other metrics marketers can use to measure the performance of display advertising:Top-Funnel MetricsDisplay ads can be used as a branding vehicle. It can be just as effective as TV, but it’s more cost-effective and you can measure it more accurately.Creative that is geared toward the bottom of the funnel often has strong calls to action so that, when acted upon, the user is effectively saying they are ready to move forward with your product. However, much of the audience you hit with display ads may not be aware of who you are just yet. In short, it’s equally important to deliver creative ads that focus on driving brand awareness and educating your audience.Many of these metrics depend on benchmarking, so marketers should measure, for instance, their branded search prior to a display campaign in order to gauge the lift when the display campaign is running. It’s important to note that metrics can vary from industry to industry and from company to company. The best way to gauge the performance of display ads is to measure them against your own brand’s performance when they’re not running.1. Brand Recall: To measure the effectiveness of a branding display ad campaign, you can commission an online brand study comparing the increase in awareness of your brand among people who have seen your ad vs. people who haven’t.2. Branded Search: Likewise, when your online advertising campaign is running, you should see a lift in the number of searches for your company or products on Google or other search engines.3. Direct Website Traffic: This last metric is helpful to monitor for the top of the funnel. During an online banner campaign, your website analytics tools should show an increase in visitors who have typed in your brand name and arrived directly at your website.Mid-Funnel MetricsAs I mentioned before, the mid-funnel is really focused on engaging and educating prospects. When running a display campaign that is focused on education, there are several metrics that will help you understand what’s working so you can keep driving prospects down the funnel.4. Cost Per New Website Visitor: To calculate the cost of acquiring new prospects, divide your total campaign cost by the number of new visitors. This will give you the cost per new website visitor.5-6. Page View Lift and Web Form Lift: While display ad campaigns are running, marketers should see target prospects viewing more pages on their websites and completing more forms as they download gated whitepapers and other content. The two success metrics to track to here are page view lift and Web form lift, respectively.
It’s important to understand the true impact of your advertising efforts so you can identify what’s working and what’s not so you can then put more wood behind the arrow of what’s driving success.Bottom-Funnel MetricsBy now you’ve gained brand awareness and have educated and engaged your prospects. It’s time to turn those prospects into leads.7. Total Leads: Bottom-funnel display ads can drive your target audience to your website, where you can entice them to share their contact information by filling out your Web forms. The compilation of all contacts whose information you have can be considered total leads.8. Cost Per Lead: You can also measure the performance of your bottom-funnel display ads by tabulating cost per lead, which is the number of leads divided by total cost of the ad program.9. Opportunity Contribution: Lower-funnel display advertising should also provide a boost in opportunities that make it into your sales pipeline. This is known as opportunity contribution.10: Revenue Contribution: Likewise, when bottom-funnel advertising is running, you should see a boost in revenue contribution and total closed sales opportunities that originated from marketing. A comScore study found that companies combining display and search advertising saw a 119% lift in attributed sales.Taking a look at all these metrics will make it much easier to get a handle on the real influence your campaign is making. When you just look at conversions, you don’t get the full picture.But by taking this full funnel approach, it puts you in a better position to nurture prospects down the funnel.What other metrics are you tracking?
Google Adwords Analytics – Complete Guide
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Google Adwords Analytics is the analysis of the marketing campaigns which run on Google Adwords, one of the most
popular advertising systems in the world. If you do multi-channel marketing for your company than you simply can’t
afford to ignore this paid channel. In order to get optimum results from your Adwords campaigns you must possess
good practical knowledge of how Adwords works and how different campaigns, ad groups, keywords and landing pages
are analyzed and optimized for traffic and conversions.
Google Adwords Analytics process consists of following four phases:
1. Preparation
2. Configuration
3. Analysis
4. Recommendation
Here the output of each phase provides valuable insight for the next phase. So if you skip a phase then you won’t get
optimum results, from either your analysis or marketing efforts.
Phase-1: Preparation
Preparation is the most important phase of Google Adwords Analytics. The quality of the results that you will get
later depends a lot on your preparation. Often marketers/analyst jump straight into analytics reports without doing the
required preparation.
Preparation is investing time and resources in understanding the business, its industry, its products, USP, short term &
long term goals, competition and the target market. If you don’t understand the business, its products, goals and market
then you may never know what to look at and where to look at in any analytics report. You may never know where
to direct your marketing efforts and budget. In short you will have hard time moving forward in the right direction and
producing optimum results through Adwords campaigns analysis.
In the Preparation phase we do following types of analysis by interviewing the client and by browsing the client’s
website:
1. Profile Analysis – get a basic understanding of the business, its history, brand story, revenue model, USP,
employee base, client base etc.
2. Products/Services Analysis – get a basic understanding of what the products/services are all about? Products cost,
products range, most profitable products, least profitable products, products’ USP etc. How the products are promoted
and sold.
3. Market Analysis – get a basic understanding of the target audience. Who are they, where they live, why they buy the
products, best customers in terms of revenue generation etc.
4. Goals Analysis – get a great understanding of client’s short terms and long term goals (leads, sales, brand
awareness, increase in market share, client retention etc). Without well-defined goals there is no optimization.
5. SWOT Analysis – determine the strengths, weaknesses, opportunities and threats for your client’s business.
Determine how strengths can be maximized, weaknesses can be minimized. Determine how opportunities can be
leveraged and how threats can be overcome.
6. Competitors Analysis – determine the top 3 competitors of your client and do profile, product, market, goals and
SWOT analysis for each of them.
The Analytics behind Google Adwords
In order to get the most out of Google Adwords analytics you must know exactly how Adwords work and how different
Adwords metrics are calculated. The best way of gaining this insight is to actually go out and run Google Adwords
campaigns yourself for at least couple of months. If you can’t manage it, you can’t measure it. It is as simple as that.
The second best way is to understand at least the key concepts behind Adwords system as outlined below. If you
are an experienced Adwords user, you can skip this section and jump to the next section titled: ‘Secret to getting highest
possible return on your Adwords Investment’. But there is no harm in reading few more lines. Who knows, you may
learn something new.
CPC, CPM and CPA Bidding options
Whenever a user performs a search on Google (or its search partners), the Google run an auction for clicks known as
the Adwords Auction. To participate in any auction you need to bid. Similarly to participate in Adwords Auction you
need to bid on keywords. Your bid is known as the CPC (Cost Per Click) or CPM (Cost Per Thousand Impressions).
In case of CPC bidding you pay for each click on your ad. In case of CPM bidding you pay every thousand times your
ad is displayed.
CPC bidding is suitable if you are mostly interested in getting traffic to your website. CPM bidding is suitable if your main
focus is on branding, getting site visibility. In addition to CPC and CPM bidding there is one more type of bidding known
as the CPA (Cost Per Acquisition) bidding. In case of CPA bidding you still pay for each click on your ad but you
don’t need to manage your bids manually to get conversions. The bids are automatically managed by Google Adwords
Conversion Optimizer. This type of bidding is suitable if you are mainly interested in getting conversions.
Note: In order to use CPA bidding, you must have conversion tracking enabled and your campaign must have received
at least 15 conversions in the last 30 days.
Max. CPC, Actual CPC & Avg. CPC
The maximum amount you are willing to pay for each click is known Max CPC. The actual amount you pay for each
click is known as Actual CPC. The actual CPC is usually less than the Max. CPC because you need to pay only that
much to Google which is good enough to rank your Adwords ad higher than the advertiser immediately below you.
Actual CPC = Ad Rank of the competitor below / Quality Score of the advertiser
To get a sense of your actual CPC look at the Avg. CPC column in your Adwords reports. Avg. CPC is the average
amount you pay for each click on your ad.
Google Ad Rank Algorithm
Google ranks Adwords ads on the basis of Ad Rank. It is calculated as:
Ad Rank = Max. CPC Bid * Quality Score
Quality Score is a factor used by Google Adwords system to determine how relevant your keyword (on which you
are bidding), ad copy and landing page is to a user’s search query. It is measured as a number from 1 to 10. Higher
your quality score, higher will be your ad rank and less you will have to pay for each click. Similarly higher your Quality
score, lower will be your keyword’s first page bid estimate. That means it will be easier for your ad to rank on the first
page of the search results if the keyword has high quality score.
Here advertiser-1’s ad won’t rank as his keyword/ad’s quality score is very poor (1). Advertiser-3 has got highest ad
rank (12), so his ad will get the 1 position on search results page for the targeted keyword. Advertiser-2 has got second
highest ad rank (9), so his ad will get the 2nd position on search results page for the targeted keyword and so on.
In order to rank higher than advertiser-3, you need to achieve an ad rank higher than 12. You can get a higher ad rank
by increasing your Max. CPC bid, by improving your quality score or both. In case your Quality Score is already 10, then
the only thing that you can do to improve your ad rank is increase your Max. CPC bid. Off course I have made this all
very simple for you. The ad rank algorithm is much more complicated.
There are three types of Quality Scores you must be aware of:
1. Quality Score of a keyword – it is used when the ads appear on Google Search Network.
2. Quality Score of Adwords ad – it used when the ads appear on Google Display Network
3. Quality Score of mobile ad – it is used when the ads appear on Mobile devices.
Note: Quality score of a keyword is calculated each time it triggers an ad.
The historical performance is the biggest component of Quality score. It can be historical CTR of your keywords,
ads, display URLs and your Adwords account. It can also be your account past performance in a particular geo
location(s) or device(s) (desktop, mobile, tablets etc).
The second biggest component of quality score is ‘Relevancy’. Relevancy means how relevant your keywords (on
which you are bidding) are to the users’ search query and your ad copy. It also means how relevant your ad copy is to
its corresponding landing page.
The third biggest component of quality score is ‘Landing Page Quality’. The landing page quality is determined by:
1. How relevant your landing page is to its corresponding ad copy and the keywords you are bidding on
2. Landing page load time
3. And other factors like originality of the contents, navigability etc.
Secret to getting highest possible return on your Adwords Investment
If you are a beginner in Adwords and your aim is to get highest possible returns on your Adwords investment then you
should consider running your Adwords campaigns on CPA bidding as soon as there are eligible for it. If you are an
advanced Adwords/Analytics user, you should read the ‘Super Geeks Section’ below:
If you are an advanced Adwords/Analytics user, you should avoid bidding on CPA. This is because Google
Adwords use the last click attribution model. So in case of Adwords, the last click which completed the sales gets all
the credit for conversion.
Average PPC marketers bid only on last click keywords. These are the keywords which completed the sales. They
don’t bid on first click and middle click keywords. First click keywords are the keywords which initiated the sales
and middle click keywords are the keywords which assisted the sales:
Different keywords (first click keywords, middle click keywords and last click keywords) work together to create a sale.
So in order to get optimum results from your PPC campaigns, you need to bid on all the keywords {first click, middle
click and last click keywords}. If you understand Attribution modeling you will get my point. If you wish to learn more
about attribution modeling then you should read the following posts:
Attribution Modeling in Google Analytics – Ultimate Guide
Google Adwords Attribution – Introducing Effective Click Optimization
Because of Google Adwords Last click attribution model, the CPA that you see in your Google Adwords report is
not your actual cost per acquisition. It is the cost per last click conversion.
So if you ignore first and middle click keywords and optimize PPC campaigns on the basis of cost per last click
conversions than you won’t get optimal results and sometimes even lose money. This is because if a keyword is not
completing a sale, it may be initiating a sale or assisting a sale (Always Remember That) and if you stop bidding
on it because its cost per last click conversion (the so called CPA reported by Google Adwords) is too high or it is not
completing any conversion then you may even lose money.
The very first step toward getting the highest possible return on your investment is determining your Maximum
Profitable CPA (Cost Per Acquisition). It is the maximum amount you can pay for each conversion and still make
profit on sale.
Let us suppose that you manufacture and sell camcorders. You sell camcorders for $300 per item. Let us suppose that
the total cost of manufacturing, packaging and shipping a camcorder (including sales tax and other taxes) is $200. So
the amount of money you make (i.e. profit) on each camcorder is: $300-$200 = $100
Let us assume that this profit doesn’t include the cost of marketing the products via Adwords campaigns. So,
Profit per Conversion (before Adwords Cost) = $100
In order to remain profitable your cost per acquisition (or cost per conversion) via Google Adwords campaign should be
below $100 otherwise you won’t make any money (profit). The CPA that you will choose to target depends upon your
profit margin.
Profit Margin = (Net Profit/Revenue) * 100
If you operate on high profit margin then your cost per acquisition needs to be low. But bear in mind that maintaining
high profit margins can result in decline in overall sales volume. This is because the aim here is to get the most
profitable sales and not highest possible volume of sales.
If you operate on low profit margin then you can afford high cost per acquisition. This is because the aim here is to
get highest possible volume of sales and not the most profitable sales. FMCG companies like ‘Tesco’ operate on low
profit margin. Since they make less profit per item, they need to sell large volume of items in order to remain profitable.
Steep decline in sales volume will quickly erase their profit and result in net loss.
Side note: I am not a pricing strategy consultant but according to my experience, businesses which don’t operate on
high profit margins generally generate more profit than those who choose to operate on high profit margin. So whenever
there is a tradeoff between profit and profit margin, I would go for profit any time of the day.
Once you know your profit margin, you can decide your ‘Target CPA’ i.e. the maximum amount you are willing to pay
for each conversion and still maintain your profit margin. Let us suppose that your target CPA is $20. Then $20 is the
maximum amount you are willing to pay for each conversion and still maintain your profit margin.
If you are a beginner in Adwords you would be using conversion optimizer. While enabling this tool you can either start
with the recommended bid or specify your target CPA. If you are an advanced user you would not be running
conversion optimizer and you would adjust the bids and do all the calculations manually (not exactly manually but via
spreadsheet). This is because you also need to optimize for first click and middle click keywords as explained above
and keep multi channels attributions into account.
In any case, once you have decided your target CPA, you run the ads for as long as is your sales cycle (default 30
days) and then note down the Actual CPA. It is possible that your actual CPA exceeds your target CPA. This happens
because Actual CPA depends upon the factors which are outside Google’s control like: Conversion Rate and Max. CPC
bid. The conversion rate depends upon your ad copy, landing page and your brand credibility. Max. CPC bid depends
on the advertising competition. Both of the factors are not exactly in Google’s control.
Actual CPA = Max. CPC / Conversion Rate
If your actual CPA is higher than your Target CPA, then you need to tweak your Adwords campaigns in such a way
that your Actual CPA is as close as possible to your target CPA (as shown in Fig.4 above). The best way to reduce your
Actual CPA is to increase the conversion rate. Higher the conversion rate, lower will be the actual CPA. You also need
to keep an eye on net profit and profit per conversion (including Adwords cost)
Sometimes you may need to increase your target CPA (compromise on profit margins) if you profit per conversion start
declining while you are attempting to bring the Actual CPA as close as possible to your target CPA. Sometimes your
Actual CPA gets even lower than your target CPA while you are still making incremental profit (as shown in Fig.4
above). In such case you set up new Target CPA which is lower than the actual CPA and then again tweak the
campaigns to determine the most profitable CPA. So you may need to experiment with different Target CPAs
before you can find your maximum profitable CPA.
Explanation of various metrics used in the table above:
1. All the metrics are for a particular ad group in an Adwords campaign.
2. Total clicks, Number of conversions, conversion rate, Max. CPC and Avg. CPC metrics are determined through
Google Adwords reports.
3. Profit Per conversions (before Adwords cost), Target CPA, Actual CPA, Net profit and Profit Per conversion
(including Adwords Cost) metrics have been calculated manually.
4. Max. CPC is the maximum amount you are willing to pay for each click.
5. Avg. CPC is the average amount you pay for each click. Generally avg. CPC is less than the Max. CPC
6. The Actual CPA = Max. CPC/ Conversion Rate
7. Net Profit = [{Number of conversions * Profit Per conversions(before Adwords cost)} – {Total Clicks * Avg. CPC}]
8. Profit per Conversion (including Adwords Cost) = Net Profit / Number of Conversions.
Phase-2: Configuration
In this phase we configure the Google Analytics and Google Adwords accounts to get all the right date for deep analysis
later on. We need data and correct data before we start interpreting analytics reports. Any conclusions based on
erroneous data can never produce optimum results and can even result in monetary loss.
Therefore it is critical that we configure the Google Analytics and Google Adwords accounts correctly. The configuration
process includes:
1. Getting administrative rights
2. Enabling conversion tracking in Google Adwords account
3. Connecting Google Adwords to Google Analytics account.
4. Enabling Auto Tagging in Google Adwords account
5. Enabling E-Commerce Tracking in Google Analytics account
6. Enabling ‘Adwords Cost Source’ settings in Google Analytics account
7. Enabling ‘Data Sharing’ settings in Google Analytics.
8. Importing Google Analytics metrics to Adwords reports.
9. Importing Google Analytics goals and transactions to Adwords conversion tracking.
10. Creating a separate profile for tracking Adwords campaigns in Google Analytics
Getting administrative rightsYou need to get administrative rights on both Google Analytics and Google Adwords account in order to work faster.
Once you become account administrator it will be easy for you to make changes to the account whenever you want.
Otherwise you have to depend on a “third party” every time you choose to make some changes.
Enabling conversion tracking in Google Adwords accountAs a marketer you need to know what happens after a user clicks on your ad. Did he purchase your product? If yes,
then which keyword, ad, ad group or campaign triggered the conversion? By knowing this, you will know which ads,
placements and keywords lead to conversions and are worth bidding on.
The ‘conversion tracking’ feature in Google Adwords can help you in getting this insight. In order to calculate
theROI of your Adwords campaigns you have to enable conversion tracking in your Adwords account. Check out the
following video to learn more about the benefits of conversion tracking and how to enable it in your Adwords account:
Connecting Google Adwords to Google Analytics account
Linking Adwords account to your analytics account help you greatly in understanding what people do after they click on
your ad and land on your website. You can understand the behavior of Adwords visitors in terms of site usage
(pageviews, bounce rate, avg. visit duration etc), goal conversions and e-commerce transactions.
This type of insight helps immensely in optimizing ad copies, keywords and landing pages of an Adwords campaign.
Check out the following video to learn connecting Google Adwords to Google Analytics account:
Enabling ‘Auto Tagging’ in Google Adwords account
Tags are campaign variables which are added to the end of destination URL of an ad. Through campaign variables
you can send information (like source, medium, campaign name, campaign term etc) about your marketing campaign
(like PPC, email marketing, affiliate marketing, display etc) to the Google Analytics server.
Tagging a URL means adding campaign variable(s) to it. You can tag Google Adwords campaigns either manually
or through ‘auto tagging’. However you can tag non-Google Adwords campaigns (like Bing PPC campaigns, Email
marketing campaigns, Affiliate campaigns etc) only manually.
When you choose to tag a URL manually, you manually add following campaign variables to the end of the destination
URL of your ads:
1. utm_source – used to specify traffic source. For example: google, yahoo, facebook, bing etc.
2. utm_medium – used to specify traffic medium. For example: cpc, ppc, banner, email, affiliate etc.
3. utm_campaign- used to specify the name of the campaign. Campaign name can be a product name, promo code
etc.
4. utm_term – used to specify the paid search keyword. For example: event-planning-courses, event-management etc.
5. utm_content- used to specify the ad version. For example: banner-link, text-link etc.
Note: the use of the campaign variables ‘utm_term’ and ‘utm_content’ is optional.
When you choose to ‘auto tag’ a URL then Google automatically ads ‘GCLID’ to the end of the destination URL of an
ad. GCLID stands for ‘Google Click ID’. It is a unique ID used by Google Analytics to track and display Adwords clicks
in your reports. You can see the GCLID in the landing page URLs of your Adwords ads (provided the auto tagging is
enabled).
Example of non-tagged URL: http://www.abc.com
Example of auto-tagged URL: http://www.abc.com?gclid=CLjTpNrg8NIC
Example of manually tagged URL: http://www.abc.com/?utm_source=bing&utm_medium=ppc&utm_term=car-
insurance&utm_content=text-ad&utm_campaign=car-insurance-promo-feb
Note: You should always Google URL builder to manually tag URLs.
Best Practices for Tagging URLs
1. Avoid manually tagging your Adwords URLs. Use auto-tagging instead.
2. Always use Google ULR builder and spreadsheet to tag multiple URLs.
3. Use consistent names and spellings for all of your campaign variables’ values.
4. Use only the campaign variables you need.
Note: When you use ‘auto tagging’, Google automatically tags the campaign source and medium of your AdWords ads
as google / cpc.
Advantage of Auto tagging over manual tagging in case of Google Adwords Campaigns
Google strongly recommends using ‘auto tagging’ for Google Adwords campaigns and there is a strong reason for that.
When you manually tag your adwords URLs, the Adwords reports in Google Analytics show results only by ‘campaign’
and ‘Keywords’. But when you enable ‘auto tagging’, Adwords reports (in Google Analytics) show detailed information
about your Adwords campaigns.
You can then see results by:
1. Campaign
2. Keywords
3. Ad Groups
4. Ad Content
5. Match Type
6. Display URL
7. Destination URL
8. Keywords positions
9. Day parts etc
The other benefit of auto tagging is that it saves time. You don’t need to manually tag each and every destination URL
of your Adwords ads. This is a life saver esp. if your Adwords account is very big.
To enable auto-tagging follow the steps below:
1. Sign in to your Google Adwords account.
2. Click My account tab > Preferences.
3. In the ‘Tracking’ section, click on the ‘Edit’ link
4. Check the ‘Destination URL Auto-tagging’ checkbox.
5. Click on ‘Save changes’ button.
Note: You should not use auto tagging and manual tagging at the same time. This can result in data discrepanciesin
your reports.
Factors which can prevent auto-tagging from working properly and how to test for issues
There are several factors like third party redirects, encoded URLs and server settings which can prevent auto-tagging
from working properly. These factors can cause GCLID parameter to be dropped from the landing page or generate
error pages. Dropped GCLID parameter can cause Google Analytics to treat Google Adwords traffic as organic, direct
or referral traffic instead of paid search traffic.
So you need to make sure that third part redirects or server settings are not preventing your auto tagging from working
properly. You can do this by following the steps below:
Step-1: Add ‘?gclid=test’ to the end of the destination URL of your Adwords Ad. For e.g. http://www.abc.com/?
gclid=test. If glcid=test is not the first parameter, then add ‘&gclid=test’ to the end of the destination URL of your
Adwords Ad. For e.g. http://www.abc.com/?source=google&gclid=test
Step-2: Copy-paste the modified URL into the address bar of your browser window and press enter.
Step-3: If the URL of the resulting page doesn’t display ‘gclid=test’ then auto tagging is not working properly.
Enabling E-Commerce Tracking in Google Analytics account
In order to get ecommerce data (revenue, transactions, average value, e-commerce conversion rate, RPC, ROI and
Margin) for your Adwords campaigns in Google analytics reports you need to enable E-Commerce Tracking in your
Google Analytics account and add e-commerce tracking code to your order confirmation page(s).
You can learn more about enabling and setting up e-commerce tracking from here.
Related Post: How E-Commerce Tracking works in Google Analytics – Ultimate Guide
Enabling ‘Adwords Cost Source’ settings in Google Analytics account
In order to import cost data from Google Adwords into Google Analytics account, you must allow your Google Analytics
account to receive the cost data in the first place.
You can do this by following the steps below:
1. Sign in to your Google Analytics account.
2. Select the account and then the web property that contains the profile you want to edit.
3. Click the ‘Admin’ tab.
4. Click on the profile whose ‘Adwords Cost Source’ settings you want to enable.
5. Click on the ‘Profile Settings’ tab.
6. Under ‘AdWords Cost Source Settings’, check the ‘apply cost sources’ checkbox.
7. Click on the ‘Apply’ button.
Enabling ‘Data Sharing’ settings in Google Analytics
In Google Analytics, your Data Sharing Setting must be set to: “with other Google products only” so that Google
Analytics can share its data with Google Adwords. You can learn more about ‘Data Sharing settings’ from here.
Importing Google Analytics metrics to Adwords reports
Once you have linked Google Adwords and Google Analytics account, you can then add Google Analytics columns to
your Adwords reports:
You can do this by following the steps below:
1. Sign in to your Google Adwords account.
2. Click on the ‘Campaigns’ tab
3. Click on ‘Campaigns’ or ‘Ad Groups’ sub-tab
4. Click on ‘Columns’ drop down button > ‘Customize Columns’
5. Click on ‘Google Analytics’ (as shown in the image above)
6. Click on ‘Add’ or ‘Add all columns’ (as shown in the image above)
7. Click on the ‘Apply’ button
You can now see the Google Analytics metrics in your Adwords reports.
Importing Google Analytics goals and transactions to Adwords conversion tracking
Not every action (conversions) that we want visitors to perform on our website can be tracked by Adwords default
conversion tracking. For example, if you don’t have a Contact Us form with a “Thank You” page on your website, but
have an email link instead which opens up client’s outlook email, then it can’t be tracked by default Adwords Conversion
tracking. To work around this problem you need to track click on the ‘email link’ as Event Goal in Google Analytics and
then import the goal from Google Analytics into Adwords conversion tracking.
Once you have linked the Adwords and analytics accounts, enabled data sharing and auto tagging, you can then import
Google Analytics goals to Adwords conversion tracking by following the steps below:
1. Sign in to your Google Adwords account.
2. Click on ‘Tools and Analysis’ tab > Conversions
3. Click on ‘Campaigns’ or ‘Ad Groups’ sub-tab
4. Click on the “Import from Google Analytics’ button
5. Select the conversions you want to import and then click on the ‘Import’ button
Creating a separate profile for tracking Adwords campaigns in Google Analytics
Filtered profile is a great way to apply advanced customization to a report without the risk of messing up the original
data. Filtered profiles are most useful if your analytics account has got data sampling issues. The data that is
filtered at a profile level is unsampled. For example if you apply the advanced segment ‘paid search traffic’ to the ‘All
Traffic’ report (so say you can determine the ‘e-commerce conversion rate’ of your paid search traffic) then your report
data will be sampled. But if you create a filtered profile which shows only ‘paid search data’ then your report data will be
unsampled.
Note: Data sampling issues are big problem only for high traffic websites (which get more than 10 million
pageviews/month) and can cause highly inaccurate reporting of metrics. Your metrics from ‘conversion rate’, ‘revenue’
to ‘visits’ could be anywhere from 20% to 80% off the mark if you have got data sampling issues.
You should use enterprise level analytics tool like ‘Google Analytics Premium’ to minimize data sampling. But do
remember that even GA premium cannot fully eliminate data sampling. Therefore you have to use filtered profiles
regardless of the analytics tool (GA Standard or GA premium) you use if you have got data sampling issues. To learn
more, check out this post: Google Analytics Data Sampling – Complete Guide
Once you have a separate profile just for tracking Adwords campaigns you can do all type of report customization
without the risking of messing up the original data in the main profile. For example by default Google Analytics group all
Google Search Partners for Adwords (like AOL, ASK, mywebsearch etc) as google/cpc. So you will never know which
Google search partner is actually sending traffic and conversions. You can fix this problem by creating and applying
following two filters one after the other to your Adwords Profile (courtesy of: Brian Clifton).
Once you have applied these filters, wait for few hours and then go to Traffic Sources > Sources > All Traffic Report.
You can now see all the Google search partners which are sending traffic to your website:
Phase-3: Analysis
Once you have configured your Google Analytics and Google Adwords account and have got at least 4 weeks of data in
your reports, you are in a position to do some serious analysis of the Adwords data. You can now analyze Google
Adwords campaigns’ performance both through Google Analytics and Google Adwords reports.
Let us start with Google Adwords reports in Google Analytics:
Adwords Campaigns Report
You can access the Adwords Campaigns report by going to Traffic Sources > Advertising > Adwords > Campaigns
Through this report you can measure the performance of each Adwords campaign (and their ad groups and targeted
keywords) on different types of devices: all devices, non-mobile devices, high-end mobile devices (like smart phones)
and tablets in terms of:
1. Site usage (visits, pages/visit, avg. visit duration etc)
2. Goal Conversions (Goal Conversion Rate, Per visit Goal value, Goal 1 conversion rate etc)
3. E-Commerce (Revenue, Transactions, Average Value, E-Commerce Conversion Rate etc)
4. Clicks (Impressions, Clicks, Cost, CTR, CPC, RPC, ROI etc).
Note: You can click on a campaign name (in the Adwords Campaign report) to check the performance of all the ad
groups in that campaign. You can click on an ad group name to check the performance of all the keywords in that ad
group.
Through the ‘clicks’ tab you can get information about clicks and the keywords spending. Most of you are already
familiar with metrics related to site usage, goal conversions and ecommerce. These metrics are pretty standard and are
available in almost every Google Analytics report. But the metrics related to Adwords Cost data and ROI is unique. So
let us explore these metrics:
Here,
Visits is the number of visits from Google Adwords ads
Impressions is the number of times your Adwords ads were displayed
Clicks is the total number of clicks on your Adwords ads
Data discrepancy between Adwords and Google Analytics reports
Here one thing that you need to keep in mind that the number of clicks on your ads generally don’t match with the
number of visits in your Adwords reports. Following are the reasons for such data discrepancy between Adwords
and Google Analytics reports:
1. Google Adwords track ‘clicks’ whereas Google Analytics track ‘visits’ (or web sessions).
2. A single click on Adwords ad can result in multiple visits.
3. In a single visit a user can click on the same Adwords ad multiple times.
4. Google Adwords can report clicks even if the javascript, cookies or images are turned off by a visitor. Google
Analytics can’t report visits in such case.
5. If the landing page of the Adwords ad doesn’t contain Google Analytics tracking code, then Google Analytics will not
be able to track visits but Google Adwords can still track clicks.
6. Redirects in landing pages may prevent the Google Analytics Tracking code from being executed. In this case
Google Analytics will not be able to track ‘visits’ but Google Adwords can still track ‘clicks’.
7. Google Adwords can filter invalid clicks but Google Analytics can’t filter invalid visits because of such clicks. So
Google analytics will track and report visits even for invalid clicks.
8. Google Analytics treat visits from untagged or improperly tagged Ad URLs as organic visits instead of paid search
visits.
9. Profile filters may remove some of the ‘visits’ data from your Google analytics reports.
10. If visitors bookmark the landing page of your Adwords ad along with the GCLID parameter, then Google Analytics
report visits from such bookmarks as paid search visits instead of direct visits.
Cost is the total costs of clicks on your Adwords ads.
CTR (or Click through Rate) is the number of times your ads were clicked/number of times your ads were displayed. So
CTR= (Clicks/Impressions) * 100
Through CTR you can determine how much visible and convincing your Adwords ad is for targeted keyword and ad
position. You can improve the CTR of your Adwords ad in two ways:
1. Bid for higher ad position (increase your Max. CPC)
2. Write a more convincing ad copy
CPC is the average cost you paid for each click on your ad. CPC = total cost/total clicks
RPC is the average revenue you generated for each click on your ad. RPC = (Total revenue generated through
Adwords ads+ total goal value generated through Adwords ads)/total clicks on the ads.
Note: Your RPC numbers could be all zero in your Adwords reports in Google Analytics if you have not set up Goals
and Goal values and/or you have not enabled ecommerce reporting.
ROI is the Return on Investment of your Adwords campaigns. It is calculated as:
ROI= {(E-Commerce Revenue+ Total Goal Value) – cost}/cost
Margin is the ‘Gross Margin percentage’ of your Adwords campaigns. It is used to estimate the gross profit of the
Adwords campaigns. It is calculated as:
Margin = {(E-Commerce Revenue+ Total Goal Value) – cost}/E-Commerce Revenue
If Gross margin percentage for a campaign is 62% and the revenue generated by the campaign is $50000 then the
estimated gross profit for the campaign would be: $50000 * 62% = $31000
ROI reported by Google Analytics for Adwords campaigns is incorrect as it doesn’t take into account your profit margin.
So the correct ROI would be:
ROI= {(E-Commerce Revenue+ Total Goal Value) * Profit Margin – cost}/cost
ROI of 0% => means no profit, no loss. You spent ‘x’ and earned ‘x’ in revenue.
ROI of 100% => means you spent ‘x’ and earned ‘2x’ in revenue.
ROI of 1000% => means you spent ‘x’ and earned ‘11x’ in revenue.
ROI of -100% => means you spent ‘x’ and earned 0 in revenue.
Important Points about Negative ROI
1. It is common for brand new campaigns/keywords to show negative ROI for first few weeks. Therefore you should
keep this in mind before you pause or delete your negative ROI campaigns/keywords.
2. You can assess keywords’ profitability through RPC and ROI metrics.
3. You should never assess the performance of keywords/campaigns on the basis of few clicks or few days’ worth of
data as some visitors can take several days or weeks before they turn into customers.
4. Your ROI numbers can be all zeros in your Adwords reports in Google Analytics if you have not set up Goals and
Goal values and/or you have not enabled ecommerce reporting.
5. Make sure that your Adwords and Google Analytics accounts are set to the same currency. Otherwise the ROI data
won’t be accurate.
Adwords Keywords Report
You can access this report by clicking on Traffic Sources > Advertising > Adwords > Keywords in Google Analytics.
Through this report you can measure the performance of the Adwords keywords (i.e. the keywords you are bidding on in
Adwords) and ‘Ad Content’ on different types of devices: all devices, non-mobile devices, high-end mobile devices (like
smart phones) and tablets in terms of:
1. Site usage (visits, pages/visit, avg. visit duration etc)
2. Goal Conversions (Goal Conversion Rate, Per visit Goal value, Goal 1 conversion rate etc)
3. E-Commerce (Revenue, Transactions, Average Value, E-Commerce Conversion Rate etc)
4. Clicks (Impressions, Clicks, Cost, CTR, CPC, RPC, ROI etc).
If you are running your Adwords on Google Display network (a network made up of millions of websites which have
partnered with Google to display relevant Adsense ads on their web properties) then the keywords report will show
‘content targeting’ in the keywords column:
Google Analytics group all the keywords which resulted in clicks on your ads (placed on the websites which are part of
Google Display Network) as ‘content targeting’. The best way to measure the performance of the keywords grouped
together as ‘content targeting’ is by selecting ‘placement domain’ as a secondary dimension:
Placement domain is the website where your ads were displayed and clicked. So when you select secondary dimension
as ‘placement domain’ you can determine the performance of your ads on a particular domain.
Adwords Matched Search Queries Report
You can access this report by clicking on Traffic Sources > Advertising > Adwords > Matched Search Queries in Google
Analytics.
Through this report you can measure the performance of Matched search queries (keywords which actually triggered
the ad) and match types (broad match, phrase match and exact match) in terms of:
1. Site usage (visits, pages/visit, avg. visit duration etc)
2. Goal Conversions (Goal Conversion Rate, Per visit Goal value, Goal 1 conversion rate etc)
3. E-Commerce (Revenue, Transactions, Average Value, E-Commerce Conversion Rate etc)
This report becomes super useful when you add ‘keyword’ as secondary dimension. In this way you can determine
which keywords you are bidding on and which are actually triggering the ads:
Adwords Day Parts Report
You can access this report by clicking on Traffic Sources > Advertising > Adwords > Day Parts in Google Analytics.
Through this report you can determine most profitable Hours and Days of the week for your ads and then re-schedule
your ads and adjust your bids accordingly. For example, if an ad generates significant amount of revenue during certain
hours of the day say between 12 pm to 4pm, then you can raise your bids during those times.
Adwords Destination URLs Report
You can access this report by clicking on Traffic Sources > Advertising > Adwords > Destination URLs in Google
Analytics.
Through this report you can measure the performance of your Adwords ads’ landing pages in terms of: site usage, Goal
Conversions, E-Commerce and Clicks. This report becomes super useful when you add ‘Landing page’ as a
secondary dimension to verify whether the destination URL is taking the visitors to the right landing page.
Through this report you can also measure the performance of Ad Distribution Network in in terms of: site usage, Goal
Conversions, E-Commerce and Clicks. You can determine which method of distribution (Google Search Network or
Google Display Network) is more effective.
Adwords Placement Report
You can access this report by clicking on Traffic Sources > Advertising > Adwords > Placement in Google Analytics.
Through this report you can determine how your ads are performing on ‘Managed placements’ and ‘Automatic
Placements’ of Google Display Network. Managed placements are those websites on Google Display Network which
you have manually selected to display your Adwords ads. Automatic placements are those websites on Google Display
Network which have been selected by Google to display your Adwords ads.
Adwords Keyword Positions Reports
You can access this report by clicking on Traffic Sources > Advertising > Adwords > Keywords Positions in Google
Analytics.
Through this report you can determine where your Adwords ads ranked on Google SERP (Search Engine Result Page)
when the visitors clicked on it and what is the impact of the ranking position in terms of site usage, goals and
ecommerce. Through this report you can determine the ranking positions which deliver best performance.
Conversion Metrics used in Google Adwords
There are two types of conversions available in Google Adwords reporting interface:
1) Click Conversion – It is the conversion triggered through a click on an Ad. A click conversion can be Conv. (1 per
click) or Conv. (many per click).
Conv. (1 per click) => one click on an ad resulted in only one conversion.
Conv. (many per click) => one click on an ad resulted in multiple conversions. However these conversions must have
occurred within the next 30 days following the click on the ad.
2) View through Conversion – It is the conversion triggered through an impression (viewing) of a display network
ad that has not been clicked in the last 30 days.
If a user clicks on your ad and purchase an item and signup for a newsletter then:
Conv. (1 per click) = 1
Conv. (many per click) = 2
==================
If a user clicks on your ad and purchase an item then later again come back to your site by clicking on the ad again and
sign up for a newsletter then:
Conv. (1 per click) = 2
Conv. (many per click) = 0
=================
If a user clicks on your ad and purchase items then later again come back to your site directly and sign up for a
newsletter then:
Conv. (1 per click) = 1
Conv. (many per click) = 2
Competitive Metrics used in Google Adwords
Competitive metrics are some of the most useful metrics available in Google Adwords. Understanding of these metrics
is critical in order to optimize Google Adwords campaigns.
Search Impr. Share – It is the search impression share for your ads on the Google Search Network. It is calculated as:
Total Impressions your ads received / estimated number of impressions your ads were eligible to receive on
the Google Search Network
Through this metric you can identify opportunities to get more impressions and clicks if your ads have got low search
impression share. You need to make sure that you keep the search impression share as high as possible.
Search Exact Match IS – It is the search impression share for your ads on the Google Search Network when the
search terms matched the keywords (on which you are bidding) exactly or very closely. It is calculated as:
Total Impressions your ads received / estimated number of impressions your ads were eligible to receive on
the Google Search Network for search terms that exactly (or very closely) matched your keywords
Through this metric you can identify opportunities to get more impressions and clicks if your ads have got low exact
match search impression share. You need to make sure that you keep the exact match impression share as high as
possible.
Search Lost IM Share – It is the search lost impression share. It is the estimated percentage of impressions your ads
didn’t receive on Google Search Network because of poor Ad rank. You need to make sure that you keep this
impression share as low as possible.
Display Impr. Share – It is the impression share of your ads on Google Display Network. It is calculated as:
Total Impressions your ads received / estimated number of impressions your ads were eligible to receive on
the Google Display Network
Through this metric you can identify opportunities to get more impressions and clicks if your ads have got low display
impression share. You need to make sure that you keep the display impression share as high as possible.
Display Lost IS (Rank) – It is the display lost impression share. It is the estimated percentage of impressions your ads
didn’t receive on Google Display Network because of poor Ad rank. You need to make sure that you keep this
impression share as low as possible.
Relative CTR – Through this metric you can get an idea of how your ads are performing on Google Display Network in
comparison to the other ads on the same websites. It is calculated as:
CTR of your ad / average CTR of others ads running on the same websites
A relative CTR of 1x means that the CTR of your Display ad is equal to the average CTR of others ads running on the
same website(s).
Read more: http://www.seotakeaways.com/complete-guide-to-google-adwords-analytics/#ixzz31hTqrMTR
20 KPIs you should monitor in Google Analytics
Posted bydimitriszotoson Tuesday, October 18 at 12:51
to Marketing
15 Comments
A Key Performance Indicator or KPI refers to a set of measurements reflecting the performance orsuccess of an organization in terms of progress of its goals. In this article we present the most important website KPIs from online marketing perspective and we discuss how to monitor them in Google Analytics.Most online marketing professionals, SEO engineers and webmasters have in their daily routine the monitoring, reporting and data analyzing tasks followed by decision making regarding the optimization of the performance of their websites. Within web metrics, charts and pivots lots of information can be found unveiling new ways to optimize their strategy.Nevertheless all these numbers, metrics and statistics can be confusing. Which ratios should be taken into account during the above analysis? Which are the most important stats? Many of these questions will be answered shortly since in the following lines we will discuss the importance of website goals and we will list the most important KPIs that are used to measure the defined targets.
Website Goals & KPIs
Setting specific and measurable goals is a vital stage before defining Key Performance Indicators (KPIs). Depending on its type, a website can have much different goals. Common goals of E-commerce sites are the increase of the number of purchases, the number of items in basket, the average transaction value etc while for content websites common goals are the increase of media consumption, subscribers, video viewers, online game players etc.
KPIs are: Indicators of Success Can be presented through rates Require comparison Depend on the industry and type of website
General KPIs about Website
1. Conversion Rate: This ratio displays how many visitors are converted into desired actions.2. Goals Conversion Rate: Shows how many visitors reached at least one of the goals that you have
setup by using the Google Analytics service.3. Type of Users (user defined): The User defined is a variable that helps you define specific types of
users that have completed a goal or a specific action in the website (pageview, form completion etc).4. Bounce Rate & Time on Site: These are 2 extremely useful KPIs which indicate whether your visitors
find what they are looking for in your website or if they leave your site immediately. This metrics can be found in the Visitors section of Google Analytics, nevertheless it is also very useful to focus on them when you evaluate the various channels/sources of traffic.
5. Type of Sources: This is a complex report which is generated by segmenting the traffic by specific sources and mediums such as Search Engines, Referring sites, Direct, E-mail or custom campaigns. Focus not only on the total number of visitors but also on the quality of the traffic (bounce rate, time on site, transactions etc).
Visibility KPIs
1. Traffic of Non branded keywords: This is the common Keywords Traffic report filtered to excludebrand name combinations.
2. Traffic generated by specific terms: The long or short tail keyword strategy can be evaluated using this segmentation. Usually the keywords traffic report that can be found in Google Analytics returns too many combinations. By using filters you can break down the keyword list and focus on the ones that contain specific terms or you can check for 2 words phrases, 3 words phrases or for terms that satisfy aspecific rule. To generate such a report, use regular expressions in the advanced filter.
3. Bounce rate per keyword: This can be found on the table of keywords traffic report. Focus on the column called “bounce rate” which shows the average bounce rate per keyword.
4. Keyword Ranking: Find your keyword rankings by using the keyword battle tool and then compare the results with the Organic traffic reports of Google Analytics to find out if your keyword selection istargeted and if your SEO strategy is successful. Focus on how much traffic you get from each top
ranking keyword and see if you need to adapt/change your SEO strategy by focusing on more popular or more targeted terms.
5. New Vs Returning Visitors: This metric can give you insights about the loyalty of your audience and show you how many new visitors you attract on your website. Depending on various factors such as industry and website type, it is useful to analyze their behavior. This report can be found under the Visitors section of Google analytics.
Interaction KPIs
1. Social Media Interactions: Monitoring the amount of visitors that interact with your social media profiles (visit them by clicking on the appropriate buttons of your website or like/tweet/share your pages) can be extremely useful. To monitor this you need to use event tracking or virtual pageviews.
2. Media Consumption: This KPI focuses on how users consume the content on the website, how many of them read posts, watch videos, listen to podcasts etc. This report is under the content section but it requires you to setup special tracking mechanisms in cases of video or interactive flash.
3. Contact/Subscribe: Knowing how, when and how many visitors contact the website owners via e-mail, contact forms, live chat etc is extremely useful. In most of the above cases this action can be tracked easily by using goal tracking in the “thank you” pages or event tracking.
Transactional KPIs
1. Cost per Transaction: This metric measures the promotional cost per transaction for specific campaigns (adwords, banners, newsletters etc). It measures how much money you have to spend on each campaign in order to generate one transaction. This is very important when you want to see how to allocate your advertising budget and it is particularly useful in decision making.
2. Average transaction value: This KPI shows the efficiency of the cross selling and up sellingtechniques that you use. The report can be found under the Ecommerce section of Google Analytics.
3. Average items in basket: Similarly to the above this KPI shows how many items are purchased on average in each transaction.
4. Conversion Rate per Medium: This KPI shows the conversion rate of each medium and it is extremely useful to monitor it in order to distinguish your top selling channels. The report can be found under the All Traffic Sources menu by using the “Medium” view option.
Geo Targeting KPIs
1. Transactions distribution per Country: This report provides very useful insights since it allows you to distinguish the nationality of your clients. It can be found under the Visitors Section in the Map Overlay Report. The information is located in the “e-commerce” tab of the previous page and it shows you the transaction distribution by country/territory.
2. Bounce rate distribution per Country: This info can be found on the same map overlay table and it shows the distribution of bounce rate by Country/territory.
3. Traffic Distribution by Country/Territory: This information is provided in the map overlay reportand it can easily be found under the Visitors menu of Google Analytics console.
What are Key performance Indicators? (KPI)Key Performance indicators (KPI) sometimes also referred to as Key Success Indicators (KSI) are a series of defined measures that are commonly used by an organisation to measure progress towards goals.
This helps organisations, departments or teams working on projects understand how they are performing in relation to strategic goals and objectives. KPIs can essentially show a snapshot of progress towards something that can be measured.KPIs can vary between different companies, industries and even projects depending on the performance measures. For example if a technology company’s goal is to have the largest growth in its industry, the main KPI could be the measure of turnover over a defined period of time. In addition KPIs are often the same across industries, for example ‘Cost per Km’ allows companies to the construction Industry to benchmark against their peers.
Successful KPI componentsKPIs can have various components such as volume, cost, time, customer satisfaction and quality – however the main components can be deconstructed as:Key: what is ‘Key’ varies significantly from company to company. This could be the hourly rate charged against the operational hourly cost. This obviously would be key to the success or failure of a company. However, arguably customer satisfaction may or may not be vital to the success of an organisation.Performance: can be evidently measured and quantified. For example sale performance would be a significant performance criterion, with a measurable target.Indicator: is largely related to future performance. For example a company can hold a large amount of data relating to historical sales trends - an indicator would be used to evaluate a variance on future performance.
Key Performance Indicators – a working exampleKPIs are constructed, implemented and recorded based on a number of simple components united for a distinct measurable purpose. For example ‘Body Temperature’ as a KPI would contain the following components.
It’s widely recognised and understood
Everybody measures temperature the same way
Very easy to collect and record
Indicator of the health of the person
Provides historical data for analysis
Provides information for diagnostics – a high temperature needs investigation
With this KPI recorded, alerts when a temperature goes over a threshold can be automated and historic information over time can be used to set those thresholds. The same logic can be applied to companies such as volume of sales per day.
KPIs for BenchmarkingUsing your KPIs for benchmarking is a systematic and logical way of measuring your company performance against others in your industry. They can also be used for internal benchmarking against offices or even individual projects. As KPIs are becoming standard across industries it has become far easier to find and compare your performance both nationally and internationally.
KPIs and balanced scorecardsKPIs make up individual measurements of performance against targets or goals, however to view this performance as part of the overall business performance, we collate those KPIs into groups. For example these could be marketing, sales, operations, customer service.In order to evaluate the impact of each KPI, they are given a weighting out of 100% to the overall performance group total – for this example marketing has 5 KPIs all weighing 20% 5 * 20 = 100%.
The benefits of KPIs for businessThe main benefits for using KPIs to measure business performance are:
It’s widely recognised and understood
Everybody measures temperature the same way
Very easy to collect and record
Indicator of the health of the person
Provides historical data for analysis
Provides information for diagnostics – a high temperature needs investigationLearn more about KPI benefits
Selecting your Key Performance IndicatorsFirstly your KPIs should be as closely aligned to your business goals as possible, and they should be focused on areas within your business that you can control. For example you cannot use the price of oil as a KPI as there is an infinite amount of factors outside of a business control to control the price, even for the producers. However an exposure to oil prices can be controlled so this would be a good KPI to monitor.
How many KPIsOne of the biggest mistakes in introducing KPIs is producing a huge list of all the things you want to measure in your business. What really matters is finding the right KPIs and distributing them to the right people.There have been several inspired theories on the optimal number of KPI’s but in practise 5 – 9 KPIs work well. For example an online marketing manager may use the following KPI set:
Qualified leads per year / month / week
Conversion rate
Cost per lead
Number of website visitors
Returning vs. new visitors
Homepage bounce rate
Setting KPI TargetsWhen creating a KPI target additional factors such as seasonal and external influences must be taken into account. For example a company selling hot tubs would not simply divide the annual sales (with a 10% uplift) and divide this over a 12 month period as the hot tub business is very seasonal. This is where historical trends helps, in investigating historic performance you can create realistic KPI targets.In the absence of historical data companies can adjust the targets to make them more achievable by closely monitoring trends.
Successfully recording KPIsOne of the most common methods of monitoring and recording KPIs, is through the humble spreadsheet, however the very nature of KPI recording, the amount of data recorded and the need to summarise the data across a network of individuals, offices and even countries means the spreadsheet soon displays woeful inadequacies for the task.Online KPI software provides a cost-effective solution to track, manage and analyse your KPI’s. Armed with powerful reporting and analysis tools the solutions offer a KPI best practise system to implement KPIs.
SimpleKPI and implementing your KPI strategySimpleKPI offers a powerful solution to 'spreadsheet farms' and ‘static reports’. It is a comprehensive online solution for KPI reporting, tracking and analysis. It provides a platform to quickly and effectively create and distribute your KPIs and offers a variety of ‘Easy to use’ functions for you to get the most out of your KPI strategy.
KPIs for measuring content marketing ROI
5 Questions to help set, manage and review your content marketing effectivenessAs we accept that our consumers are learning about, and navigating through, more and more information about
our brand, organisation, industries or topic areas as they research online, we’re needing to deploy more
sophisticated strategies in order we can earn attention, and importantly trust. This is what sits behind the drive of
content marketing’s rise to the forefront of the digital marketing agenda.
Content marketing is starting to mature, too. More and more reports, such as this from the Aberdeen Group,
illustrate this, here too.
An easy start-pointBelow is a simple matrix of ideas to help you set the KPIs or metrics based on what we’ve used on different
projects. We’re not saying “this is the way you must do it” or that you need to use all of these KPIs. Instead, we
hope this is a useful framework to help select the best type of KPIs for different markets.
We’ve taken three angles here to illustrate, so we’ve got the full range of measures covered from hard sales vs
softer engagement metrics.
Using these different types of measures is even more important for companies with long purchase or repeat
purchase cycles, such as automotive, furniture or maybe PCs – and certainly for B2B businesses. The longer buy
cycles require the need to demonstrate ongoing engagement.
Commercial measures: These are the harder business or commercial measures and what usually
takes the longest to be demonstrable. These are the measures for the senior managers although
they may well also need to know about Likes! Think audience share, sales, leads or at least clear
indicators from people such satisfaction ratings or % that fed back. Remember that these need to
be incremental and ideally attributable to your content marketing. Dave will show you how to
attribute these using Google Analytics in a separate post.
Tactical measures: These include the views, clicks, interactions with your content – so involves
the social shares such as Likes and Tweets. You might also use link shortening tools to help
measure, at Smart Insights we use PostRank rating and also metrics from Facebook Insights. These
are hard indicators that your content is visible and worth sharing – so very key.
Brand measures: These are easier for bigger brands or where there’s less competition, simply
because the tools seem to work better in that space. Think brand or key-phrase mentions,
sentiment, share of market mentions over competitors and certainly site traffic. These are the
bigger needles to get moving and often require a bit more momentum.
Combining measurements and social media optimisation
As you can see from the table above, content marketing KPIs go hand in hand with social media marketing,
content fuels social media. The two come together when working on social media optimisation (SMO)
which Dave has recently posted on. SMO for me centres on the distribution of social objects and their ability to
rise to the top of any related search query [Dan - I disagree on this - the poll in our post show that most think it's
broader - maximising reach and interaction in social channels to achieve your goals].
Brian Solis talks about SEO + SMO = Amplified Findability in the traditional and social web. I think that’s a great
way to summarise it [Dan – like that although I’d call it Amplified VisibilityFWIW – for me Findability is about
efficient customer journeys on websites – it’s a user-centred design technique, but I guess Brian doesn’t know
about that!).
Since tracking within SMO is also important, how do you do it? At the centre of a SMO programme are social
objects. Social objects represent the content we market via social media – images, videos, blog posts,
comments, status updates, wall posts, and all related activity that creates the potential for online conversations. It
follows then, that the goal of SMO is to measure, monitor and improve the visibility of social objects as a means
to connecting with individuals who are proactively seeking additional information and direction.
Given that social objects are contextualized through keywords, titles, descriptions, and/or tags so the measures
here are not so different to SEO in terms of inbound links, as well as referring web sites where your content, the
social objects, are placed. So you need to develop an analytics dashboard that reviews your effectiveness within
this content eco-system.
Recommended Guide: Guide to Content Marketing ROI
Learn how to use analytics to PROVE the value from your content marketing
Download our Content Marketing ROI Guide.
Actionable analytics for content marketing
Following on from the above table, these measurements are great and you also have to be able to do something
with them. The analytics guru’s like Avinash Kaushik, and of course Dave Chaffey will always talk about
actionable metrics. How might that apply to content marketing, here are a few examples of questions to ask for
which you need to review the analytics to get the answer:
Q1. Which keyphrases related to content are most effective at driving visits and
outcomes? Ensure that you have an idea of what audience personas or segments whom those
keywords relate to as well, so you know who you’re writing content for. Build on the keyphrases
that are most effective. When you identify high bouncing keywords try surveying those users on
exit or placing calls to action directly on the page to ask for feedback, tools like Kampyle can help
with that.
Q2. Which referring partner sites or social networks have helped with link generation
and measurement (for SEO) and the driving of traffic, referenced above as a part of
SMO. Check for traffic volumes from those domains and how those users (segmented by referring
domain) bounce and click through the site – are their needs being met? Of course, you want more
of the traffic that’s generating results and understand how you might also improve journeys for
those that bounce highest, starting with landing pages. From an SEO perspective you should
review the number and quality of links that your content generates using these types of backlink
benchmarking software.
Q3. How does content viewed on click-paths or journeys affect marketing outcomes. This
reviews the value that a user is finding on your web site and whether it’s influencing leads or sales.
In a separate post Dave will show how to use Advanced Segments to precisely show how content is
affecting sales.
Q4. Are we increasing the % of engaged users? Engagement can be short or longer-term – it
might be that someone has viewed more than 3 pages on the site, per session, this is better than
time on site. You can consider improving that by designing site journeys that are for specific
audiences and creating multiple routes to the important content.
Q5. What are the satisfaction ratings for our content? Use different customer feedback
software like 4Q and Kampyle so you get overall ratings of your content and feedback on specific
content. 4Q is great since it shows you what people were looking for against what whether they
were successful and how satisfied.
The general rule of optimisation is to monitor and test and don’t stop! Websites and web based content are not
brochures, they’re never ‘done’. Focus on testing and trying new things where the analytics and customer
feedback data indicates the best opportunity to improve.