Digital Marketing Metrics & KPI's Explained (With Examples)
Summary
TLDRThis video script offers an insightful guide to core digital marketing metrics essential for business growth. It explains the significance of CPA and LTV, emphasizing their balance for profitable customer acquisition. The script delves into website metrics, highlighting the importance of traffic, bounce rate, session duration, and conversion rate. It also covers ad and social media metrics, such as impressions, CTR, frequency, and CPC, advocating a holistic approach to assess and improve digital marketing effectiveness.
Takeaways
- đ Understanding core digital marketing metrics is essential for business growth and improving digital marketing campaign results.
- đ Metrics vary based on business type and goals; for e-commerce, it's different from lead generation businesses where conversions happen offline.
- đ Business performance metrics, specifically CPA (Cost Per Acquisition) and LTV (Lifetime Customer Value), are critical for assessing marketing effectiveness and profitability.
- đ° CPA measures how much it costs to acquire a new customer, and it should be proportionate to the LTV, which is the total amount a customer spends over their lifetime with a business.
- đïž Increasing LTV involves strategies to encourage customers to buy more frequently or in higher amounts, while improving marketing performance aims to reduce customer acquisition costs.
- â ïž A high CPA compared to LTV signals trouble and requires attention to optimize marketing strategies.
- đ Website metrics are crucial for online businesses, with a focus on the buyer journey and marketing funnel, starting with awareness and website traffic.
- đ Key website metrics include sessions, unique visitors, bounce rate, average session duration, and conversion rate, indicating user engagement and effectiveness of the marketing funnel.
- đ Conversion rate should be tracked for different goals or paths, such as contact forms or demo sign-ups, reflecting the value and intent of different user actions.
- đŻ Ad and social media metrics, such as impressions, reach, CTR (Click-Through Rate), frequency, and CPC (Cost Per Click), provide insights into ad performance and audience engagement.
- đ« It's a mistake to view metrics in isolation; a holistic approach is necessary to understand the effectiveness of digital marketing efforts and identify areas for improvement.
- đ ïž Optimization of landing pages and offers is vital for converting clicks into customers, especially when the right traffic is being driven to the website.
Q & A
What are the core digital marketing metrics discussed in the video?
-The video discusses three core categories of digital marketing metrics: business performance metrics, website metrics, and metrics from social media channels, ad platforms, and search consoles.
What does CPA stand for and what does it measure?
-CPA stands for Cost Per Acquisition and it measures the average amount spent to acquire a new customer.
What is LTV and why is it important in relation to CPA?
-LTV stands for Lifetime Customer Value, which is the average total amount of money a customer spends with a business over their lifetime. It's important because it should be directly proportionate to the CPA to ensure profitable business growth.
How can a business increase its Lifetime Customer Value (LTV)?
-A business can increase its LTV by getting customers to buy more often, in higher amounts, or by improving the quality of the product or service to encourage repeat purchases.
What are the two main website traffic metrics in Google Analytics?
-The two main website traffic metrics in Google Analytics are sessions and unique visitors.
What does a high bounce rate on a website indicate?
-A high bounce rate indicates that a large percentage of visitors are leaving the website without taking any further action, suggesting a lack of engagement with the website's content.
Why is session duration an important metric for website owners?
-Session duration is important because it gives an indication of how engaged potential customers are with the content on the website. Longer sessions may indicate more interest and potential for conversion.
What is the difference between an impression and reach in the context of social media and ad platforms?
-Impressions count the total number of times an ad or post has been seen, including multiple views by the same person. Reach shows the number of unique individuals who have seen the ad or post.
What does CTR stand for and what does it represent?
-CTR stands for Click-Through Rate, which represents the percentage of people who have seen an ad and then clicked on it.
Why is it important to consider multiple metrics when evaluating the success of a digital marketing campaign?
-It's important to consider multiple metrics to get a holistic view of the campaign's performance. Focusing on a single metric, like reducing CPC, can lead to overlooking other critical aspects of the campaign that may affect overall success, such as conversion rates or the quality of acquired customers.
What action should a business take if they have a high click-through rate but low conversions?
-If a business has a high CTR but low conversions, they should review their landing page optimization and the positioning of their offer to ensure they are compelling and relevant to the audience.
How can a business determine if their digital marketing efforts are lacking?
-A business can determine if their digital marketing efforts are lacking by analyzing the relationship between various metrics, such as high click-through rates with low conversions, which may indicate issues with ad targeting or landing page effectiveness.
Outlines
đ Understanding Core Digital Marketing Metrics
This paragraph introduces the importance of understanding digital marketing metrics for business growth. The speaker emphasizes the need to know core metrics tailored to the type of business, such as e-commerce or lead generation, and how they align with business goals. The focus is on 'metrics' as a variable that changes based on the business's objectives. The speaker promises to break down these metrics into three categories: business performance metrics, website metrics, and metrics from social media and search platforms, starting with the critical business performance metrics like CPA (Cost Per Acquisition) and LTV (Lifetime Customer Value).
đïž Key Business Performance Metrics: CPA and LTV
The speaker explains the significance of CPA and LTV for any business running digital marketing campaigns. CPA is the average cost to acquire a new customer, which could be high but should be proportionate to the LTV. LTV represents the total amount a customer is expected to spend with a business over their lifetime, which can be estimated based on the business model and industry benchmarks. The speaker advises that if CPA exceeds LTV, the business model may be flawed. They also suggest asking two key questions to improve marketing performance: increasing customer lifetime value and reducing customer acquisition costs, with a caution about the risk of acquiring customers at a loss without a proven business model.
đ Tracking Website Metrics for Digital Success
This paragraph delves into the importance of website metrics in the digital marketing journey. The speaker discusses the buyer journey stages and the metrics to track at each stage, starting with website traffic, including sessions and unique visitors, which indicate how many individuals have visited the site. They also cover bounce rate and average session duration, which provide insights into visitor engagement with the website's content. The speaker notes the importance of conversion rate, which can vary based on different goals or paths a visitor might take, such as filling out a contact form or booking a demo. The paragraph concludes with a mention of other visitor analytics tools for deeper insights and the importance of setting up conversion goals.
đ Analyzing Ad and Social Media Metrics
The speaker discusses various metrics related to ad and social media platforms, starting with 'impressions' and 'reach', which indicate the total number of times an ad or post has been seen and the number of unique individuals who have seen it. They explain 'click-through rate (CTR)', which shows the percentage of people who clicked on an ad or post, and note that CTR can include clicks to the profile or comments, suggesting the use of custom metrics to focus on link clicks only. The paragraph also touches on 'frequency', which shows how often an individual sees an ad, and 'cost per click (CPC)', which indicates the cost of acquiring a click. The speaker warns against viewing these metrics in isolation and emphasizes the need for a holistic approach to identify bottlenecks in the marketing funnel.
đ Conclusion: Holistic Approach to Digital Marketing Metrics
In the concluding paragraph, the speaker summarizes the importance of a holistic approach to digital marketing metrics, stressing that no metric should be considered in isolation. They highlight the need to understand where the digital marketing efforts may be lacking and to identify potential bottlenecks in the marketing funnel. The speaker also encourages viewers to subscribe for more digital marketing training and hints at an upcoming video focusing on reducing cost per click and improving marketing metrics.
Mindmap
Keywords
đĄDigital Marketing Metrics
đĄKPIs (Key Performance Indicators)
đĄBusiness Performance Metrics
đĄCost Per Acquisition (CPA)
đĄLifetime Customer Value (LTV)
đĄWebsite Metrics
đĄBounce Rate
đĄConversion Rate
đĄAd Metrics
đĄClick-Through Rate (CTR)
đĄCost Per Click (CPC)
Highlights
Understanding core digital marketing metrics is essential for business growth.
Metrics vary based on business type, such as e-commerce or lead generation.
Business performance metrics are crucial for digital marketing success.
Cost Per Acquisition (CPA) measures the average spend to acquire a new customer.
Lifetime Customer Value (LTV) is the total amount a customer spends with a business over time.
CPA should be proportionate to LTV for sustainable business growth.
Increasing LTV and improving marketing performance are key business goals.
Website metrics are vital for tracking the effectiveness of digital marketing.
Sessions and unique visitors are primary metrics for website traffic.
Bounce rate and session duration indicate visitor engagement with website content.
Conversion rate is a critical metric for measuring the success of conversion goals.
Ad and social media metrics provide insights into the performance of marketing campaigns.
Impressions and reach measure the visibility of ads or posts to audiences.
Click-Through Rate (CTR) indicates the effectiveness of ads or posts in driving clicks.
Frequency shows how often individuals are exposed to ads.
Cost Per Click (CPC) measures the cost of acquiring a click through an ad.
Metrics should not be viewed in isolation but considered holistically.
High CTR and low conversion may indicate issues with ad targeting or landing page optimization.
Creating an irresistible offer can help stand out in a crowded market.
Transcripts
let's be honest listening to a digital
marketer talk about metrics and kpis can
be a bit like listening to somebody
talking a completely foreign language do
you speak any english but in this video
i'm going to be telling you the core
digital marketing metrics that you need
to know about to really help your
business thrive and most importantly
what you can start doing with those
metrics to improving the results you are
getting from your digital marketing
campaigns so let's get straight into it
so the first thing to know about metrics
is that it's going to vary depending on
the type of business you're in for
example whether you're in an e-commerce
business or whether you have a lead
generation business where your goal is
to generate leads and the conversion
then happens offline over the phone
through invoicing or whatever it is the
metrics that you're tracking are also
going to vary depending on your business
goals and objectives and what i'm going
to be going through today is by no means
going to be an exhaustive list this is
really just designed to give you an
understanding of some of the core
metrics that you need to be tracking
that are really going to help you have
an impact on your digital marketing
efforts so i'm going to break these down
into three core categories the first one
we're going to be talking about and
probably the most important of all of
these are your business performance
metrics the second one is going to be
your website metrics and then third will
come onto platforms used by social media
channels ad platforms and search
consoles so let's start with the two
business performance metrics that are
absolutely critical to any business
owner running a digital marketing
campaign whether you're an e-commerce or
have a lead generation business those
two metrics are your cpa and your ltv
cpa stands for your cost per acquisition
in a nutshell this is how much on
average you have to spend to acquire a
new customer so let's say you've spent 2
000 pounds on marketing so far and
you've generated tons and tons of leads
but you've only had one of those leads
turn into a sale that means your cost
per acquisition would be two thousand
pounds but if you're an e-commerce store
on the other hand and you're selling
products online let's say you'd spent
500 pounds on advertising and you've had
thousands of clicks to your website but
again only one person has bought that
would again mean that your cost per
acquisition is 500 pounds now you may be
thinking that they seem like really high
cost per acquisitions to have however
the cost per acquisition should be
directly proportionate to your ltv which
is your lifetime customer value in a
nutshell this is an average of the total
amount of money that a typical or
average customer would spend with you
over the lifetime of them doing business
with you if you're a brand new business
or startup it might be difficult for you
to know exactly what your lifetime value
is going to be but your business model
will obviously have an impact on that
for example if you're selling a product
which is literally a one-off purchase
and people aren't likely to ever need to
buy from you again your lifetime value
is likely just going to be the cost of
your product or service if on the other
hand you're selling let's say a
subscription service then maybe you'll
want to look at the typical churn rates
or typical lifespans of a customer in
your industry to get a rough estimation
of how long customers typically stay in
your industry and then work out your
monthly fee times the average duration
that a customer stays so let's say you
had a subscription of 10 pounds a month
and you found that for businesses in
your industry the average lifespan of a
customer is 12 months that would make
your average lifetime customer value or
your expected customer value in this
case around 120 pounds now obviously if
you find that your cost per acquisition
exceeds your average lifetime customer
value well you're in trouble and this is
why these two metrics are so important
because these are the main things that
are going to help your business grow and
the metrics that you need to be
absolutely obsessing over to grow your
business profitably so there's really
two questions you should be asking
yourself constantly as a business owner
or as a marketer for a business the
first question is how do we increase our
lifetime customer value in other words
how do we get our customers to either
buy from us more often or in higher
amount the second question you want to
be asking yourself is how do we improve
our marketing performance so that we are
spending less to acquire each customer
however just a caveat here if you are
confident about the lifetime customer
value and you know that a lot of the
customers that buy from you as a one-off
will turn into repeat buyers you may
even be able to afford to acquire
customers at a loss because you know
that you make your profits on the back
end however this can be an incredibly
risky tactic if you don't already have a
proven business model and you don't know
what percentages of your buyers are
actually turning into repeat buyers okay
so the next thing we need to look at is
your website metrics because if you have
any sort of online presence or your
business is operating in the digital age
your website is going to be the hub of
where those leads or purchases come from
and really the easiest way to do this is
just to break these metrics down in the
different stages of the buyer journey or
even the marketing funnel so the first
thing we want to think about is
awareness so how are people finding us
and how many people are actually finding
us the easiest metric to track of this
is your website traffic now if you're
using a tool like google analytics and
if you're not then i highly recommend
you get that set up the two main traffic
related metrics you're going to see in
analytics primarily are your sessions
and also your unique visitors so just to
differentiate what these two mean your
sessions are ultimately the total amount
of times a new session has started on
your website now by default sessions do
reset after somebody's been on your
website for a certain amount of time so
multiple sessions could even come from
one individual your unique visitors on
the other hand gives you a much better
idea as to how many individuals have
been on your website so this is a good
metric to track in terms of how
effective you are at actually generating
that awareness and bringing visitors and
potential customers to your website the
next things that you'll want to start
tracking here are things like your
bounce rate your average session
duration because this will give you a
good indication of how engaged potential
customers or visitors to your website
are with the content that is on your
website your bounce rate is effectively
showing you what percentage of visitors
are leaving your website without taking
any further action this can be clicking
a button to go onto another page filling
out a contact form if they haven't taken
any interactions on your website that is
going to class as a bounce so if you
have a very very high bounce rate this
is an indication that the people coming
to your website just aren't resonating
with the content on it maybe they're not
seeing what they want to see on there or
maybe your website is just boring them
that's worth noting here for things like
session duration or time on page google
analytics can only record the session
duration of the previously viewed page
on your website so if somebody hasn't
actually viewed more than one page on
your website google won't be able to
tell you the session duration of those
visits now there are a number of other
visitor analytics and behavior tools
that you can use things like hot jar and
lucky orange that will give you much
deeper insights into how users are
actually interacting with your website
but that's outside of the scope of this
video now finally one of the most
important metrics on your website to
track is going to be your conversion
rate and it's important to note with
conversion rate this can be broken down
by the different goals or even
conversion paths that somebody can take
to get in touch with you so the best way
to think about this is let's say for
example you're selling a software
product and you have a contact form on
your website but then you also have a
form where people can sign up and book a
demo
they would be two different conversion
goals that you would want to track and
in terms of how valuable they are to you
as a business that's something that
you'll need to figure out internally
maybe it's that people booking a demo
they're probably showing a higher level
of intent than somebody contacting you
but that's really for you to work out
and explore as a business the most
important thing here is that you are
setting up the different conversion
goals and different paths that people
can take to actually
sign up as a potential lead for your
business if on the other hand you're
selling online and you're an e-commerce
business then you simply need to enable
e-commerce tracking in your google
analytics account and that will then
allow you to track your conversions as
the people who have bought something on
your website i'm going to link to some
resources in the descriptions below this
video that'll walk you through how to
configure your google analytics account
how to set up ecommerce tracking and how
to set up conversion goals as well now
the final thing we need to talk about
here are things like your ad metrics
your social media metrics and that kind
of thing now there are absolutely tons
of different metrics available on these
platforms but i'm going to give you and
go through the most common ones that
you'll hear talked about and what impact
they actually have on your marketing so
one of the first ones you may have seen
or heard about is impressions this is
effectively the total amount of people
who have seen a post on social media who
have seen an organic listing in search
engines or who have seen your ad on one
of the ad platforms however this
impression count will also go up even if
the same person sees your ad more than
one so this is literally the total
amount of times your listing your ad
your post has been seen regardless of
whether or not it's by the same person
reach on the other hand is showing you
how many individuals have seen that
postal listing now another metric you'll
see a lot is your ctr this is your
click-through rate and in a nutshell
this is showing you out of the people
who have seen your ad what percentage of
them have actually clicked on it now ctr
can be a good indication as to how
effective your ad or your post is to the
particular audience that you are showing
it to it's also worth bearing in mind
with ctr if you're running ads on social
media or you're doing social or you're
monitoring the analytics of your social
media posts your ctr and click-through
rate can include clicks through to your
profile or even clicks into things like
the comment section of a particular post
or ad so one thing you can do on a lot
of these platforms is explore some
custom metrics and you can make sure
that you have the ctr for link clicks
only what this means is that it will
show you what's the click-through rate
for people actually clicking through to
the link in your post or your ad another
metric that can be important especially
if you're running paid ads is the
frequency what frequency means is how
often are people seeing your ads this
can become especially important when
you're running things on um social media
platforms or if you're running youtube
ads for example because it will give you
an indication of you know how many times
is one person seeing your ad so if you
see an average frequency of 15 that
means on average people are seeing your
ad in their feed 15 times now there's
not necessarily any right or wrong
answer to what the frequency should be
and this is really going to vary
depending on the type of business you're
in for example if you're selling in the
b2b space and you have a quite long
buying cycle you may want that frequency
to actually be higher because there may
be more consideration involved in that
purchase but it's also worth bearing in
mind that if they're seeing the same ad
over and over again you may end up
annoying people and actually having the
opposite effect so if anything it's good
to refresh your creatives refresh your
ads that you're running to make sure
that this frequency is kept relatively
low now one of the most common metrics
you'll hear about when it comes to
running paid advertising is your cpc
your cpc stands for your cost per click
i actually did another video on this
recently that breaks this down in much
more detail so i'm going to link to it
in the video somewhere up here but in a
nutshell this is just giving you an
indication of how much you're spending
to get a click it's also worth noting
that much like your ctr if you're
running ads on any social platforms your
cost per click will also be broken down
by overall clicks and then you'll have a
separate cost per click for link clicks
and i would say that if you're running
ads to your website you really want to
be looking at your cost per click per
link clicks because that's going to give
you an indication of how much is it
costing you to actually get someone to
click through to your website now one of
the most important things to remember
one of the biggest mistakes that i see
people making when it comes to looking
at their metrics is that none of these
metrics should be viewed in isolation
what i mean by that is you shouldn't go
on a on a mad mission to try and reduce
your cost per click forgetting about all
of your other metrics because what
you'll find in some campaigns is that
sometimes the campaigns of the higher
cost per clicks can actually have a much
lower cost per acquisition whereas
campaigns with a low cost per click can
have a much higher cost per acquisition
because remember just because you
brought somebody through to your website
that doesn't mean you've bought the
right person through it can be very easy
to get clicks from the wrong people but
getting clicks from the right people is
a whole other ballgame so you need to
look at these metrics and be measuring
these metrics in a holistic approach and
then trying to paint a picture of where
your digital marketing efforts are
lacking and on that note it's also a
very good way of getting signs as to
what may be broken or where the
bottlenecks may be in your digital
marketing funnel or with your business
for example if you have an amazing
click-through rate and you're getting
loads of clicks through to your website
for a very low cost per click but then
you have very very low conversions and
nobody is signing up or buying this will
generally mean one of two things either
your ad itself or the targeting was way
too vague and way too broad and you're
just getting the wrong people clicking
or people just clicking out of curiosity
because they don't really understand
what your ad is about so the people
coming through to your website we're
never going to be people that buy from
you or if your ad is very specific and
you've got the right audience coming
through then what it probably indicates
if you're not getting conversions is
that your landing page simply isn't
optimized
for conversions i'm going to link to a
blog below this video that gives you 16
ways to significantly increase your
website conversion rate and turn more of
those clicks into paying customers it
might also be that the offer that you
have on your website whether that be an
offer to book a demo whether that be an
offer of a product whether it be an
offer to book a call with you or to sign
up for something the offer just isn't
positioned in a way that's compelling
enough for you to stand out from the
noise so if that's the case i'm also
going to be linking to a video again
i'll link it up here somewhere i'll put
it down in the comments which will go
through how to create a truly
irresistible offer for your business but
again bear in mind this is only going to
work if you first bring the right
traffic and the right visitors through
to your website so there you have it
guys i really hope that videos helped
and if you want more training like this
on digital marketing to really skyrocket
the results in your business be sure to
subscribe to the channel i've got
another video coming up next which will
dive into your cost per click and how
you can start reducing that and
affecting those metrics i'll see you
there
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