Digital Marketing Metrics & KPI's Explained (With Examples)

Summary

This 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

• 📈 Understanding core digital marketing metrics is essential for business growth and improving digital marketing campaign results.
• 🔑 Metrics vary based on business type and goals; for e-commerce, it's different from lead generation businesses where conversions happen offline.
• 📊 Business performance metrics, specifically CPA (Cost Per Acquisition) and LTV (Lifetime Customer Value), are critical for assessing marketing effectiveness and profitability.
• 💰 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.
• 🛍️ 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.
• ⚠️ A high CPA compared to LTV signals trouble and requires attention to optimize marketing strategies.
• 🌐 Website metrics are crucial for online businesses, with a focus on the buyer journey and marketing funnel, starting with awareness and website traffic.
• 📊 Key website metrics include sessions, unique visitors, bounce rate, average session duration, and conversion rate, indicating user engagement and effectiveness of the marketing funnel.
• 🔗 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.
• 🎯 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.
• 🚫 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.
• 🛠️ 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

00:00

📈 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).

05:01

🛍️ 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.

10:01

🌐 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.

15:04

📊 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.

🚀 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.

Keywords

💡Digital Marketing Metrics

Digital marketing metrics are quantitative measures used to track and analyze the performance of marketing strategies and campaigns in the digital space. They are essential for understanding how well your business is engaging with its audience online. In the video, the speaker emphasizes the importance of these metrics for improving the results from digital marketing campaigns and provides examples of how they can be used to assess business performance.

💡KPIs (Key Performance Indicators)

KPIs are specific metrics that businesses use to measure the success of their operations and strategies. They provide a clear way to evaluate progress toward business goals. The video script mentions KPIs in the context of digital marketing, suggesting that understanding these indicators is crucial for businesses to thrive in the digital landscape.

💡Business Performance Metrics

Business performance metrics are the quantitative measures that assess how well a business is achieving its objectives. In the video, the speaker breaks down these metrics into categories such as CPA (Cost Per Acquisition) and LTV (Lifetime Customer Value), which are critical for evaluating the success of digital marketing efforts and ensuring profitable growth.

💡Cost Per Acquisition (CPA)

CPA is the cost associated with acquiring a new customer, calculated by dividing the total marketing spend by the number of new customers acquired. It is highlighted in the script as a critical metric for businesses to monitor, as it helps determine the efficiency of marketing spend and is directly related to profitability.

💡Lifetime Customer Value (LTV)

LTV represents the total amount of revenue a business can expect to generate from a single customer over the course of their relationship. The script explains that LTV is essential for understanding the long-term profitability of acquiring new customers and should be considered in relation to CPA.

💡Website Metrics

Website metrics are the data points that measure the performance of a website, including user engagement and conversion rates. The video discusses several website metrics such as sessions, unique visitors, bounce rate, and conversion rate, which are vital for understanding how effectively a website is driving business results.

💡Bounce Rate

Bounce rate is the percentage of visitors who leave a website after viewing only one page and not interacting further. It is used as an indicator of how engaging the website content is. In the script, a high bounce rate suggests that the website content may not resonate with visitors, indicating a need for improvement.

💡Conversion Rate

Conversion rate measures the percentage of website visitors who take a desired action, such as making a purchase or filling out a contact form. The video emphasizes the importance of tracking conversion rates for different goals or paths on a website to assess the effectiveness of digital marketing strategies.

💡Ad Metrics

Ad metrics are the performance indicators used to evaluate the success of advertising campaigns. The script mentions several ad metrics, including impressions, reach, CTR (Click-Through Rate), and CPC (Cost Per Click), which are crucial for understanding the impact of advertising efforts on audience engagement and sales.

💡Click-Through Rate (CTR)

CTR is the ratio of users who click on a specific link to the number of total users who view a page, email, or advertisement. It is used to measure the success of an online advertising campaign for a particular website as well as the effectiveness of email campaigns. The video script uses CTR as an example to illustrate how engaging an ad or post is to its audience.

💡Cost Per Click (CPC)

CPC is the amount spent on advertising to gain one click on a link. It is a critical metric for paid advertising campaigns, as it helps businesses understand the cost of driving traffic to their website. The script advises marketers to focus on CPC for link clicks to accurately assess the cost of acquiring potential customers.

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