to do instead of outdated marketing KPIs?

You can gain real competitive advantage by moving away from traditional KPIs to a deeper understanding of your campaign.

This topic could have been written years ago. But it is important now, as the engagement costs for major advertising channels are increasing, and a volatile economy places a premium on efficiency.

Are you ready to transform the way that you measure your campaigns and marketing? This article will look at the five KPIs that I hear clients referring to and explain.

• Why you should replace your old ones.
• What they should instead analyze
• Why it matters

Bad KPI 1 : Spend

Profit instead of

It’s not that the budget concept is irrelevant, but spending should not be a starting point for campaigns or the goal unless.

• You are just starting out and don’t have any CRM data to refer to.
• You are pursuing scale at the expense of efficiency.

We still receive many requests from companies to “spend this money.”

It’s even more absurd: “We would like to spend x for Google, y for Facebook, and z for LinkedIn.”

It is better to focus on efficiency, regardless of the channel.

Good analytics people will crunch the numbers to tell you what you can spend within your ROI goal, no matter where you spend it.

You can hit growth barriers (and upset your CFO) by referring to spend without tracking the efficiency.

Spending too much money on some channels, and not enough in other channels that generate more revenue is one of the worst things you can do.

When you go for scale, but ignore efficiency, metrics such as conversions, revenue, spending and visitors become more important. CPA and ROAS, (efficiency metrics), will suffer.

Digital marketing has a core principle that says the more conversions, the more costly they are. So you will have to choose whether you want to improve efficiency or drive scale.

Bad KPI 2 : Platform-provided CPA

Use instead:CRM based CPA

If you rely solely on CPAs from Google Ads, Facebook, and LinkedIn, without evaluating the quality of these acquisitions (leads for B2B or purchases for ecommerce), it’s likely that you are spending too much money on the wrong leads.

Note: Google Search Partners, display campaigns and other advertising methods produce a particularly low quality of leads.

Integrate your CRM data instead to understand the cost per CLV (B2B and ecommerce) or cost per Down-Funnel metrics.

B2B sales cycles are long and complex, so this is particularly important.

It’s more important to know what you can afford to spend on opportunities and what you need to pay in order to get them through certain channels than just buying leads.

If the leads you receive are valuable enough, it will make you more willing to pay high CPCs. (Hello, LinkedIn).

Dig deep: 3 Steps for effective PPC Reporting and Analysis

Bad KPI #3: CPA based on clicks

Incrementality-based CPA is a better alternative.

The click-based CPA ignores impression-based campaigns. This could be a YouTube advertisement, a programmatic campaign, or even a billboard that you sponsored near your target location.

True CPA is incrementality based, and implements things such as the halo effects, brand lift tests, geo lift tests, etc.

It is important to be agnostic about impressions vs. clicks, and understand the true impact of any advertising interaction.

It can be a complex process to do this. There are some native tools that you can use, such as Facebook lift tests or Google’s CausalImpact R Package based on Bayesian structural models.

It’s best to determine how much data is needed before you can draw a statistically meaningful conclusion. Then, only run these initiatives at test locations. This way you won’t have to stop entire campaigns as you evaluate their effectiveness.

Bad KPI #4: Average CPA/Average ROI

What you can use instead: Marginal ROAS/Marginal CPA

Marginal CPA is a way to calculate the cost of acquiring marginal returns. This means that you are calculating the return for each conversion and not assuming the same price or the same result for all new clients.

This can be illustrated with a simple example: Imagine you are taking the average CPA of Facebook ads that brought in both expensive and cheap customers. All these customers were worth about the same amount.

You might find that the marginal CPA shows that you acquired a few new customers for $1.50, and others at $8.

It’s better to continue finding customers who are more cost-effective, like the first group. Spend less to reach customers that are more expensive but don’t add any value.

Bad KPI 5 : Impression share is lost due to bidding

Use instead:Impression shares lost to budget

There are two ways to reduce your search campaign costs.

• Drop bids or targets to reduce CPCs.
• The campaign will be forced to shut down for a portion of the day if you lower the daily budget.

If you reduce your bids or target and lose impressions, a CPC that is lower will produce more clicks for the same budget.

I’ve seen bid strategies used by brands with the goal of capturing 90% of impression share (IS), giving Google a green light to charge more.

In these scenarios switching to manual CPC and aiming lower, (thereby losing some share of impressions) instantly tunes performance and efficiency.

If you reduce your budget, it will affect the daily budget of the campaign and shut off. The overall cost and impression share will be lower, but the efficiency will remain the same. Keep budgets high and spend under control using bids and efficiency goals!

When you adopt this “scale-vs.-efficiency” mindset, it has far-reaching consequences.

Imagine you’re a B2B business that has poor performance at weekends. Instead of shutting down weekends, lower bids/targets to make traffic profitable.

Next Steps

Some of them, especially the first two, should be simple to implement immediately. Some of these may require you to consult a trusted resource in analytics to help you create models and integrate data.

By reading this far, however, you have already taken the initial step. You’ve begun to look critically at the standard KPIs which are not helping you optimize the effectiveness your marketing campaigns.

Before you make any changes, ensure that you have the right people in place. People who use the old KPIs as a gauge of your work will not be able to accurately assess the success you achieve.

Digging deeper: Tracking PPC campaigns

The post Search Engine Land : 5 outdated Marketing KPIs you should toss, and what to use instead first appeared on Search Engine.