Key Indicators for Assessing Digital Marketing Effectiveness

Positions, traffic, and leads - that's not all. For some, it will be a revelation that there are quite a few performance indicators. We have collected and described different metrics. First and foremost, this article will be of interest to business owners who want to better understand the intricacies of Internet marketing and more effectively oversee the work of digital specialists.

In this article, you will research key indicators from the digital marketer Julia Goncharenko.

Step 1: The Consumer's Initial Contact with the Ad

Metrics to Track for Paid Advertising, irrespective of user actions, such as impressions or ad placement:

• Reach - the percentage of the target audience that engaged with the ad. Formula: (number of contacts or impressions / total audience) * 100%. Low percentages may necessitate budget adjustments or exploring alternative advertising channels.
• Views - the number of views of an advertising post or banner.
• CPM - Cost Per Thousand Impressions - the cost of 1,000 ad impressions. Formula: (cost of ad placement/number of known or expected views) * 1,000. Useful for evaluating the profitability of banner, media, and targeted advertising.
• CPV - Cost Per View - the cost of one ad view. Not to be confused with the Cost Per Visitor. CPV helps analyze the effectiveness of video ads.

Step 2: The Consumer Visits the Website

Metrics to consider for assessing website traffic:

• Number of unique visitors to the site, determined by web analytics systems based on cookies.

• A number of visits (sessions).

• Share of new visitors - the number of users visiting the site for the first time.

  
  

Evaluation of advertising effectiveness at this stage includes:

• CPC - Cost Per Click - calculated by dividing the cost of placement by the number of clicks.

• CTR - Click Through Rate - Formula: (number of clicks/number of impressions) * 100%. CTR directly impacts CPC in contextual advertising.

• CPV - Cost Per Visitor - calculated as the cost of advertising divided by the number of site visitors attracted.

  
  

It's crucial to analyze each advertising channel separately and equip all site-bound links with UTM tags for accurate tracking.

Step 3: Visitor Interest

What occurs: When a visitor remains on the site for more than a few seconds, it indicates a minimum level of interest in the company and/or product.

The objective at this stage: is to create a positive impression, engage the visitor, and sustain their interest.

Key on-site metrics:

• TSS - Time Spent on Site - the duration of a user's interaction with the site, measured in minutes.

• PPV - Pages Per Visit - an indicator of the depth of view, representing the average number of pages viewed by a unique visitor during one visit.

• BR - Bounce Rate - the percentage of visitors who leave the site without any further interaction. The rate is calculated using the following formula: (number of bounce rate / total number of visits) * 100%.

  
  

The audience's interest is demonstrated by microconversions, small steps taken by users on the path to purchase. Metrics for assessing effectiveness include:

• Clicks on social media buttons
• Free registrations on the site
• Subscriptions to email newsletters
• Clicks to the contact section

Such data is not typically available in standard web analytics reports, so additional goal customization is necessary to track specific page visits or events.

By establishing a composite goal, it becomes possible to observe which portion of users ultimately achieves macro conversions, referring to more significant actions like applications, orders, or calls.

Audience engagement and interest can be evaluated not only by on-site behavior but also across other platforms where the business interacts.

Metrics for email marketing:

• Open Rate - the percentage of opened emails from the total number of delivered emails.
• CTOR - Click-To-Open Rate - the percentage of clicks on links from the number of opened emails.
• UR - Unsubscribe Rate - the proportion of recipients who opt out of receiving further emails.

Examples of metrics for social media and YouTube:

• Love Rate - the level of attraction, calculated as (number of likes/number of subscribers) * 100%.
• Talk Rate - an indicator of sociability, computed as (number of comments/number of followers) * 100%.
• ER - Engagement Rate - the user engagement rate, calculated as (average number of all activities/number of subscribers) * 100%.

It's simpler to gather statistics on social media using specialized services such as Popsters or Livedune.

The metrics Reach and Views, mentioned in the first step, are also useful for evaluating audience engagement in social media. Given the complex algorithms governing feed visibility on social networks, having a subscription does not guarantee views.

Step 4: User Evaluation

The scenario of a website visitor reading an inspiring text and making an immediate purchase is optimistic yet unrealistic. Most impulsive purchases occur offline, and on the vast expanse of the Internet, consumers have ample opportunities to explore reviews and competitive offers.

What occurs: When a visitor begins to search for additional information about the product, service, or company, the goal is to assess the risk of losing them to competitors.

The following metrics prove valuable in this context:

• Mentions - the number of brand mentions on other sites.
• Net Sentiments - the difference between positive and negative mentions.
• NSR - Net Sentiments Rate - the share of net mentions, calculated as (Net Sentiments / Mentions) * 100%. Negative NSR values necessitate reputation management efforts.
• SOC - Share Of Conversation (Buzz, Voice) - the share of mentions compared to one or more competitors. The index can be calculated by taking the brand's Mentions, dividing it by the competitors' Mentions, and multiplying the result by 100%.

Step 5: User Submits a Request

What occurs: When a user intends to become a customer, they leave a request, either placing an order for a call or purchasing a product in an online store.

The goal at this stage: is to generate as many leads as possible.

Relevant metrics include:

• Orders - the number of orders placed but not yet paid for.
• LPO - Leads Generated Per Offer - the number of leads generated by a specific offer, providing insights into the effectiveness of advertising campaigns.
• CPO - Cost Per Order - the average cost of an order received, calculated by dividing advertising costs by the number of orders placed.

The percentage of abandoned carts serves as a crucial indicator in e-commerce. Setting up a composite target in Metrics and Analytics is necessary to determine this figure. Research suggests that approximately 70% of online shopping carts remain abandoned, with unexpected shipping costs and compulsory site registration being the primary reasons. Poor usability can also contribute to cart abandonment.

Step 6: Potential Client Transforms into a Customer

What happens: The user progresses from being a potential customer to making a purchase, transitioning into a bona fide customer. The goal at this stage: is to close the maximum number of transactions with the highest average purchase value, thus beginning to offset advertising costs.

List of metrics indicating sales success/failure:

• Sales - the number of completed sales (closed deals).
• LCR (Lead-Close Rate or Lead Conversion Rate) - the closing ratio, calculated as (Sales / Orders) * 100%. This metric evaluates the performance of managers involved in processing online orders.
• CPS - Cost Per Sale - the cost of a single paid product or service order, calculated similarly to CPO by dividing advertising costs by the number of orders.
• AOV - Average Order Value - the average purchase value, guiding pricing decisions and aiding in adjusting advertising costs, calculated as total revenue divided by the number of orders.

Statistics on financial indicators can be acquired through Analytics (with enabled e-commerce tracking) and CRM systems.

Step 7: One-Time Customer Transforms into a Loyal Customer

While many consider a sale the final step in the funnel, this perspective is flawed for most industries, excluding situational services. Retaining an existing customer and encouraging repeat purchases is typically more cost-effective than acquiring new customers.

What occurs: A satisfied customer decides to make a repeat purchase.

The goal at this stage: is to retain as many customers as possible.

The effectiveness of the repeat sales system can be evaluated using the following metrics:

• CRR - Customer Retention Rate - calculated as ((E - N) / S) * 100%, where E is the number of customers at the end of a specific period, N is the number of new customers acquired during that period, and S is the number of customers at the beginning of the period.
• PF - Purchase Frequency - calculated by dividing the total number of orders by the number of customers.
• OGA - Order Gap Analysis - the average time interval between user purchases, calculated as the number of days divided by PF for a specific period, aiding in planning email newsletters and setting up remarketing and retargeting strategies.
• CCR - Customer Churn Rate - calculated by dividing the number of departed customers by the total number of customers and multiplying the result by 100%.
• RPR - Repeat Purchase Rate - the percentage of customers who made 2+ purchases, calculated as (number of customers with repeat sales / total number of customers) * 100%. This metric aids in the development of loyalty programs.

The above metrics can be computed independently in Excel after uploading data from the CRM system.

Step 8: Loyal Customer Advocacy

The ideal customer is not merely one who buys frequently or in large quantities, but also one who passionately recommends the product to friends and family, and writes positively about the company on social networks and blogs.

What happens: The customer experiences a 'wow' effect and eagerly shares their satisfaction with the world. The goal at this stage is to measure loyalty and draw conclusions about the overall effectiveness of the Internet marketing strategy.

All the metrics listed in step 4 - "User Thinking" - remain relevant here, along with the following additions:

• BER - Brand Evangelists Rate - the proportion of brand advocates among the total number of subscribers, calculated as (number of brand advocates / total number of subscribers) * 100%. This rate quantifies word-of-mouth marketing.
• Passion - the average number of mentions made by one author, providing insights into the level of interest in a particular product or company. It can be calculated based on all mentions or using the formula: Net Sentiments / Brand Evangelists.
• NPS - Net Promoter Score, an index of customer loyalty, calculated as the ratio of the share of promoters to detractors. It requires surveying consumers and asking, "How likely are you to recommend the product/service/company?"
• CRV - Customer Referral Value - the monetary value earned or saved through customer referrals. Setting up a referral system and tracking referrals with UTM tags and promo codes is necessary to compute this.

Key Performance Indicators (KPIs) for Business

While we have detailed numerous micro and macro indicators, not all of them are suitable as KPIs for business. An entrepreneur is seldom concerned with the number of VKontakte subscribers, the cost per click in Direkt, or the depth of browsing on a website. Most of the metrics from the previous sections are relevant for monitoring individual Internet marketing specialists.

What to consider as KPIs for business:

• CARC - Customer Acquisition and Retention Cost - the total amount spent on acquiring and retaining customers, calculated as costs divided by the number of paying customers, incorporating advertising costs, incentives, and management expenses.
• Margin-Adjusted Revenue - the average profit per client per month, after adjusting for margins.
• Time to pay back CARC - the duration required to recoup the amount invested in acquiring and retaining a client, calculated as CARC divided by Margin-Adjusted Revenue.
• LTV - Lifetime Value - the total profit from one client throughout the entire period of cooperation, represented as the average profit from one sale multiplied by the average number of monthly sales and the average duration of the client relationship in months.
• ROMI - Return On Marketing Investment - a metric assessing the return on marketing investment, calculated as LTV divided by CARC multiplied by 100%.

These indicators enable the evaluation of the effectiveness of Internet marketing from a comprehensive and long-term perspective.