Marketing terminology can be challenging to understand, but knowing the true definition of marketing metrics and terms is crucial for developing successful marketing campaigns and ensuring that you are meeting intended business objectives. Key marketing measurement terms and metrics include KPIs, impressions, reach, frequency, CTR and CPC. This crash course marketing metrics guide will help prepare you to ask the right questions and make better decisions in your next meeting.
What is a KPI?
Everything starts with KPIs or Key Performance Indicators. This is the metric that measures the performance of your company and the effectiveness of your marketing. KPIs can look different for every business. KPIs can also vary based on the objective of the campaigns. Here’s a quick introduction and explanation of some of the primary KPIs that are used in marketing.
In plain English, an impression is the total number of times an ad has been seen on a platform. This is a valuable metric for all campaigns but will be the most useful for campaigns that focus on spreading brand awareness.
Slightly different from impressions, reach is the total number of unique people that have seen an ad. This might seem the same as impressions, but impressions can be higher than reach because one person can see the ad more than one time. For example, if someone sees an ad three times, the ad will have an impression count of three, but a reach of one. By expanding the reach of your audience, the number of impressions will likely increase.
Calculated by dividing the number of impressions by the reach, frequency is the number of times a person is exposed to an advertisement. This metric is helpful because increasing the frequency of an ad increases the likelihood they will make a purchase or remember your company/offering. As a rule of thumb, an ad is most effective when it reaches a frequency of three.
Click Through Rate (CTR)
A useful ratio to understand, CTR is the number of clicks divided by the number of impressions. A “good” CTR will depend on the type of campaign, promotion, and platform, but remember that the higher the CTR, the more successful your campaign will be.
Cost Per Click (CPC)
Also known as Pay-Per-Click (PPC), Cost-Per-Click (CPC), is used to determine the cost of showing your ads. It is the total advertising cost divided by the number of clicks an ad received. Your goal CPC will be determined by the price of your product or service.
Measuring key performance indicators is vital to the success of your advertising, because these stats will help you see areas for improvement as well as opportunities for continued success and growth. Understanding what these metrics mean and the power they hold will help you make data-driven decisions and will improve the performance of your campaigns in the short and long term.