June 22, 2021
Putting in the effort to create a strategic marketing plan takes hard work and dedication, fine-tuning all the details of the campaign. One of the most important questions that we ask our clients is, “What are your KPIs (key performance indicators)?” How will the agency and the client measure the effect of the campaign?
A new study from the Association of National Advertisers (ANA) says that out of the five most used KPIs by marketers, only one is the most important.
Return on Investment (ROI)
Also known as return on advertising spending, ROI demonstrates how effective a marketing campaign was, based on how much revenue it made versus the cost of producing it.
The “Other Four”
The four KPIs that make up the five most used by marketers are:
- CPM (cost per thousand)
- CPC (cost per click)
- Unique reach
- Site visits
CPC can be easily counted, making it a favorite among marketing professionals. Marketing studies, some over a decade old, show that clicks on online ads are practically meaningless because they don’t correlate to sales. Despite this, many marketers obsess over this KPI. While CPC and CPM are closely related, both are heavily impacted by bots, which click far more often than humans do, creating a false sense of information.
What Should I Be Looking At?
The ANA suggests that marketing professionals consider looking at ROIs, ROAS (return on advertising spend), and “exposed ROAS'', which looks at brand sales, ad spending, and perception lift. You should also review your conversion, brand safety metrics, and customer lifetime value to get a better understanding of your marketing strategies.
Are There “New” KPIs I Should Know About?
There are a few “emerging” KPIs that deserve your attention! They focus on measurement outcomes or quality of leads and information. They also reflect the shift from purchasing media to purchasing audiences.
What About Outcome-Based KPIs?
Outcome-based KPIs, which include conversions and sales, are becoming more valuable over output-KPIs, such as audience reach. This comes from growth performance marketing and direct-to-consumer advertisers.
The Importance of the Marketing Funnel
A marketing funnel is described as the purchase journey for the consumer. As you get lower in the funnel, the tactics and messages utilized in your strategy should change. For awareness of your brand, product or service, traditional media such as television, radio and billboard are highly effective. However, as the customer progresses down the funnel, a successful campaign will deploy targeted tactics, such as paid social ads, to help bring the consumer closer towards purchase.
How Does “The Funnel” Affect Me?
Is your business or brand established in the marketplace? If you have a well-known brand or are the largest of your industry in your given market area, consumers are likely aware of you. But are they interested in what you have to offer?
Conversely, if you are just starting to build your business, you need to make a name for yourself amongst the established brands. You need the consumer to be aware that you exist as an option.
The marketing funnel (and its various stages of the customer journey) should be taken into consideration when developing your marketing budget and what tools you use to get your message out. It’s important to remember that not all tactics are effective for each stage.
Take our example from before -- TV advertising is a great way to reach a large number of consumers. Once a consumer is aware of you, why should they consider you? Maybe for the consideration stage of the funnel, you create a series of videos online showcasing how your business does things differently than your competition.
Taking it one step further, and farther down the funnel, is there a financial incentive you can offer to sway the consumer’s evaluation of two competing businesses? At this stage, perhaps you can deploy a series of digital ads to let the intended audience know of this offer.
There are many traditional and digital methods to help guide customers along their path to purchase. The first step is to partner with an agency that is focused on being your partner and creating an effective strategy in order to achieve your goals. When you're ready to get started, we're ready to roll up our sleeves and get to work! Call us today at 585-205-5969.