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When it comes to performance marketing, there are a lot of different key performance indicators (KPIs) that you could track. However, not all KPIs are created equal, and some are more important than others depending on your specific campaign goals and objectives.
With that said, here are some of the most important KPIs to track in performance marketing that can be placed on your top list while planning marketing campaigns.
“The popularity of AI and machine learning has played an important role in the increased value placed on data and analytics. Having a good view of what activities influence those data points helps businesses optimize functions across departments and drive higher profit margins” – MARKETING DIVE
6 Most Important KPIs to Track in Performance Marketing:
1. Cost per acquisition (CPA):This is the cost you incur to acquire a new customer or lead. This metric is important because it helps you understand how much you're spending to get a new customer. If your CPA is too high, it means your campaigns aren't efficient enough, and you're spending too much for each new customer.
“Rankings and organic search traffic data are relative. Consider adding critical metrics like leads, sales, and PDF downloads as key performance indicators” – Content Marketing Institute
2. Return on investment (ROI): This is the amount of money you make in relation to the amount of money you spend on marketing. It's important to track ROI because it helps you understand whether or not your marketing efforts are generating a positive return. If your ROI is negative, it means you're losing money and need to adjust your campaigns.
3. Click-through rate (CTR):This is the number of clicks your ads receive divided by the number of impressions (or views) they get. The CTR is important because it helps you understand how engaging your ads are. If your CTR is low, it means your ads aren't resonating with your audience and need to be improved.
“Look for content that aligns with your marketing and business KPIs to determine which posts are worth throwing some extra dollars behind” – Sprout Social
4. Conversion rate:This is the percentage of people who take a desired action on your website after clicking on one of your ads. The conversion rate is important because it tells you how effective your landing pages [or any other targeted web page] are at converting visitors into customers or leads.
"Facebook Ads have an average return on investment (ROI) of 152% and an average conversion rate of 9.21%, which is higher than Google Ads at 3.48% on the Search Network and 0.72% on the Display Network" - SEOCHATTER
5. Customer lifetime value (CLV):This is the amount of money a customer is expected to spend with your business over their lifetime. CLV is important because it helps you understand the long-term value of acquiring a new customer. If your CLV is high, it means your marketing efforts are paying off in the long run.
“Once you have a clear understanding of your customers’ needs, use this data to deliver custom hyper-targeted communications that will only increase the overall lifetime value of your biggest fans” - Wunderkind and Retail Dive Report
6. Return on ad spend (ROAS): This is the amount of revenue generated by an ad campaign divided by the cost of running that campaign. ROAS is important because it tells you how effective your campaigns are at generating revenue.
If your ROAS is low, it means you're not generating enough revenue to justify the cost of running the campaign. This also indicates that somewhere things are not aligned as planned.
“Picking channels that don't align with your business goals, or evaluating them with KPIs that don't match the channel strengths, will return a lot of false negatives and curtail your appetite for finding new paths to growth—which would do your marketing campaigns a disservice, both in the short term and in the long term”– Marketing Profs
Pro-Tip:Use analytics to gather the finest data for KPI analysis and identify any possibilities for potential future improvements to consider in campaigns. This could result in a new KPI as well.
In the end, to get to a meaningful conclusion and to track more effectively, you may select the KPIs that are most important for your company or business when planning performance marketing [by having conversations with the teams involved] so that all are on the same page, which supports effective coordination.
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