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For the strongest marketing results, be sure to monitor your digital marketing performance metrics
Are you an entrepreneur who doesn’t have a marketing background? Do you want to understand the metrics people use to measure how different digital marketing strategies are performing?
You’ve no doubt heard of terms like cost per click and bounce rates. But it may be that you’re still not entirely confident what they mean or how to use them to make more profit.
Perhaps you’re a solopreneur who does their own marketing? In this case it’s clear you need a good grasp of the key concepts. Otherwise you’ll risk wasting money unnecessarily.
But even if you run an established small business and pay an agency to execute your marketing, you still need to understand whether your agency is achieving good results with the money they spend on your behalf.
Key ratio analysis is crucial for controlling many aspects of your business. In this article I’ll explain the most important ratios you’ll come across that relate to digital marketing. I’ll show you how to calculate each metric, what the metrics tell you and how you can use them to improve the results from your marketing.
I’ve organised the metrics under four categories:
Paid ads
There are lots of places where you can advertise using paid ads. I’ll use Google Ads as my example in this section because it’s such an important platform and one that many people are familiar with.
Impressions
This is the number of times that the ad platform has displayed your ad to someone. For example, let’s say you sell organic, vitamin-enriched dog food. The number of impressions is the number of times that Google has displayed your ad to people who searched for ‘premium dog food’.
This is not necessarily the same as the number of people who saw your ad — some people might have scrolled past and not noticed it. But it’s probably nearly the same thing.
It’s worth being aware of one potential side benefit. If someone searching for ‘premium dog food’ sees your ad but doesn’t click on it, you don’t get charged for it. Which is free advertising for you because they may remember your brand and do an organic search for it later.
Click through rate (CTR)
This is the share of people who click on your dog food ad after seeing it, expressed as a percentage. For example, if Google displays your ad to 1,000 searchers and 150 click on it, the CTR would be 15%.
CTR is important — you want it to be as high as possible. That’s because a higher CTR can get you cheaper clicks. Here’s how it works.
Ad platforms make money when someone clicks on an ad (there is also a payment per impression model but let’s ignore that for now). If the platform displays several ads to a searcher and they don’t click on any of them, the platform has lost an opportunity to make money.
So while the ad algorithms place a lot of emphasis on the price you bid to have your ad displayed, that’s not the end of the story. The platform won’t robotically display ads in rank order of descending bid price. If the algorithm learns that a particular ad with a high bid price is a poorly designed ad that nobody clicks on, it will demote that ad down the page.
The flip side is that if you create a really compelling ad that attracts lots of clicks the algorithm may promote you up the page. It’s better for the platform to get paid a cheaper price for a click than be paid nothing at all.
Landing page conversion rate
After a searcher has clicked on your ad for premium dog food they should arrive on your landing page. That’s the page you’ve created on your website specially for your Google ad campaign. The content is tailored to appeal to the type of people who would be likely to click on your ad.
It’s essential to create a landing page tailored to each of your ads — it will maximise your conversion rate. Your landing page conversion rate is the percentage of visitors who take the action that you ask them to — the ‘call to action’ on the page.
For your dog food, that might be as simple as buying your dog food. After all, deciding to try out a different brand of dog food isn’t a big decision (for most people).
If your business has a more complex decision process (e.g. buying a new car or taking out life insurance) the visitor isn’t going to buy there and then. So the call to action on your landing page should ask the visitor to take a first step. For example, booking a test drive, signing up to listen to an explanatory webinar, receiving a free information pack and so on.
A/B testing (aka split testing)
When you run any kind of digital marketing campaign, you should usually use a technique called A/B testing. This involves displaying more than one version of an ad to visitors. Typically you show three different ads, with each new visitor seeing a different one to the last visitor.
As the campaign goes on, you can track the results you obtain from the three different versions. Once you have enough results to rank the performance of your ads you should cut the version with the weakest results and replace it with a new one.
By constantly using A/B testing you’ll be able to learn which messages work. You can then cut your weakest ad and replace it with a different version you hope will do better. This will help you build constant improvement into your results. This principle of experiment, test and refine should be central to almost any digital marketing campaign using any channel.
Cost per click (CPC)
Cost per click is the amount you pay, on average, for each visitor that an ad brings to your website. Your cost per click won’t be exactly the same as your bid price in the ad auction (e.g. for Google Ads or Amazon Ads) because of the technical aspects of the auction process but it shouldn’t be higher.
Here’s how to calculate cost per click:
Total spending on paid ads / Total clicks through from ads to your website
You can measure your cost per click for all the ads you’re running over a given period but it also makes sense to measure it for each campaign individually. That way you can work out which campaigns are delivering the best results. Good results are leads that you capture for a reasonable cost and which subsequently convert into paying customers at a high rate.
Organic search
These days organic search is almost synonymous with Google search.
Number of ranking keywords in organic search
This is the number of keywords you’re targeting that rank highly in organic search. A keyword is a term of one or more words that a searcher types into a search engine.
The definition of ranking ‘highly’ is judgmental but for many SEO experts it would mean ranking in the top 10 results (excluding paid ads, which occupy up to four of the top results slots).
All other things equal, ranking for lots of your target keywords is better than ranking for fewer of them. However it’s worth emphasising that ranking keywords are only really useful for you if they will bring you the kind of visitors you want to attract.
This is a topic for a whole article on its own but the easiest way to understand it is to focus on the intent of the searcher.
For example, ranking for the keyword ‘healthy dog food’ is likely to bring to your site dog owners who care about their dogs’ health and might be buyers of your premium dog food. By contrast ranking for the keyword ‘pet food’ might bring you some dog owners but also owners of cats, guinea pigs and rabbits, none of whom would be potential buyers of what you sell.
You can get data on keyword rankings and related topics from paid SEO analytics tools like Ubersuggest, Moz, Ahrefs, SEMrush and others.
Website bounce rate
This is the percentage of visitors to your website who leave after visiting only one page and without taking any further action (e.g. subscribing to your e-mail list). If someone ‘bounces’ from your site, this usually indicates they found the site wasn’t relevant to the topic they were interested in.
You don’t want a high bounce rate from any pages on your site because it would mean your content marketing and other promotional work is attracting the wrong kind of visitors. It’s particularly important to monitor the bounce rate from the landing page of any paid ad you’re running.
If your ad is well designed it will attract people who are interested in what you sell while also putting off people who wouldn’t be interested in it. That’s because paying to attract people who bounce straight off your site is a waste of your ad budget. For example, you could say in your dog food ad ‘we specialise in dog food’ to reduce the number of cat owners who click on it.
You can obtain data about the bounce rate from your site and from individual pages on it for free using Google Analytics. It can be time-consuming to learn how Google Analytics works and to set up the platform to obtain the data you need but the wealth of insight you can obtain makes the effort worth it.
Page views
This is the average number of pages that a visitor to your site views before leaving. It’s important to encourage visitors to stay on your site for as long as possible. That’s because the more time they spend with you the more you can communicate your brand values and impress them with your expertise. One way to get them to hang around is to persuade them to visit multiple pages.
If your site is well designed it will use an indexing system that is intuitive and the structure of your site will be easy to navigate. You’ll also have created links that lead a visitor naturally from one page to another so that, if they are interested in the topics you are talking about, they will tend to visit multiple pages before leaving. More page views means your tactics are working.
Once again, you can obtain data on page views from Google Analytics.
Time on site and time on page
Analysing how long visitors spend on your site and on the individual pages within it can really help you optimise how effectively your site engages with visitors, wins their trust and eventually converts them into paying customers.
So monitor which pages visitors spend lots of time on and which ones they leave quickly. If visitors spend lots of time on some of your pages, think about why that would be. What are the common factors? Are the most popular pages devoted to a particular topic or written in a particular style?
Equally, are the pages that people don’t visit just hard to find? Is the structure of your site logical or is it difficult for a visitor to find their way around?
Once you’ve worked it out, give visitors more of what they like.
Once again, you can obtain time on site and time on page data from Google Analytics.
Some SEO experts believe that Google’s search algorithm regards performance statistics like bounce rate, page views and time on site/ page as ranking factors (i.e. that good results lead Google to rank your site more highly in its organic search results). Other SEO experts don’t think that’s the case.
We can’t know for sure because Google doesn’t disclose the ranking factors its algorithm uses. Either way, if you measure, analyse and optimise your performance on bounce rate, page views and time on site/ time on page it should make your website a more effective marketing tool.
Social media
You can obtain all the social media metrics listed below from paid social media scheduling and analytics apps, of which there are many.
Affordable options for small businesses include Social Pilot, Sendible, Social Bee, Loomly and Buffer. More expensive and fully featured options for companies with more complex needs or for whom social media marketing is especially critical include Hootsuite and Sprout Social.
Engagement rate
This metric measures the number of engagements your social media content generates. Engagements include comments, likes and shares.
Engagement rate is usually expressed as a percentage relative to the size of your audience. There are several ways to define your audience. Your number of followers is often used as a proxy, which isn’t perfect but it’s fine for most cases. Just bear in mind that some of your followers won’t see some of your posts while other people may see your posts and yet aren’t among your followers.
Here’s how to calculate your engagement rate based on your followers:
100 x number of engagements / number of followers
You’ll need to define the period over which you want to measure engagement — a month is common.
You can calculate an engagement rate for your posts individually in the same way.
You want to generate as much engagement as you can, provided it’s coming from the types of people you want to attract to your brand. To some extent you can boost engagement by following the standard rules of good marketing (i.e. talking about things your target audience is interested in, sharing content they would find relevant and valuable etc).
You should also pay special attention to the ‘social’ factors that make social media distinctive. Social media is not a natural environment for overt selling whereas it is a forum that magnifies people’s propensity to share content with others. Take advantage by using triggers that encourage sharing such as good storytelling skills and effective use of emotion.
Reach
Your social media reach is just the number of people who see your content over a chosen period of time (e.g. a month). You can track this in total or for each of piece of content you publish.
All other things equal you should aim to expand your reach as much as possible using the same techniques I mentioned above with respect to engagement.
Impressions
An impression is when someone sees a piece of your content, whether a post, a video or some other form of content. So your total impressions measures the number of times your content has been seen. That’s different to your reach because some people will see more than one piece of your content. Again you can measure impressions in total and for each piece of content you publish.
Again, use the techniques above to boost your impressions.
Audience growth rate
This metric records the percentage rate at which your number of social media followers is growing over your chosen time period.
Here’s how to calculate it:
100 x (followers at end of period / followers at start of period -1)
You naturally want to grow your audience as quickly as you can, all other things equal.
Bear in mind though that you want an audience that is highly engaged with your brand.
A large audience that is barely engaged is not very useful.
Click-through rate (CTR)
Your CTR measures the rate of clicks from within your social posts.
Here’s how to calculate your CTR:
100 x number of clicks from a post / number of impressions of a post
Your CTR is an important metric. It measures how effectively your posts persuade readers to click on links to complete an additional step, such as visiting your website, downloading content or accessing a promotional offer. Note that CTR doesn’t measure whether they actually complete that step, it only measures the rate of clicks.
The higher your CTR, the better your posts are doing their job of promoting your brand in general or you customer proposition specifically.
You can measure CTR overall or for each of your individual posts.
Conversion rate
Your conversion rate is related to, but distinct from, your CTR. It measures how frequently the visitors who come to your website via your social media channels end up carrying out the action you want them to. When they carry out the action you want, it’s called a conversion.
Here’s how to calculate your conversion rate:
100 x number of conversions by website visitors arriving via social media / number of website visitors arriving via social media
Conversion rate can be applied to visitors that come to your website from your social media channels as a result of both organic posts and paid ads.
Your conversion rate is also an important metric. A high conversion rate will tell you that the offer on your website is compelling and that it’s well matched to the needs or desires of the visitors that your social media channels are bringing to your site.
Cost per click (CPC)
The calculation of cost per click is essentially the same for social media channels as for non-social media channels like paid search (see above).
E-mail marketing
E-mail marketing is a major part of many small business marketing strategies. It’s commonly used to nurture leads that have visited your website or social media pages, been engaged by what you offer and agreed to let you send them marketing materials.
What key metrics should you monitor to check that you’re doing an effective job with your e-mail marketing? Here are a few of the most important ones.
Delivery rate
This is the percentage of your e-mails that actually reach the inbox of the intended recipients. Reasons why an e-mail may not be delivered include an out of date e-mail address and blocking by the spam filter of the e-mail host.
Here’s how to calculate delivery rate:
100 x e-mails delivered/ e-mails sent
Maximising your delivery rate is important. Specialist e-mail marketing providers deploy a range of technologies and techniques to try to ensure your e-mails don’t get blocked by spam filters. You can help yourself by avoiding headline words that spam filters reject (e.g. ‘extra cash’ or ‘risk free’).
Open rate
This is the percentage of delivered e-mails that is opened by the recipients.
Here’s how to calculate it:
100 x e-mails opened / e-mails delivered
Again, you need to try to maximise the open rate. The most impactful thing you can do to maximise open rate is to use compelling e-mail headlines.
A compelling headline may be one that informs, intrigues, excites or does any number of other things. How you pitch your headlines will be driven by the sort of product you offer and the sort of customers you have.
Response rate
This is the percentage of recipients who do the thing your e-mail asks them to. That might include joining an informational webinar, taking a free test drive or making a purchase there and then.
The formula to use for the calculation is:
100 x e-mail responses / e-mail opens
If an e-mail merely seeks to build trust and credibility with your clients by offering something of value (e.g. insight or entertainment) it may not include a call to action and therefore wouldn’t require a response.
You should use A/B testing to constantly optimise the effectiveness of your e-mail marketing, just as you should with your paid ads (see above). That way you’ll learn what headlines and body text are most persuasive and get better returns from your time and effort.