20 Budget-Cut Defying KPIs for Your Advertising and Funnel Strategy
The business need for marketing measurement is growing. Last year almost two thirds (61.2%) of marketers agreed that measuring marketing effectiveness has risen in importance when making marketing/business decisions (Marketing Week’s Language of Effectiveness Survey 2022).
Most marketing folks agree that during these high-inflation, low-budget times marketing metrics – or to put it more simply proof that the money was well spent – have become even more important for brand marketers. Exactly which KPIs to measure, however, is less unanimous.
Despite the differences in opinion there is at least a general consensus that a mix of both short and long-term metrics that track the sales funnel from upper-funnel brand building through to sales, is the best way to measure ROI (Kantar’s Media Reactions 2022).
Here are some of the key KPIs that brand marketers can focus on in 2023 to follow the funnel in order to understand, improve and ultimately prove the money was well spent on their ads and sales funnel strategies:
Spend
The Spend refers to the total amount of money that you are spending on advertising. It is important to monitor this to ensure that you are staying within your budget and to determine if you need to adjust your spending based on your results.
CPM
The CPM (Cost per Thousand Impressions) is the average cost for 1,000 impressions of your ad. This can vary based on the industry and competition. Brands should focus on optimizing this metric to reduce the cost of reaching their target audience. If CPM is too high, it can indicate that the messaging needs to be improved, or the target audience may need to be adjusted.
Impressions
The Impressions refer to the total number of times that your ad has been displayed. It is calculated based on your CPM and can give you a sense of the reach of your advertising.
CTR
The CTR (Click-Through Rate) is the average percentage of people who click on your ad after seeing it. A good CTR is at least 1%. This is an important indicator of how engaging your ad is and how well it resonates with your target audience. A low CTR can indicate that the ad is not relevant enough to the target audience. Brands should aim to increase CTR by making their ads more relevant to the target audience.
Link Clicks
The Link Clicks are the total number of clicks on your ad. It is calculated based on your CTR and gives you an idea of how many people are taking action on your ad.
Click to LPV Drop
The Click to LPV (Landing Page View) Drop is the average bounce rate, which is the percentage of people who leave your website after visiting only one page. A good bounce rate is 20% or less. Make sure the site speed is good to reduce the drop-off rate.
LPV
The LPV (Landing Page View) is the total number of people who have landed on your website after clicking on your ad. It is calculated based on your bounce rate and can give you an idea of the effectiveness of your landing page.
LPV to VC
The LPV (Landing Page View) to VC (View to Cart) is the average percentage of people who proceed to the product page after landing on your website. A good percentage is at least 50%. This gives you an idea of how interested people are in your products. A low VC/LP ratio can indicate that the offer is unclear, or there is a lack of congruence between the ad and landing page. Brands should work on making their offer clear and improving the congruency between the ad and landing page.
VC
The VC (View to Cart) is the total number of people who have viewed a product page. It is calculated based on the VC to LPV ratio and can give you an idea of how well your product pages are performing.
VC to ATC
The VC (View to Cart) to ATC (Add to Cart) is the average percentage of people who add a product to their cart after viewing it. A good percentage is at least 10%. This gives you an idea of how likely people are to purchase your products. A low ATC/VC ratio can indicate that users still have objections about the product, such as price, returns, or size. Brands should address these objections to increase the ATC/VC ratio.
ATC
The ATC (Add to Cart) is the total number of people who have added a product to their cart. It is calculated based on the ATC to VC ratio and can give you an idea of how well your product pages are converting.
ATC to IC
The ATC (Add to Cart) to IC (Initiate Checkout) is the average percentage of people who initiate checkout after adding a product to their cart. A good percentage is at least 25%. This gives you an idea of how likely people are to complete their purchase. A low IC/ATC ratio can indicate that something is unclear to users, such as the product description or details. Brands should work on making their product information clear and concise.
IC
IC (Initiate Checkout) refers to the total number of people who have initiated checkout. It is calculated based on the IC to ATC ratio and can give you an idea of how well your checkout process is working.
IC to Purchase
IC (Initiate Checkout) to Purchase is the average percentage of people who complete their purchase after initiating checkout. A good percentage is at least 50%. This gives you an idea of how effective your checkout process is in converting customers. A low Purchase/IC ratio can indicate that something is stopping users from completing their purchase, such as shipping price or time. Brands should address these obstacles to increase the Purchase/IC ratio.
Purchases
Purchases are the total number of purchases made on your website. It is calculated based on the purchase-to-IC ratio and can give you an idea of how successful your sales funnel is.
AOV
AOV (Average Order Value) is the average amount spent per order. It is important to monitor to determine if your customers are purchasing high-value items and to identify opportunities to increase revenue.
Revenue
Revenue is the total amount of money generated from sales. It is calculated based on the AOV and number of purchases and gives you an idea of the overall success of your sales funnel.
ROAS
ROAS (Return on Ad Spend) is the return on investment from your advertising spend. It is calculated based on revenue and spend and gives you an idea of the effectiveness of your advertising campaigns in driving sales.
Website CR
Website CR (Conversion Rate) is the percentage of people who make a purchase after visiting your website. It is calculated based on the purchase to LPV ratio and gives you an idea of the effectiveness of your website in converting visitors into customers.
CPA
CPA (Cost per Acquisition) is the cost of acquiring one customer through advertising. It is calculated based on ad spend and number of purchases and gives you an idea of the cost-effectiveness of your advertising campaigns.
Tracking these KPIs can help brands make informed decisions to improve their advertising campaigns and sales funnels, which is an essential survival strategy during an economic downturn. By monitoring these metrics regularly, brands can identify areas for improvement, make changes, and prove the impact on their results back to the business.