There are hundreds of data points to consider when managing a business. Each team has its own list, and evaluating success can have different meanings depending on their goals. Paid media KPIs (key performance indicators) measure the effectiveness of how your paid or advertising campaign is performing, and there are ways to get the most out of using KPIs to improve your results.
Sound challenging? You bet.
Undoubtedly, there should be little disagreement on the importance of the following 5 to track in your next B2B campaign when it comes to paid media KPIs. Let’s take a look.
1. Conversion Rate
Our first paid media KPI measures the effectiveness and success of your marketing campaigns and user experience. Conversion rate is the percentage of website visitors that complete a meaningful action, such as form-fill, divided by the total number of visitors.
Conversion Rate = # of Conversions / # of Visitors x 100
For instance, if you generated 110 visitors from an ad and 3 submitted a form fill, the conversion rate would be 3.63%. Why is this important? Conversion rate evaluates if your marketing and website experience resonates with your target audience. Therefore, if your conversion rate is below benchmarks, you will not be building your pipeline. Speaking of benchmarks, take a look at these industry benchmarks for Google Ads:
2. Cost Per Acquisition
Now that you have optimized your marketing campaigns and exceeded your conversion rate benchmarks, it’s time to evaluate how much your conversions cost. A popular KPI with advertising campaigns, cost per acquisition, calculates how much it costs to generate a conversion.
Cost per acquisition (CPA) = Total Spend / Total Conversions
Understanding how much it costs to convert someone helps businesses understand how much they are willing to pay to acquire a customer. Generally speaking, the lower the CPA, the better. However, you can calculate a break-even point to determine how much you can spend before your marketing campaigns become unprofitable.
3. Close Rate
Now that you understand how to calculate and evaluate the effectiveness of your marketing campaigns and website, it’s time to start thinking about post-conversion. Are the conversions generating quality leads? In order to help evaluate the lead quality, calculate your close rate.
Close Rate = Deals / Conversions x 100
If an email campaign generated 7 form submissions and 2 of those converted into deals or customers, your close rate would be 29%. Also known as a lead-to-close rate, a lower rate can indicate poor lead quality, and ineffective nurture strategy, or a broken sales process. Close rates will vary depending on the industry. Take a look at where your business stands.
4. Customer Lifetime Value
Your marketing campaigns are converting at a high rate, lowering your CPA. Your lead quality is above average as you’re exceeding close rate targets. What is the long-term business impact on your customers? To help us understand, we need to calculate the customer lifetime value (CLV). Customer lifetime value measures how much revenue a business generates from a single customer.
Customer Lifetime Value (CLV) = Customer Revenue x Average Customer Lifetime
Retaining your current customers is a cost-effective way to drive growth. CLV is an important metric to track as it helps businesses develop strategies to retain existing customers. For example, you probably want to spend more of your media budget on acquisition than retention, so excluding current customers from outbound campaigns might be a viable solution.
5. Return On Investment
Now, after all of this work to evaluate the effectiveness of your marketing campaigns and the impact on your business, you have finally reached your B2B paid media KPI pot of gold: return on investment (ROI).
Important for any business, calculating your return on investment determines the profitability of any business expense and can be broken down in many ways. Get started with this ROI calculator from our friends at HubSpot.
Paid Media KPIs with Lake One
There you have it. Our suggested top 5 B2B paid media KPIs are the foundation for evaluating success in any campaign. Starting here will help you and your business make better decisions and progress towards intended outcomes.
Reach out to our team today to get started with your next campaign.