Guide to Metrics: Key KPIs in Performance Marketing
If you are engaged in performance marketing, you have certainly encountered the term Key Performance Indicators. If you want to evaluate your online business based on specific data instead of subjective impressions, this overview of metrics will help you navigate them. What exactly do KPIs mean, which ones should you monitor, and how to evaluate them correctly?
What does the abbreviation KPI mean?
Imagine trying to cook according to a recipe, but without precise amounts of ingredients or the correct oven temperature setting. You could hope the dish turns out well, but the result would be uncertain. The same applies to marketing campaigns without tracking their performance. Key Performance Indicators (KPIs) are key metrics that help you determine whether your strategy is delivering the expected results and how it is evolving.
In the field of performance marketing, KPIs track specific indicators, such as website traffic, click-through rate (CTR) on ads, or customer acquisition costs. With this data, you can precisely identify which campaigns are successful and where improvements are needed.
Without clearly defined KPIs, your business is based only on estimates and hopes for success. And honestly – who can afford to do marketing without reliable data today?
The Importance of KPIs in Performance Marketing
Performance marketing is built on measurable results. Every invested amount should bring specific results. Without KPIs, you wouldn't even evaluate the success of your marketing campaigns.
Imagine your ad has a high click-through rate (CTR), but the conversion rate is low. This indicates that while the ad attracted people, something on the website deters them from completing a purchase. Such insights allow you to quickly identify the problem and optimize the page.
KPIs are also invaluable for budget management. If you find that one platform delivers a higher return on investment at lower costs, you can redirect your finances where they have a greater effect.
Which KPIs Should Be Monitored?
In performance marketing, there are several efficiency indicators. The most crucial include:
ROI (Return on Investment)
ROI measures the effectiveness of money invested in advertising. It shows how much you earn from every euro invested. If you want to know whether advertising is truly worth it, this indicator gives you a clear answer. ROI is especially important in PPC advertising, on social media, or in SEO, where long-term benefits need to be evaluated.
ROI Calculation:
ROI (%) = (Net Profit / Investment Costs) × 100
Higher ROI values indicate better campaign efficiency.
ROAS (Return on Ad Spend)
ROI is closely related to the ROAS (Return on Ad Spend) metric, which indicates how much is earned per euro invested in advertising.
ROAS Calculation:
ROAS = Advertising Revenue / Advertising Costs
CTR (Click-Through Rate)
CTR indicates the percentage of people who click on an ad compared to its total number of impressions. A high CTR value suggests that the ad is engaging and relevant to the target audience. This indicator is crucial for PPC campaigns, banner advertising, and social media marketing.
CTR Calculation:
CTR = (Number of Clicks / Number of Impressions) × 100
Conversion Rate
This indicator measures the percentage of website visitors who performed the desired action – whether it's a purchase, registration, or form submission. It helps you understand how effectively your website converts visitors into customers.
Conversion Rate Calculation:
Conversion Rate = (Number of Conversions / Total Number of Visits) × 100
CPA (Cost per Action)
Cost per Action (CPA) expresses how much each specific action performed by a user costs you, such as a purchase, newsletter registration, or form submission. This metric is particularly important for effective advertising budget management, as it allows you to evaluate exactly how much you pay for the desired results of your campaigns.
Higher CPA may indicate that you need to optimize your advertising strategy, improve the target audience, or adjust the landing page to increase conversions.
CPA Calculation:
CPA = Total Advertising Costs / Number of Actions Performed
By optimizing CPA, you can ensure that the marketing budget is used as efficiently as possible and that every invested amount brings maximum value.
Website Traffic
The number of visitors to your website helps you reveal the reach of individual marketing activities. You can analyze traffic from both paid and unpaid sources, known as organic traffic. It also provides a comparison of different channels from which visitors came to your website.
There are various tools for tracking website traffic, but one of the most used is Google Analytics.
Social Media Engagement
Audience engagement is one of the important metrics on social media, as it measures interactions such as likes, comments, shares, or saves of posts. Strong engagement means that your content strategy is effective and the audience is responding to your content.
You can see the audience engagement rate directly in the social media interfaces, which have their own tools for performance evaluation and analysis.
CPC (Cost per Click)
This indicator tells you how much you pay for a single click in an advertising campaign. Optimizing CPC helps you use the budget more efficiently, with the goal of achieving as many clicks as possible at the lowest cost.
CPC Calculation:
CPC = Total Advertising Costs / Number of Clicks
Tools for KPI Analysis
Google Analytics
It is a free tool that is definitely worth using. It provides a comprehensive overview of website traffic, such as traffic sources, user behavior on the site, and conversion rate. If you want to evaluate the performance of your website and your campaigns, GA4 is for you. It provides a comprehensive overview of website traffic, sources of arrivals, and customer behavior.
Facebook Insights
Analyzes the performance of posts, content reach, and user engagement on Facebook.
Google Ads, Facebook Ads, and other PPC platforms
Provide immediate campaign optimization and detailed analytical outputs that measure performance metrics such as CTR, CPC, or ROI, and many others. Immediate campaign optimization.
Google Looker Studio (formerly Data Studio)
Looker Studio visualizes key metrics into clear dashboards and can be linked with Google Analytics and Google Ads or other platforms.
How to Properly Interpret KPIs and Identify Weak Spots?
Simply tracking data is not enough – it is necessary to evaluate and interpret it correctly in the context of your marketing strategy. Set realistic goals and compare results with historical data and average values in the industry.
- Low CTR? Maybe you need to adjust the target audience or ad creative.
- Weak conversion rate? Check the website UX and simplify the purchase process.
- Low ROI? Don't forget about hidden costs, such as product margins or customer support.
- Rising CPC? Analyze the bidding strategy and set campaigns more targeted.
Use a combination of different tools, test, and optimize. This way, you ensure maximum efficiency of your marketing campaigns. If you need advice, don't hesitate to contact us.
