8 Marketing Metrics to Know As a Media Buyer
As a media buyer, along with knowing the operational basics, do you know what’s the most important thing? — “Knowing the Numbers”
You must know how your ad is performing or the return you are generating for your clients. In this blog, I have discussed the top 8 important marketing metrics to know as a media buyer. So, let’s get started!
Return on Ad Spend
You may have heard the term ROAS. The full form of ROAS is “Return on Ad Spend” which measures how profitable your media buying is. It is the ratio of the revenue generated by your ads and the cost of the ad.
How to Measure ROAS?
Revenue (total income from advertising) / Cost (total ads spend) = ROAS.
Example
For example, suppose you have run an ad and spent $1000. After that, you have generated $2000 of sales or revenue. The ROAS or return on ad spend is 2x.
Why is measuring ROAS important?
Knowing your return on ad spend for the month, quarter, or year quickly helps you understand how your investment is performing at a high level. ROAS helps you to determine the value and impact of your media buying. You can calculate these metrics by using data from media providers, analytics tools, or accounting systems.
Recently, for one of my clients, I have generated $22,000 with a 20+ ROAS. For this, the business has seen a 30% increase in their overall sales.
Customer Acquisition Cost (CAC)
Customer Acquisition Cost is another metric that is essential for a media buyer to know. It measures how much you are spending to gain or acquire one customer.
How to Measure CAC?
It’s calculated by dividing all the costs spent on acquiring more customers (marketing expenses) by the number of customers acquired when the money was spent.
Example
Let’s say, Rebel Bangladesh is a clothing company that spent $10,000 on marketing and sales efforts. If the company acquires 100 new customers then, the CAC or Customer Acquisition Cost will be $100. That means the company spent $100 to acquire each customer within a certain time period.
Why Measuring CAC is important?
Customer Acquisition Cost helps a company calculate the overall value of a customer to the organization. It also helps calculate the resulting ROI of an acquisition. By measuring CAC, you can know how your marketing and sales efforts are performing. You can know the effectiveness of your marketing. CAC helps you to make important decisions and make necessary changes to marketing efforts as well.
Reach, Frequency, and Impression
These 3 are the most common metrics a media buyer deals with regularly. Often a beginner tends to be confused about these 3 metrics. Let’s discuss it.
Reach: This is the metric which refers to the number of times your ad was viewed
Impression: Impression refers to the number of times your content appears on someone’s screen regardless of the click on the ad.
Frequency: It measures how often your ads are repeated to the same person.
How to Measure?
Reach = impressions/frequency
Frequency = Impressions / Unique Users
Impression: the total number of people your content is visible to.
Example
If your ad was viewed by 10,000 unique users, then the reach of the ad is 10,000
Whereas, if each user viewed your ad an average of 3 times, the frequency of the ad is 3.
Lastly, if the ad was viewed 100,000 times no matter if the ad was clicked or not, the impression is 100,000.
Why Measuring Reach, Frequency, and Impression is important?
These metrics help advertisers know how effectively their advertisements are reaching their target audience. It also helps in evaluating whether the campaign is reaching enough people to make an impact.
Click-Through Rate (CTR)
A click-through rate (CTR) is the ratio of clicks to impressions on a mobile advertising campaign. It measures the effectiveness of your ad by showing how many times a user has clicked on your ad after seeing it.
How to Measure CTR?
The formula of CTR is (Number of Clicks/Number of Impressions) * 100%
*Impression: An ad impression, also known as an ad view, quantifies the number of digital views an advertisement, post, or web page receives.
Example
Suppose, You have run an ad for a product. The ad was displayed 10000 times to users and it received 500 clicks. The CTR will be 5%
That means, the ad got 5 clicks for every 100 impressions.
Why Measuring CTR is important?
CTR is important as it provides information about the effectiveness of an ad or content. A high CTR may indicate that your ad is resonating with the target audience or performing well. Whereas, a low CTR may indicate your ad is not being able to capture the attention of the audience.
Conversion Rate (CVR)
CVR is another important metric which stands for Conversion rate. It tells you how many users are converting to your website from the ad. A conversion is when a user performs an action that is pre-defined. It can be making a purchase, filling out a form, or requesting a demo. CVR is expressed as a percentage; the higher the percentage, the better your conversion rate.
How to Measure CVR?
The formula of CVR or conversion rate is
CVR= (Number of Conversions/Total Number of Visitors) * 100%
Example
For example, say 1,000 people visited your website by clicking on an ad, and 100 of those followed through by making a purchase. Your conversion rate would be 100 divided by 1,000 or 10%.
Why Measuring CVR is important?
Conversion rate is very important to determine whether your ad content is effective. It also tells you whether your ad is resonating with the audience.
High CVR means the content or ad is performing well and fulfilling the desired actions. Low CVR indicates poor performance. Hence, as a media buyer, you should make the necessary changes to the ad for a better performance.
Cost Per Mille (CPM)
CPM or Cost Per Mille refers to the cost of reaching every 1,000 users or audience with the ad. Mostly, it is used in display advertising where a media buyer pays for every 1,000 impressions.
How to Measure CPM?
CPM= Total Cost/Total Impressions(1000)
Example
Let’s say, Ostad, an edtech company invested $2000 in online advertising and got 500,000 impressions.
The CPM would be $2,000/500,000= $4
That means, to get every 1,000 impressions, the investment was of $4
Why Measuring CPM is important?
CPM can help companies measure how efficient their advertising is by telling them how much money is paid for 1,000 views of their website ad, and it can represent how much a digital publisher charges for advertising space.
Cost Per Point (CPP)
Cost Per Point or CPP allows one to compare the cost of an ad or campaign schedule to another advertisement. It measures the cost of reaching 1% of the target audience through the ad.
How to Measure CPP?
CPM= Total Cost/Rating Points
*Rating Point: It is the percentage of the target audience reached multiplied by the frequency of exposure.
For example, if a company reaches 3,300 people out of a population of 100,000, it reaches 2.3% of the population. In this example, the rating is 3.3.
Example
For example, if the Total Cost is $10,000 and the Ratings Points are 20, the Cost Per Point is $20,000 ÷ 46 = $50
This means It costs $50 to reach one percent of the target audience.
Why Measuring CPP is important?
CPP is important to evaluate the cost-effectiveness of the campaigns. It can measure if the company is spending more than what it needs to just reach 1% of its target audience.
Customer Lifetime Value
Customer lifetime value is a measurement of how valuable a customer is to your company, not just on a purchase-by-purchase basis but across entire customer relationships. It is one of the key stats to measure as a media buyer.
How to Measure CLV?
Customer Lifetime Value = Customer Value x Average Customer Lifespan
Example
Consider that, Rebel Bangladesh’s customer orders $1000 of products and the customer spends 3 times in his lifetime. Then, the CLV will be $3,000
Why Measuring CLV is important?
It is always better to retain the old customer rather than acquire a new one. CLV gives you a picture of the long-term value of retaining customers. By focusing on CLV, the company can focus on making the customer experience smoother so that the customer stays loyal to the company.
Average Order Value (AOV)
Average Order Value (AOV) is a metric used by businesses to measure the average value of each order placed by customers. It refers to the average amount spent by customers per transaction.
How to Measure AOV?
Average Order Value= Total Revenue/Total number of orders
Example
Let’s say, your store has generated a total of $100,000 in revenue and the order no is 100
Then, the average order value is $1,000 which means, from every order you have generated an average of $1,000
Why Measuring AOV is important?
It allows us to identify trends in customer behavior and increase revenue. It also helps to increase the profitability of a business. As a media buyer, you should know the metric so that you can recommend it to your client and help him grow the business.
Apart from the discussed metrics, there are more that you should know like, quality score, relevance score, ROI, etc. Knowing these metrics will give you an extra edge in terms of serving the client with high-performing ads. You can analyze the ad’s performance and optimize it accordingly to get the best result. So, start knowing the metrics from today.
Marketing metrics include ROAS, CAC, Reach, Frequency, Impression, CTR, CVR, CPM, CPP, CLV, and AOV.
KPI in marketing stands for Key Performance Indicator, which helps measure the effectiveness of marketing strategies and campaigns.
The best marketing metric depends on the specific goals and objectives of the campaign, but ROAS (Return on Ad Spend) is often considered a crucial metric for assessing profitability.
