Key Performance Indicators (KPIs) serve as pivotal metrics for tracking the effectiveness of your marketing campaigns. They show you what’s working and what’s not, so you can adjust your campaigns to effectively grow your business. But how do you know which digital marketing KPIs to follow?
What is KPI in Digital Marketing?
Digital marketing KPIs are measurable values that tell you how well your business and marketing is doing in specific areas.
By tracking metrics such as website traffic, conversion rates, CTR (click-through-rate), CPA (cost–per-acquisition), ROI (return-on-investment), and social media engagement, you’re not just collecting data; you’re deciphering your marketing efforts.
Having the right KPIs will inform strategy and growth for your business. Start by looking at which areas of your business or target goals you want to prioritize.
Then choose the indicators that will be most effective. Focusing on KPIs that align with your digital marketing strategy and the complete customer journey is important. There are five main marketing KPI categories:
- Lead Generation
- Website & Traffic Metrics
- Paid Advertising
- Social Media Tracking
- SEO Optimization
Common tools and platforms include:
- Social Media Analytics: LinkedIn, Facebook, Twitter, Instagram, Snapchat, and TikTok
- Pay-per-Click Tools: Google Ads, Google Analytics, Bing Ads, SpyFu
- Web Analytics: Google Analytics 4 (GA4), Smartlook, Clicky
- Lead Conversion Tools: HubSpot, GA4, Unbounce, Sumo
How to Measure KPI in Digital Marketing
Choosing what to measure is a crucial part of a digital marketing KPI. Keep it simple by focusing on what will impact your business’s goals most.
When setting KPIs for digital marketing, simplicity, actionability, and a defined timeline are key. Here’s a simple guide on how to set KPI for digital marketing:
- Be clear on what your objectives are. That means setting metrics, data, and concrete numbers at the start.
- Keep it simple so that anyone in the company can understand the purpose of the data
- Focus on a specific action. There is no shortage of marketing data and metrics, but the metrics that matter are the ones that drive action.
- Set a timeline when reviewing and reporting on long-term targets that align with your marketing and business goals.
An example may be, “We need to achieve a 5% increase in leads from Instagram by the third quarter of 2025.”
6 Important KPIs to Measure
Which digital marketing KPIs are most important varies for each business. It’s best to start with a few key metrics that you know are solid indicators for scaling your business. Then ensure you have the correct tools to measure them.
Here are six essential digital marketing KPIs to help move your business forward:
1. Click Through Rate (CTR)
This is one of the most common KPIs measured across industries. CTR is the percentage of clicks on a link that generates impressions.
Not only are you seeing how many people clicked on your link, but you can track how many are taking action and interacting with your brand.
What’s considered a good CTR varies depending on the digital marketing channel.
- PPC: A good click-through rate on Google Ads is 6–7%.
- Facebook: CTRs will be much lower on social channels than a Google Ad. A good CTA is just under 1%.
- Banner/Display Ads: Offer similar click-through rates as Facebook Ads with a CTR of 0.46%.
- Email: B2B newsletters tend to have higher CTR than B2C newsletters. On average, a 10–20% CTR is considered good.
2. Conversion Rate
The conversion rate is the number of people who completed the action you presented to them divided by the total number of people who took the first action. Conversion rate is applicable across industries and digital marketing channels.
For example, if you run an email acquisition campaign and of the 1,000 people who click on your email, 100 people sign up to receive your newsletter, you have a 10% conversion rate.
Your conversion rate is a broad KPI demonstrating your marketing campaign’s success throughout the customer journey.
3. Cost Per Click (CPC)
If you’re using paid advertising, CPC is a fundamental digital marketing KPI to track. CPC is calculated by dividing the total cost of your clicks by the total number of clicks your ad received.
This simple formula will show you the average spend on paid advertising, including PPC, display ads, and retargeting.
It’s important to understand CPC varies significantly depending on product, price, and competition. For example, on Google Ads, monthly CPC may reach $20 for an insurance company, but the electronics sector may be valued at only 77 cents.
Overall, it’s an excellent metric for marketers to track performance over time and manage marketing budget spend.
4. Organic Search Traffic
This metric helps you calculate the percentage of website traffic earned through organic searches. Healthy organic traffic means your content is performing well because it has value, is relevant, and people find it engaging.
KPIs help you understand where your organic traffic is coming from, so you can make informed changes and create more SEO-rich content.
For instance, GA4, allows you to view organic queries and see which queries bring visitors to your website and the position your pages are in the search return. Learn more about Google Analytics 4 in our recent blog.
5. Return on Investment (ROI)
The most important KPI for digital marketing is undoubtedly Return on Investment (ROI). Revenue growth is the ultimate goal for any business, and tracking ROI for each marketing initiative is crucial for consistently meeting revenue goals.
CEOs and C-suite executives regularly review ROI as it provides a macroscopic perspective on how ad campaigns contribute to profitability.
Digital marketing ROI evaluates the effectiveness of strategies by comparing the profit generated to the cost of the ads. A higher ROI indicates effective spending and tangible results, which can be showcased to leadership.
Conversely, a low ROI signals areas for improvement and opportunities to enhance marketing efforts. Therefore, monitoring ROI is essential for optimizing digital marketing strategies and maximizing profitability.
6. Return on Ad Spend (ROAS)
Return on ad spend (ROAS) is a digital marketing KPI metric used to measure total revenue generated per advertising dollar spent. It is calculated by dividing the campaign revenue by the campaign cost.
ROI and ROAS are often used interchangeably, but there are differences. ROAS focuses on an ad campaign’s effectiveness in isolation, while ROI shows if the overall strategy is working and worth the investment.
Used together, ROI and ROAS provide the marketing team and leadership with a more comprehensive picture of the effectiveness and profitability of an ad campaign.
Avoid Vanity Metrics
KPIs that provide little value to your business are known as “vanity metrics.” While they may give you lots of numbers and look good on the surface, these numbers offer little insight into the customer experience.
An example of a vanity metric can be social media impressions and followers. Anyone can purchase followers, and while it’s nice to have lots of people look at your content, it’s more important how they interact with your content. Measuring content shares and customer conversions would be more beneficial.
Taking Action on Your KPIs
You can measure KPIs on a weekly, monthly, quarterly, and annual basis. Ultimately, your business’s goals will dictate how often you should monitor your digital marketing KPIs.
For instance, if you’ve set a monthly sales goal, you will want to check in weekly to see how you are progressing. Now you can identify what performed well and what didn’t. Then, you can make insightful adjustments to the next week’s content pieces for success.
For long-term business goals, such as annual revenue, you’ll want to regroup every three to six months to ensure your KPIs continue to provide helpful information. The most important thing is regularly checking in and analyzing your KPI data. Then you can address any problems, adjust your strategy, and implement data-driven insights.
Need KPI Assistance?
At New Path, we work with you and your team to develop customer-focused marketing and advertising strategies using data-driven insights. Every move we make will bring you closer to achieving your marketing and business goals.
Blog Last Updated on 2 months by New Path Digital
