What is a Digital Marketing KPI?
Digital marketing KPIs are quantifiable metrics that measure performance across all marketing channels. Companies of all sizes use KPIs to measure what is and isn’t working. KPIs provide actionable insights into how you can pivot and implement meaningful changes to help increase conversions.
Having the right KPIs in place will inform future 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
Nowadays, it’s easier than ever to access data and measure KPIs. Common tools and platforms you can begin using are:
- 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 Set Digital Marketing KPIs
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 measuring KPIs, you want to keep it simple, action-oriented, and within a set timeline.
- 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 2023.”
6 Important KPIs to Measure
Which digital marketing KPIs are most important varies for every 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:
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.
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.
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 significantly varies 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.
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, Google Analytics’ soon-to-be default tracking system, 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.
Return on Investment (ROI)
Let’s be honest, revenue growth is the top goal for any business. And being able to track the ROI for each marketing initiative and action is key to consistently meeting your revenue goals. ROI is a key metric that CEOs and c-suite executives will want to review regularly.
Digital marketing ROI evaluates how effective a strategy is–it’s a macro view of an ad campaign’s contribution to the business’s profitability. It is calculated by dividing the profit generated by the cost of the ad.
The higher your ROI, the better. It means you are spending your marketing dollars effectively and providing tangible results; you can show leadership. If your ROI is low, you’ll be able to identify your weakest areas and double down your efforts.
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
Numerous metrics and analytics tools are available to measure almost anything you want in digital marketing. But only some metrics provide value to reaching your business goals.
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.
Digital marketing KPIs are key to measuring performance throughout your marketing strategy. And as technology evolves, businesses must successfully track, analyze, and apply data-driven insights to create more efficient and profitable digital marketing strategies.
Working with an agency, you’ll have a partner to help you align your path to success. 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 11 months by New Path Digital