So What is a KPI, Anyway?

It was a term I’d heard over and over in my past Marketing classes – I knew it well, and had defined it on multiple occasions for my professors. But it wasn’t until after working in an ad agency this past summer that I realized how often that familiar term, “KPI,” would be casually thrown around on a regular basis. It was when I was assigned to “send a client some KPIs of his campaign’s performance” that I realized that I had absolutely no idea what they meant. What did they want? What did the client want?

Luckily, the team at CommCreative was pretty patient with my silly questions. After asking one of the Digital Marketing Managers for some advice on the assignment, I think I received probably one of the most apt definitions available. As Chase told me, “Yeah…KPIs are arbitrary, but they’re also not.” I started backpedaling away with an unsure “Right, gotcha,” followed by a quiet “Shoot, I’m screwed.

I sat back down and nervously pored over the Excel sheet with the AdWords report I’d thrown together. That’s when I began to realize what it was Chase meant. I saw trends in the data that were purposeful and directly related to the campaign I was reporting on, and then I began to notice other trends and side-effects of the campaign that were signs of weakness and misdirected efforts on behalf of this particular company that would affect its future. Boom. Got it.

I finally realized that there were just three kinds of KPIs to always keep in mind when performing any sort of analysis.

  1. KPIs that are just always important. Period.
  2. KPIs that were company/campaign specific. A little more actionable.
  3. KPIs that the client specifically asked for. Not always relevant.

Now, granted, I’m not the world’s foremost authority on digital KPIs, but here’s how I personally began to break these down by the most commonly occurring measurements I recorded:

 

  1. KPIs that are just important. Period.
  • Click-through-Rate (CTR)
    • Nothing better than a good CTR. While I understand that there are campaigns that are primarily geared towards generating brand/product awareness, I think that displaying a campaign’s CTR always helps to demonstrate not only the level of interest and audience engagement, but also the types of consumers that a campaign is reaching.
      Do they actively pursue offers? If they do, at what times are they online? How long do they spend on your site? Did they click through key offers on the site, itself? Can you target them for re-marketing?
  • Clicks
    • This kind of goes hand-in-hand with CTR. A high CTR is great, but if only 5 people saw your ad, that’s not a very good ad performance. Granted, you could use Impressions here, instead, but I’ve found that most brands/campaigns are placing more and more importance on engagement rates over plain, raw traffic. As the number of high-volume Internet users continues to increase, the number of impressions will be more and more inflated in a way that won’t necessarily be helpful or accurate.
  • Bounce Rate
    • Bounce Rate comes into play a little more towards the front-end developers’ side of the equation – given that the landing page for the ad is actually relevant to the campaign and its ads, of course. Getting your consumer past the landing page of your campaign is the first step towards building genuine interest and true engagement for your brand. If consumers are leaving the site at the landing page, the company needs to re-evaluate its UI and content to streamline the conversion of Clicks to MQLs.
  • Conversions
    • Granted, this term will mean something different for every campaign you’re working on – but no matter what, it will undoubtedly be relevant. Conversions measure your true number of successes – whether it be getting consumers to sign up for a newsletter or complete a purchase – every conversion is another way of measuring the true efficiency and effectiveness of your campaign.
  1. KPIs that were company/campaign specific. A little more actionable.
  • % New Visitors
    • While determining the percentage of new traffic coming to your site is always a useful point of analysis, this dimension especially comes in handy for brand awareness campaigns. If the traffic to your site has increased over the duration of the campaign, you’ve effectively boosted your consumer base. All that’s left now is keeping up with them and making sure to streamline your site with friendly and welcoming UI.
  • Impressions
    • Now yes, you could just calculate this dimension from the presence of CTR and Clicks. But Marketers – much like the consumers they market to – don’t want to sift through any more data than they have to. Just get to the point. If a brand is trying to reach more people, they want to know the raw number of impressions that the campaign is receiving. This will also help them determine which ads are properly targeted and, as a result, over/under-spending.
  • Conversion Rate
    • Sort of following suit. Conversion rate – much like CTR – is especially useful for getting a better sense of both how accurate your targeting is and how effective your site is at promoting conversions. While this may not be as directly actionable as the raw number of Conversions, the Conversion Rate will give you a better sense of your inbound marketing capabilities.
  1. KPIs that the client specifically asked for. Not always relevant.
  • Cost
  • % Budget Spent
  • Cost / Converted Click
  • Conversion Value
    • …Sam these are all cost-based KPIs.” Yup. Every time a client required a specific KPI calculated or set up, they would ask about their budget and costs. Understandable. The first question all Marketers are usually asked is some variation of “How much is that going to cost?” So any report for a Marketing Director will usually require an important analysis of all of the benefits of the ad campaign, and a highlight regarding the efficiency of the ad spend.

So after a full summer of reporting, analyzing, and sending out recommendations, that’s essentially what I came away with.

KPIs are arbitrary…but they’re also not.

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