KPI: A Quick Guide to Key Performance Indicators

By August 24, 2016Digital Media Buying

Bright-eyed, bushy-tailed, and wet behind the ears—it’s easy to hone in on one Key Performance Indicator (KPI) during your first branded acquisition campaign.

The KPI that gets all of the attention is often the campaign’s objective, which makes sense, right? If my campaign is set up to drive mobile app installs or purchases from my e-commerce site, why should I pay attention to anything else? If I were to pay attention to any other KPI, what would it be, and more importantly, why should I care?

Here’s a quick guide:

CTR – Click Through Rate

  • Definition: The number of clicks you received on your ad that directed people off Facebook, divided by the number of impressions.
  • What this means: This is an essential indicator of how well your ads are performing.
  • Why should I care? The more people that see and click your ad, the better your ad is performing. Strive to have a CTR that is 1% or higher.

CPC – Cost Per Click

  • Definition: The amount you are charged each time someone clicks on the link in your ad that directs people off Facebook.
  • What this means: This is essentially the per-person cost of driving traffic to your website/landing/app download page.
  • Why should I care? The cheaper it is to drive traffic to the link in your ad, the more efficient your ad spend.

CPP – Cost Per Purchase

  • Definition: The average cost for each purchase tracked by your Facebook pixel on your website after people viewed or clicked on your ad.
  • What this means: This is an indicator of how efficient your ads are at driving purchases.
  • Why should I care? Your ultimate goal is to have the cost per purchase be a fraction of the cost of your average order value. If you have a product that retails for $100 and it costs you $10 of ad spend to get a customer to purchase one of your products, you are hitting the right marks.

Relevance Score

  • Definition: A rating of 1 to 10 based on how your audience is responding to your ad. This score is calculated after your ad receives more than 500 impressions.
  • What this means: This is an indicator of how relevant your ad is to the selected target audience.
  • Why should I care? The more relevant your ad is to a particular audience, the higher the likelihood that you’ll achieve your overall campaign objective.

Return On Ad Spend

  • Definition: The total value of the purchase actions tracked by your Facebook pixel on your website after people viewed or clicked on your ad divided by the total amount you’ve spent during the dates you’ve selected in your Ads Manager.
  • What this means: Viewing advertising as an investment, your return on ad spend is your return on investment (ROI)
  • Why should I care? Eventually, if you are not bringing in more money through product sales than you are spending on ads that bring in those purchases, you aren’t going to be in business very long.

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