“If it’s not measured, it doesn’t exist”. Unless you have surplus cash (and in that case, call us!) or you really enjoy working blindfolded, it is essential to measure the profitability of your digital campaigns and, consequently, the efficiency of your agency, freelancer or marketing team. But this exercise should not be improvised: you have to set up a quality-data collection system in advance, and you must fully understand the indicators and regularly monitor performance!
Tracking is the key thing
Let me take you through it, step by step:
1. Define the objectives 🎯 of the campaign: are you looking for leads, online sales, views for a video or an article?
2. Choose, on your website, the indicators (💲) that are needed: for a leads campaign the number of clicks on the “send” button of a form, for e-commerce the number of sales, revenue per sale, products purchased, etc.
3. Set up a tracking system 🔍 on the acquisition platforms, that returns a code to be retrieved and implemented on your website
4. Carry out tests 💉 to verify that everything works properly.
Do not overlook these prerequisites! Nobody – not even us – can guarantee the number of leads or sales you will get, but what is certain is that if the objective is not clearly defined and the tracking system is not effective, the result will be close to zero…
What indicators should be analysed?
In the case of generation of leads, we do not speak of ROI, but of CPL (cost per lead). It is calculated by dividing the ad spend by the number of leads generated.
It is difficult to say categorically whether a CPL of €3 is “good” or “bad”. However, you can compare it against your sales margin: if your average sale is €50 and the CPL (the cost of gaining a prospect) amounts to €120, then you are in the red…
For e-commerce, we refer to ROAS (return on ad spend) and ROI (return on investment). The principle is the same: divide what you have earned by your ad spend.
But for ROAS, “what you have earned” corresponds to revenue, while for ROI, you must deduct production costs, salaries, and such from revenue, and only consider the sales margin. The ultimate objective of any online sales website is to have ROAS, or even ROI, equal to 1 (you are not losing money) or, obviously, one that is greater than 1 (you are making money!).
Do not let the campaign just do its own thing!
It’s perfect, you have defined your indicators and your target values. Do not rest on your laurels by not looking at the figures until the end of the campaign! The great advantage of these easy-to-measure ratios is that you can refer to them regularly, depending on the ad spend invested. For example, every two days or once a week, or at any given time, to estimate whether the campaign is profitable or not and make adjustments if necessary. My last piece of advice: be reactive!
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