In a series of blog posts I’ll go through the most common online display marketing metrics. The aim of these posts is to give anyone who is new to the area a basic understanding of which metrics are used and how and when they are relevant. In this first post I’ll explain four basic metrics and how they interact:
An impression is when an ad has been shown. Or actually, when an ad has been loaded into a browser that is visiting a page that holds ads. The ad doesn’t even have to have been in-screen, which means that the person browsing never had the chance to view or click the ad. (I’ll get back to all this in a later post about viewability). Because of this impressions is quite uninteresting on itself. This being said, alot of important metrics are derived from impressions. Later in this post I’ll explain two of them, CTR and CPM. Among others, that I’ll get back to in later posts are frequency and viewability.
The only reason impressions is an important metric on it’s own is since this are what you pay for. Seen or not, clicked or not – if you’re buying programmatically, you pay per impression.
If a customer clicks an ad, this will trigger a script that counts clicks. This is an important measure to see how well your ad is performing and often used in a/b-tests to find the most effective creative. Although the click in it self has little to no value for the advertiser it is considered to be an indication of intent to buy or how interesting the ad is to the customer.
Unfortunately there is a lot of click fraud and/or click mistakes (especially on mobiles) going on. In order to draw the right conclusions regarding the effectiveness of the campaign in general and specifically the creative and placement it’s important to focus on verified clicks.
When evaluating a campaign, CTR (Click Through Rate) is a common metric. CTR is calculated by dividing the number of clicks by the number of impressions.
If your site has the aim to sell your product (not just promote it), the amount of orders your marketing has generated is most likely your main focus. Orders are usually divided into VT (View-through) orders and CT (Click-through) orders. An order is counted as a VT order when an ad was shown to customer who completed a purchase within a set time span (often 7 or 30 days). A CT order is when the customer has clicked an ad and makes a purchase within the same session.
CR (or CVR) is an acronym for conversion rate. When evaluating a marketing campaign, this is a measurement of how large proportion of the clicks that generate an order.
As a marketer you are probably more often than not working on a fixed budget. There are a number of metrics used to evaluate if your marketing budget is spent in an effective way.
- CPM – Cost Per Mille (mille is Latin for thousand). This shows your cost for 1000 impressions. Since impressions are bought individually in programmatic marketing, CPM is often called eCPM ( =effective CPM).
- CPC – Cost Per Click. This is the average cost for one clicked ad.
- CPO – Cost Per Order. This is the average cost for one order.
That’s all for now, please don’t hesitate to comment if you agree, disagree or have any questions about the metrics. In my next post I’ll discuss some metrics used in programmatic buying.