Digital Marketing is a dynamic and extensive marketing activity. It has been ever evolving since the concept was known. While being faster and economical, I feel the biggest advantage of digital marketing over traditional marketing is the measurability of results using a host of metrics or KPIs that give a particularly good perspective of 3 important factors:
- the impact of your digital marketing efforts
- the rate at which you get results and how you can optimise
- the cost effectiveness of your overall efforts
Going by over a decade of experience in the market, I have mentioned below the 5 most fundamental KPIs that should be focused on to get a grip of your digital marketing performance. For companies who are looking to get started, but are overwhelmed with the extensiveness of data and analytics, these KPIs are a good starting point.
Reach/Impressions: Which ever digital marketing activity you do, this is the basic metric. It goes by a simple logic, if your brand does not reach the optimum capacity of your target audience, you are already at a loss. Understanding your brand's reach or the impressions it gets from your digital activity and further diving into its relevance is a good starting point for improvement. Figuring out which digital marketing activity will be the most helpful in achieving your goals is crucial.
Click through rate (or engagement rate): Click through rate is a good measure of knowing the impact your communication is having on your audience. Not every digital activity can be measured using clicks, hence engagement (likes, shares, saves, comments, etc.) becomes an essential metric especially in organic digital marketing efforts. Higher the impact, more chances that the clicks (or engagement) will be more, which means right from seeing or reading about you, your audience has moved a step closer to your brand. Impressions with influencing impact will ensure that the click rate or engagement rate of your content is optimised.
Cost per click or (cost per engagement): Performance marketing is not possible without factoring in the cost. There are 2 important and basic cost-related metrics, one of which is cost per click or cost per engagement. This metric will shed light on how cost effective your content is. But there are various factors that contribute to this cost including competition, audience targeting, duration, among others. You can optimise the cost, make your content as relevant as possible, and ensure that this content reaches its target audience at a time when they are looking. Conversely, this metric is a good measure whether you have the right content/communication, reaching the right audience at the right time.
Conversion rate: This is a basic yet consequential goal for every digital marketer, as it is all about generating leads. Conversion rate is generally measured as a ratio of conversions to clicks. However, you can use engagement instead of the clicks where you may club together numbers of different types of engagement (likes + comments + shares, etc). This metric is a great KPI to understand if you have been able to lead the audience towards exploring your offering further.
Cost per conversion/lead: This one is the second important cost related metric and KPI of how economical your digital marketing efforts are. It is the total cost of digital marketing/the no. of leads/conversions (generally the first interaction in terms of showing interest towards considering your product/services). The math here is to reduce your cost per conversion, you must get a greater number of leads. Cost being a prime factor in all marketing efforts, this KPI throws light on the budget friendliness of the activities undertaken and lets you understand whether you are overspending or not.
Analytics is all about drawing actionable insights for improving your performance. If there are too many KPIs, the chances are that you might not be getting the right kind of inferences. It is necessary to not complicate analytics and use something that is easily tangible, paints the right picture of your performance and is easy to handle. The above mentioned KPIs are being used by every digital marketer and these are primary metrics to get a good grasp of your performance, while being easy to analyse and infer.