METRICS AND KPIS

Listed here are common metrics and performance indicators used by online marketers, affiliates
and site owners to measure and optimise marketing strategies and site performance.
Being able to track and report on these metrics daily is key to being on top of any online
business; often its easy to overlook some of these when things are working well. But as soon
as revenue drops, or marketing cost start to escalate, understanding these metrics will ensure
activity can be optimised and tweaked for efficiency so site performance can continue to be
profitable.

Click Through Rate (CTR) % = Clicks / Impressions

WHAT IT IS This metric is generally used to measure the rate at which visitors are clicking
through after seeing a piece of media or link to a site, for example a paid search ad, a display
banner, or an email. Generally, CTRs will vary depending on the media channel. Branded
search CTRs can be high at around 10%, whereas prospecting display banners would look
more like a 1 hundredth of that at 0.1%
HOW ITS USED Its not wise to compare ad success across different media channels using
CTRs. However comparing CTRs for the same media type will give indication of which creative
message is encouraging the most clicks for the audience of traffic it is being displayed to. For
example, for a display campaign using 4 different designs of creative, optimising which creative
to show when using CTR can help to increase the clicks through to landing page.

Post Click Conversion Rate (CR) % = Conversions / Clicks

WHAT IT IS This metric is used to show the portion of site traffic which is undertaking the
required goal for the page or site. A conversion can mean a range of actions, the most common
being a purchase, a registration, a download, a video play, a Facebook like or a twitter follow.
Clicks in the above formula can be interchanged with visits depending on the source of the data.
For example, Google Analytics reports on page visits. Whereas media activity more generally
focuses on clicks.
HOW ITS USED Understanding conversion rate is an important aspect of running any
website, since a conversion is usually the main revenue driver. The overall day on day
conversion rate is a good health indicator of any site, and peaks and troughs should be
observed and acted upon. Its also important to be able to break down conversion rates into
smaller segments, typically by traffic source. The more granular you can get, the more visibility
and understanding you can have on how each traffic source is performing, meaning its easy to
take steps of optimising ie trying to grow traffic from good converting sources, and tweaking
traffic from poor performing ones.
Conversion rate also plays an important part in understanding site usability. A key factor in
getting visitors to undertake desired goals, is to develop a site conversion funnel which works at
an optimal level. You might be seeing a great CTR and traffic volume to your site, but if your
pages are hard to navigate and do not promote your product in a clear fashion, you will see a
high Exit rate and low conversion rate.

Post Impression Conversion Rate (PICR) % = Impression based Conversions /

Impression
WHAT IT IS This metric is mainly used as another form of understanding conversions in
display or email advertising. Users may be seeing ads that then influence them to visit a site at
a later date, perhaps via search.
HOW ITS USED This metric can be used in sneaky ways! For example, the performance of a
display campaign can be seen to be working well even if clicks are low, by looking at PICR.
However, on the flip side it can give an understanding of any uplift in conversions.

Cost Per Click (CPC) = Marketing Cost / Clicks

WHAT IT IS Cost per click is quite literally, the amount that each ad click is costing to
generate. It is a very common metric in Search advertising, and also used in display networks.
CPCs are commonly used as the bidding metric in search auctions as the maximum click price
advertisers are prepared to pay, varying depending on the competitiveness and buoyancy of the
market.

Cost Per Acquisition (CPA) = Marketing Cost / # Acquisitions

WHAT IT IS This metric is a key performance indicator for understanding how much its
costing to generate an acquisition. The term acquisition is just another word for conversion.
HOW ITS USED An effect way of planning marketing budget is to know in advance how much
can be spend on generating a single conversion based on the revenue as a result of a
conversion. Knowing this will mean marketing budgets can be planned efficiently. Also, once
campaigns are running, it is important to be able to calculate the CPA to understand what areas
of the marketing plan are performing at the desired CPA levels.
A point to note is that calculating the true CPA is not always a simple task, especially when a
number of marketing spends are being used. Understanding which marketing costs contributed
towards generating the acquisition has opened up a whole industry of marketing tracking tools,
and sparked much debate over conversion attribution. Overall its important not to be too narrow
in analysing CPAs, but rather look across all touch points a user had (and their associated
costs) before converting on site. Read more from one such attribution tool DC Storm.

Cost Per Lead (CPL) = Marketing Cost / # Leads

WHAT IT IS usually used by affiliates to quote a fixed price for the cost of a lead, where a lead
is some form of customer detail for example an email address or mobile number. It is also a KPI
for indicating how much it is costing to generate leads for a site doing marketing to build a
customer database.
HOW ITS USED Understanding the value achievable off the back of lead is the Holy Grail for
business where their models require revenue generation from a customer database. And

knowing this figure can dictate (in a similar way to CPA above) how much can be afforded on
generating these leads.

Return on Investment (ROI) % = ( Revenue Marketing Cost ) / Marketing Cost

WHAT IT IS ROI shows how much return is being achieved for the cost of generating the
revenue. The reason its important to consider along with CPA is that is takes into account the
amount of revenue produced. CPA does not, and therefore treats every sale with the same
value
HOW IT IS USED Similarly to CPA, ROI should be used to analyse the performance of
marketing spend. An ROI benchmark should be set for marketing budgets, so that activity can
be quickly reviewed for its efficiency and suitability for the business.

Email Specific KPIs

Delivery Rate % = # Delivered Emails / # Sent Emails

WHAT IT IS When sending emails to large databases, not all email addresses in the list will
gain delivery. The delivery rate is a measure which shows the portion of emails that were
delivered out of the total emails broadcast.
HOW ITS USED First off, it gives insight into the quality of the database being emailed. It also
will give insight into the sending score of the Email sender. Large ISPs pay close attention to
sender score, and will potentially block or blacklist senders that appear to be spammers.
Delivery rate is the first line in understanding the efficiency of your send, and if your emails are
getting into real and live inboxes.

Bounce Rate % = # Email Bounces / # Sent Emails

WHAT IS IT A bounce is when an email is tried to be delivered, but does not reach the email
inbox and hence bounces back to the sender. Bounces come in 2 main forms hard and soft.
A hard bounce is when the email is returned to the sender because the email address is invalid
and does not exist. A soft bounce is when the ISP can find the email inbox, but cant deliver it for
some reason, for example the inbox is full. In general, good database hygiene should involved
monitoring and filtering bounced emails out of a list.

Email Open Rate % = # Emails Opened / # Emails Received

WHAT IT IS Email open rate measures the percentage of people who open an email as part
of an email marketing send. Opening an email implies that the opener is interested in some way
in the email, hence an email open shows positive interaction. Its worth nothing that not all open
stats will be real people, for example some email clients such as outlook have auto open
options when the email is viewed in a preview pane.

HOW ITS USED Email open rate is the first KPI up an email marketers sleeve for feedback
on an emails ability to gain interest and a large part of this comes down to the email subject
line. So email open rate is a primary KPI for accessing the effectiveness of subject lines.

Email Click Through Rate (Email CTR) % = # link clicks / # emails opened
WHAT IT IS Similar to ad CTR above, email CTR is a measure of the portion of people
undertaking a desired click on a link within an email, out of all the people who opened the email.
HOW ITS USED Email CTR indicates if the email content is encouraging and sufficient
enough to get a reader to click to the desired landing page. Usually, a clear Call To Action is
required to get an increase in Click Through Rate, and also the email subject line must be
relavent to the actual email content. Often emails will have a number of links potentially in
different places in the email. Tracking Email CTR down to each link means it is possible to
assess the performance of each link, and therefore the email can be optimised to encourage
maximum CTR.

Unsubscribe Rate % = # Unsubscribe requests / # Emails Sent

WHAT IT IS Unsubscribe rate shows the proportion of people that an email caused them to
unsubscribe from the mailing list, indicating that they feel they email was irrelevant to their
interests and unwanted.
HOW ITS USED I have previously written about the importance of watching email unsub
rates in relation to database management ensuring you have a simple unsub mechanism is
important, as is also ensuring that your unsub is either not too high compared to other emails
sent, or does not rise due to changes in email sending strategy.

Cost Per Thousand Emails (CPM) = ( Email Cost / Emails Sent ) x 1,000
WHAT IT IS This is the cost of sending 1,000 emails.

Revenue Per Thousand Emails (RPM) = ( Email Revenue / Emails Sent ) x 1,000
WHAT IT IS This is the revenue generated per 1,000 emails sent.
HOW ITS USED RPM is used where the goal of email marketing is to generate revenue. It is
a measure that shows the revenue performance relative to the size of the send, and can be
offset against the CPM to show the profitability of the email send.

Display Ad Click Metrics Can No Longer Be Defended

Posted by Robert M. Brecht, Ph.D. | May 15, 2012

Impressions and clicks have long dominated the metrics of online advertising. Yet these two
metrics may be the least important metrics in measuring the effectiveness of any particular
banner or display ad.
Ad Impressions reported by ad networks simply reports the number of ads that were sent from
the ad server to the users browser. The term is misleading because it doesnt mean that the ad
was ever seen by the user. The ad may have never rendered within the browser or may have
loaded below the fold where the user could only have seen it if they had scrolled down the
page.
Clicks on display or banner ads are still the standard way success is measured when reporting
results from online ad campaigns. Its a logical assumption that clicks on ads that lead to pages
designed to convert visitors would be the most important measure in attributing the value of a
lead or sale.
A study released in April by ComScore and Pretarget questions these two fundamental
metrics. Over a 9 month period, Pretarget and ComScore undertook a large scale study of 263
million ad impressions across 18 different advertisers. They gathered not only typical ad
reporting data such as impressions and clicks but also other data including viewability and
hover data. Clicks and cookie-based conversion data were also collected for the ads served.
Conversion was defined as either a purchase or a request for information.
A Pearson correlation analysis of gross impressions, views (defined as 75 percent of the
pixels of an ad being visible in a browser either above the fold or after scrolling), time-in-view,
hover/engagements and total hover/engagement time, clicks and conversions.
The Pearson product-moment correlation coefficient is widely used in statistics to measure the
strength of linear dependence between two variables. The correlation coefficient value ranges
from minus one to plus one (-1 to +1). A value of plus 1 denotes a direct linear relationship
between the two variables while a value of minus 1 shows a direct inverserelationship between
two variables (as one goes up the other goes down). coefficient value of 0 means no linear
correlation between the two variables.
What they found should lead to a reevaluation of Key Performance Indicators (KPIs) for online
display and banner advertising campaigns. The metric with the highest correlation with
conversion was ad hover/interaction with a correlation coefficient value of 0.49. Viewable
correlations had the second highest correlation (coefficient value = 0.35) followed by a
significantly lower gross impressions correlation (coefficient value = 0.17).
What should be most interesting for online advertisers is that the correlation coefficient value
between the variables of clicks and conversions was 0.01! Let me repeat this finding: this study
found no statistical correlation between ad clicks and conversions!

This study, along with other studies with similar conclusions should make online advertisers
change the metrics they are using. MediaMinds 2009 Benchmark Report" released in 2010
revealed that increasing average Dwell (hover) time from 5 percent to 15 percent increased
conversion rate by 45%. In another study, Casale Medias 2011 Ad Visibility Report showed
that ads that appear above the fold were 6.7 times more effective at producing conversions than
ads appearing below the fold.
Its time for advertisers to look at their attribution models and definitions of KPIs. If you measure
the success of your online advertising by looking at the last click to determine a display ads
effectiveness you are missing the boat entirely. If you are using ad impressions as a KPI, there
are better metrics to use.
Advertisers and their agencies should be paying close attention to how they measure the
effectiveness of their online advertising campaigns. Clicks would appear to be a poor indicator
of resulting conversions. These studies bring a new dimension to the shift away from last click to
multi-touch attribution modeling underway.

32 Key Performance Indicators (KPIs) for Ecommerce

Performance should inform business decisions and KPIs should drive actions.
Key performance indicators (KPIs) are like milestones on the road to online retail success.
Monitoring them will help ecommerce entrepreneurs identify progress toward sales, marketing,
and customer service goals.
A performance indicator is simply a quantifiable measurement or data point used to gauge
performance relative to some goal. As an example, it may be a goal for some online retailers to
increase site traffic 50 % in the next year. Relative to this goal, a performance indicator might be
the number of unique visitors the site receives daily or which traffic sources send visitors (payper-click advertising, search engine optimization, brand or display advertising, or a YouTube
video).
For some goals there could be many performance indicators often too many so often
people narrow it down to just two or three impactful data points known as key performance
indicators. KPIs are those measurements that most accurately and succinctly show whether or
not a business in progressing toward its goal.

Setting Goals and Identifiying KPIs

Selecting KPIs begins with clearly stating goals and understanding what areas of business
impact those goals. Of course, KPIs can and should differ for each of an online retailer's goals,
whether those are related to boosting sales, streamlining marketing, or improving customer
service.
Here are a few examples of goals and associated KPIs:

GOAL 1 Boost sales 10% in the next quarter. KPIs include daily sales, conversion
rate, site traffic.

GOAL 2 Increase conversion rate 2% in the next year. KPIs include conversion rate,
shopping cart abandonment rate, associated shipping rate trends, competitive price trends.

GOAL 3 Grow site traffic 20 percent in the next year. KPIs include site traffic, traffic
sources, promotional click-through rates, social shares, bounce rates.

GOAL 4 Reduce customer service calls by half in the next 6 months. KPIs include
service call classification, identify of page visited immediately before the call, event that
lead to the call.

It should be easy to see that there are many performance indicators, and the value of those
indicators is directly tied to the goal progress measured. Monitoring which page someone
visited before initiating a customer service call makes sense as a KPI for GOAL 4 since it could
help identify areas of confusion that when corrected would reduce customer service calls, but
that same performance indicator would be almost useless for GOAL 3.

With the idea that KPIs should differ based on the goal being measured, it's possible to consider
a set of common performance indicators for ecommerce. Here are 32 common ecommerce key
performance indicators. Just remember that the performance indicators listed below is in no way
exhaustive.

32 Key Performance Indicators

Sales Key Performance Indicators:

Hourly, daily, weekly, monthly, quarterly, and annual sales

Average order size (sometimes called average market basket)

Average margin

Conversion rate

Shopping cart abandonment rate

New customer orders versus returning customer sales

Cost of goods sold

Total available market relative to a retailer's share of market

Product affinity (which products are purchased together)

Product relationship (which products are viewed consecutively)

Inventory levels

Competitive pricing

Marketing Key Performance Indicators:

Site traffic

Unique visitors versus returning visitors

Time on site

Page views per visit

Traffic source

Day part monitoring (when site visitors come)

Newsletter subscribers

Texting subscribers

Chat sessions initiated

Facebook, Twitter, or Pinterest followers or fans

Pay-per-click traffic volume

Blog traffic

Number and quality of product reviews

Brand or display advertising click-through rates

Affiliate performance rates

Customer Service Key Performance Indicators:

Customer service email count

Customer service phone call count

Customer service chat count

Average resolution time

Concern classification

Once you have set goals and selected KPIs, monitoring those indicators should become an
everyday exercise. And most importantly: Performance should inform business decisions,
and you should use KPIs to drive actions.

The 10 Marketing KPIs You Should Be Tracking

When it comes to setting and tracking your marketing KPI's, many marketers and business
owners are fully aware of the usual suspects: Sales revenue, Leads, Cost per acquisition.
But there are a number of other KPI's that you should be tracking in order to execute a more
successful marketing campaign.
No one wants to support a marketing activity that's losing their company money. By tracking the
right marketing KPI's, your company will be able to make adjustments to various strategies and
budgets.
Without the right KPI's, your company might be reporting and making decisions based on
misleading information. In addition to this article, we've also detailed how to fix the 6 critical
marketing KPIs your boss actually cares about here.

The 10 Most Important Marketing KPI's to Track

1. Sales Revenue
How much revenue has your inbound marketing campaign brought your company?
Understanding your sales revenue is important to know how effective your inbound marketing
campaign is, no company wants to spend money on something that isn't generating money.
For the moment think of inbound marketing as pay per click, if your sales revenue from direct
mail was less than the money you spent for that campaign, why would you continue using direct
mail? Most likely you would move that money to other marketing activities. To determine
your sales revenue from inbound marketing you would have to define what you mean by
inbound and outbound marketing.

Inbound marketing activities include:

Developing premium content

Podcasts

Blogging

Infographics

Social Media Engagement

Pay Per Click

Outbound marketing activities include:

Direct mail

Television ads

Advertising

Telemarketing

Another critical element is capturing sales data directly via your CRM integration and closed
loop reporting. You can calculate your sales revenue from inbound marketing by utilizing the
following calculation.
(Total sales for the year) - (Total revenue from customers acquired through inbound
marketing)

2. Cost Per Lead

Not only do you want to calculate your customer acquisition costs for inbound marketing, but
outbound marketing as well. How much is it costing you to acquire a customer through inbound
marketing versus outbound marketing? When calculating your customer acquisition costs, it
requires the integration of your marketing automation and CRM platforms as well as accounting
for all relevant costs associated with ERP integration.
Calculating CAC for inbound marketing, relevant costs include:

Manpower (creative and technical)

Technology and software

General overhead
Calculating CAC for outbound marketing, relevant costs include:

Advertising

Marketing distribution

Manpower (sales and marketing)

General overhead
Once calculating the costs associated with your inbound and outbound marketing campaigns,
you can directly account for new sales, as well as allocate particular budgets for each

campaign. If you company is utilizing mostly inbound marketing, you can break down that
component further by campaign types assess how successful and profitable each activity is.

3. Customer Value
With inbound marketing, there is no better way to reach out to your current customers. Not only
can it help you keep in contact with leads, but it also helps reduce churn and expand your
customers lifetime value.
You can calculate the lifetime value of your customers by utilizing the following calculation:
(Average sale per customer) X (Average number of times a customer buys per year) X
(Average retention time in months or years for a typical customer)
A great way to increase the lifetime value of your customers is by developing lead nurturing
campaigns that reach out to existing customers. Providing you and your sales team the
opportunity to inform existing customers about new services, products and resources.

4. Inbound Marketing ROI

Every company wants to see their return on investment! Calculating your inbound marketing
return on investment is huge to help assess your monthly and annual performance. Equally
important is the ability to start planning strategies and budgets for the following year or even
months. No matter what marketing activity your company is using, your return on investment will
determine the future with that activity. You don't want to continue adding money or increasing
your budget for a marketing activity that is costing your company money.

5. Traffic to Lead Ratio

Understanding your website traffic, especially knowing where your traffic is coming from,
whether it's organic, direct, social media or referrals is extremely important. Is
your trafficcontinually increasing or is it dropping? Not only do you need to ensure that your
traffic is meeting the goal you set for the month, but also make sure your visitor to lead
conversion rate is between 2 to 4 percent.

6. Lead to Customer Ratio

After all of your marketing efforts, it's important to know how many leads your sales team is able
to close. You will want to calculate both your sales qualified lead conversion rate and sales
accepted lead conversion rate.
What's the difference between the two?

Sales Qualified Leads are leads considered to be sales ready based on their lead score or
specific activities/triggers they completed. Most companies would consider a lead who filled out
a form, such as "contact a rep" a lead who is ready to buy your service or product. For example,
a waste management company with a lead who filled out the form "rent a dumpster", would be
considered a sales qualified lead.
Sales Accepted Leads are leads your sales team considers opportunities, and have either
contacted the lead directly or a scheduled call.
This marketing KPI is extremely useful for sales and marketing to help determine how
successful their campaigns are.
Ask yourself the following questions:

Is my campaign capturing leads?

Is our CRM successfully passing qualified leads to sales at the right time?

Do you have high close rate?

7. Landing Page Conversion Rates

Is your content generating conversions? A great well to tell if your landing pages are converting
visitors is to see how many people are visiting each landing page and identifying how many of
those visitors are completing your lead capture forms.
One reason people might not be converting is your content! Are you creating remarkable
content that will make your visitors convert into leads? If your landing pages aren't generating
conversion rates around 10-20% you might need to edit your content. Another great way to
increase conversions would be to optimize your landing pages and call to actions by performing
A/B tests.

8. Organic Searches
What percentage of your traffic is from organic searches?
The traffic to your site generated by organic searches can be directly correlated with your
search engine optimization strategy. Some great metrics to help you identify where you organic
search traffic is coming from include:

Number of lead conversions assisted by organic search

Number of customer conversions assisted by organic search

Percentage of traffic associated with branded keywords

Percentage of traffic associated with unbranded keywords

Those are four really great metrics to help your company gain a better understanding of
your brand awareness, content marketing effectiveness, as well as the impact of your SEO
strategy.

9. Social Media Reach

You might be wondering what your social media reach and engagement have to do with your
marketing KPI's. Well, social media is a huge component of your inbound marketing strategy,
allowing you to engage and share content with users. You can show your senior management
team the value of social media through the growth and engagement of your social media
profiles. Social media engagement can include anything from likes, comments, retweets,
shares, mentions and many more.
Metrics you can utilize to show the importance and impact of social media on your marketing
efforts include:

Number of lead conversions assisted by each social media channel

Number of customer conversions generated through your social media channels

Percentage of traffic associated with social medie channels

With social media sites like Twitter, Facebook, LinkedIn Google+, Pinterest and Instagram you
might not have all the time in the world to effectively utilize every platform. Break down the
number of leads, customers and percentage of traffic coming from each platform.
Why would you spend 10 hours a month engaging and interacting on Google+ when 55% of
your traffic generated through social media is coming from LinkedIn?

10. Mobile Traffic, Leads and Conversion Rates

You cannot forget the increasing amount of traffic, leads and customers being produced through
mobile devices like Smartphones and tablets. Is your website effectively optimized for mobile?
One way you can tell if your company is generating traffic and leads through mobile is to
calculate the following metrics:

Number of lead conversions from mobile devices

Bounce rates from mobile devices

Conversion rates from mobile optimized landing pages

You don't only want to see how many visitors are converting through mobile but you also want
some indication of how effective your mobile presence is.

Understanding Key Performance Indicators (KPIs) Complete

Guide
What I am going to do next is, explain KPIs to you in a way that is instantly useful and I
am planning to make you a KPI Champion in just 10 minutes

What is a KPI?
KPI stands for Key performance Indicator.
It is a metric which is used to determine how you are performing against your business
objectives.
A metric can be a number or a ratio. So we can have number metrics and we can have ratio
metrics.
For example: Visits, Pageviews, Revenue etc are number metrics because they are in the form
of numbers.
Bounce rate, Conversion rate, Average order value etc are ratio metrics because they are in
the form of ratios.
Since KPI is also a metric, we can have KPIs in the form of numbers and ratios. So we can
have number KPIs and we can have ratio KPIs.
For example: Days to purchase, visits to purchase, Revenue etc are number KPIs.
Conversion rate, Average order Value, Task completion rate etc are ratio KPIs.

Difference between a Metric and KPI

A metric graduates to KPI.
However in order to make this happen the metric must hugely impact the business
bottomline. This is possible only when the metric has the ability to provide recommendation(s)
for action which can a huge impact on the business bottomline. So
Your KPI must have the ability to provide recommendation(s) for action which
can hugely impact the business bottomline.
For example, Average Order Value can be used as a KPI because it hugely impacts the
business bottomline. You can greatly increase sales at the present conversion rate just by
increasing the size of the orders.
Revenue per click, Revenue per visit, Revenue per acquisition, Cost per acquisition, Task
completion rate etc. are other examples of metrics which can be used as KPIs.

How to find a good KPI?

1. Before you start the process of finding KPIs, you must acquire a very good understanding of
your business and its objectives.
2. Then you need to translate your business objectives into measurable goals.

3. Once you have determined your goals, you will select KPIs for each of these goals.
You will use these KPIs to measure the performance of each goal.
Goals are specific strategies you used to achieve your business objectives.
Your business objective can be something like increase sales. Your goal could be something
like increase sales by 5% in the next 3 months by increasing the average order value from x to
2x.
Any metric which has the ability to directly impact the cash flow (revenue, cost) and/or
conversions (both macro and micro conversions) in a big way can be a good KPI.
For example if you sell display banner ad space on your website and display advertising is the
main source of revenue for you then pageviews can be used as a KPI. The more pageviews
you get, the more you can charge for every thousand impressions (CPM) from your advertisers.
If you are not sure whether or not a metric can be used as a KPI, then try to correlate it with
revenue, cost and/or conversions over a period of time (3 or more months).
You need to prove that there is a linear relationship between your chosen KPI and
revenue, cost and/or conversions
i.e. as the value of your KPI increases or decrease there is a corresponding increase or
decrease in revenue, cost and/or conversions.

Can you use number of twitter followers as a KPI?

The answer is NO, not unless you can correlate number of twitter followers with revenue, cost
and/or conversions i.e. as the number of twitter followers increases or decreases there is a
corresponding increase or decrease in revenue, cost and/or conversions.

Even if somehow you are able to correlate the number of twitter followers with revenue, cost
and/or conversions you still need to prove that the correlation has huge impact on the business
bottomline.
Just because a metric impacts the business bottomline, does not automatically make it a
good KPI.

Can you use number of facebook fans as a KPI?

The answer is NO, not unless you can correlate number of facebook fans with revenue, cost
and/or conversions

i.e. as the number of facebook fan increases or decreases there is a corresponding increase or
decrease in revenue, cost and/or conversions.

Even if somehow you are able to correlate the number of facebook fans with revenue, cost
and/or conversions you still need to prove that the number of facebook fans has huge
impact on the business bottomline.
Just because a metric impacts the business bottomline, does not automatically make it a
good KPI.

Can you use Phone Calls as a KPI?

The answer is yes provided majority of your revenue comes through Phone calls.
You can easily track phone calls through phone calls tracking software and then import
phone calls data into Google Analytics. Once the data is imported you can tie phone calls to
revenue, cost and/or conversions to determine correlation.
Here there is one thing to keep in mind.
A KPI doesnt need to be a metric available in Google Analytics reports.
You can use metrics from other analytics tools too.
For example Phone call metrics is not available in Google Analytics reports by default but this
doesnt mean that we cant use it as a KPI.
Similarly, Task completion Rate metric is not available in Google Analytics reports. However
you can calculate Task completion Rate through a survey tool like Qualaroo and use it as a
KPI.
Task completion rate is the percentage of people who came to your website and
answered yes to this survey question: Were you able to complete the task for which
you came to the website?

Can you use Clients Happiness as a KPI?

The answer is NO. This is because a KPI is a metric and metric is a number or a ratio. In other
words,
metrics is something which can be measured in the first place.
How you can possibly quantify a human emotion like Happiness?

Types of KPIs
There are two broad categories of KPIs:
1.

Internal KPIs

2.

External KPIs
Internal KPIs
These KPIs are internally used by team members to measure and optimize their marketing
campaigns performance. They are not always reported to clients/boss/senior management.
Internal KPIs dont need to be business bottomline impacting either.
For example following KPIs can be used to measure your link building outreach campaigns :

1.

Delivery Rate

2.

Open Rate

3.

Response Rate

4.

Conversion Rate of outreach

5.

ROI of outreach
Often marketers make this terrible mistake of reporting internal KPIs to clients/senior
management.
For example Bounce Rate is a good Internal KPI for optimizing landing pages. But it is not
something which you will report to a CEO. We report only hugely business bottomline impacting
KPIs to senior management.

External KPIs
These are the KPIs we report to clients/senior management and use them to create Web
Analytics Measurement Models (strategic roadmaps) for businesses.
External KPIs must be hugely business bottomline impacting.
Whenever we talk about KPIs in general, we are referring to external KPIs. Some examples of
external KPIs:
1.

Average Order Value

2.

Conversion Rate

3.

Revenue

4.

Revenue per acquisition

5.

Cost per acquisition

6.

Task Completion Rate

7.

Goal conversions
Note: External KPIs can also be used as internal KPIs. There is no hard and fast rule here.

Attributes of a Good KPI

A Good KPI has following attributes:

1. Available and Measurable

You can use only those metrics as KPIs which are available to you in the first place. For
example if Net Promoter Score metric is not available to you then you cant use it as a KPI.
Similarly if you come up with something which is impossible to measure (like frustration level of
customers who abandoned the shopping cart for the 3 rd time) then you cant use it is as a KPI.
So when you are finding your KPI, you need to be 100% sure that there is a mechanism/tool
available out there to measure and report your KPI in the first place.

2. Hugely business bottomline impacting

If a metric does not greatly impact the business bottomline then it is not a good external KPI.

3. Relevant
If your KPI is hugely business bottomline impacting then it is got to be relevant to your business
objectives. Conversely, if your KPI is not relevant to your business objectives then it cant be
business bottomline impacting either.

4. Instantly useful
If your KPI is hugely business bottomline impacting then it is got to be instantly useful i.e. you
can quickly take actions on the basis of the insight you get from your KPI.

5. Timely
Your KPI should be available to you in a timely manner so that you can take timely decisions.
For example if you are using a compound metric (a metric which is made up of several other
metrics) as a KPI and it takes several months to compute it once and then another several
months to compute it second time then it is not a good KPI as you cant take timely decisions on
the basis of such KPI.

Examples of Good KPIs

KPI

Meaning

Formula

Gross Profit

It is the profit after

production and
manufacturing cost.

Gross Profit = Sales Revenue

Direct Cost
Direct cost can be something like cost of

manufacturing a product

Gross Profit
Margin

It is used to determine the

effectiveness of your
business in keeping
production cost in control.
Higher the gross profit
margin, more the money is
left over for operating
expenses and net profit.

Gross Profit Margin = (Gross Profit/

Revenue) * 100

Operating Profit = Sales Revenue

Operating Profit

Operating profit
margin

Net Profit

Net Profit Margin

Revenue Growth
Rate

Total Economic
Value

It is the profit before

interest and taxes.

Operating Cost
Operating cost is the ongoing cost of
running a business, product or system. It
can include both direct and indirect costs.

It is used to determine the

effectiveness of your
business in keeping
operating cost in control.
Higher the operating profit
margin, more the money is
left over for net profit.

Operating Profit Margin = (Operating

Profit/ Revenue) * 100

Also known as net income,

net earnings, bottomline. It
is the profit after interest
and taxes.

Net Profit = Sales Revenue Total cost

(this includes any direct and indirect cost
+ interest + taxes)

Also known as profit

margin, net margin, net
profit ratio. It is used to
determine the
effectiveness of your
business in converting
sales into profit. Low profit
margin indicates higher
risk, that a decline in sales
will erase the profit and
result in net loss.

Net Profit Margin = (Net Profit/ Revenue)

* 100

Also known as sales

growth rate. It is the
measure of the percentage
increase in sales between
two time periods.

Revenue Growth Rate = (Current months

Revenue- Last months Revenue) / (Last
months Revenue) * 100

It is the total value added

by your
product/service/campaigns
to the business bottomline.

Total Economic Value = Total Revenue+

Total value of the assisting conversions +
Total value of the last click conversions

It also take into account

the role played by micro
conversions and
conversions which
assisted and completed
the sales.

10

11

Return on
Investment (ROI)

Net Promoter
Score

Customer lifetime
value

It is used to evaluate the

efficiency of your
investment or to compare
the efficiency of different
investments.
It tells how likely it is that
your customers will
recommend your business
to a friend or
colleague. Click here for
more details.
It is the projected revenue
(repeat business) a
customer will generated
during his lifetime.
Different types of
customers have different
life time value (LTV). One
of the best ways to boost
LTV is by improving
customer satisfaction.

ROI= (Gain from investment cost of

investment)/cost of investment

Net promoter score = % of promoters %

of detractors

(Average order value) X (Number of

Repeat Transactions) X (Average
customer life span in months/years)

Average customer life span means how

long he/she remains your customer.

It is used to determine how

good your company is in
retaining customers.

Customer Retention Rate = [1(Customers lost in a given time

period/total number of customers
acquired in the same time period)] * 100

This score is used to

separate profitable
customers from
unprofitable customers.

Customer profitability score = Revenue

earned through a customer cost
associated with customer
management/service/retention

It is the average cost of

generating a lead.

Cost per lead = total cost/total leads

It is the average cost of

acquiring a customer or
generating a conversion

Cost Per Acquisition = Total Cost/ Total

acquisitions

Revenue Per
16
Acquisition

It is the average revenue

earned through an
acquisition

Revenue Per Acquisition = Total

Revenue/Total acquisitions

17 Per Visit Value

It is the average value of a

Per Visit Value = Total Revenue/Total

12

13

Customer
retention rate

Customer
profitability score

14 Cost per lead

15

Cost Per
Acquisition

18 Conversion Rate

Average Order
19
Value

Task Completion
20
Rate

visit to your website.

Visits

It is the percentage of
visits which results in goal
conversions or ecommerce
transactions.

Conversion Rate = (Total Goal

conversions/ E-commerce transactions/
total visits) *100

It is the average value of

an ecommerce
transaction. Through this
metric you can measure
how effective your
upselling and cross selling
efforts are and whether
you are helping people in
finding the product they
are looking for.

Average order value = Total

Revenue/Total ecommerce transactions

It is the percentage of
people who came to your
website and answered
yes to this survey
question: Were you able
to complete the task for
which you came to the
website?

Task completion rate = (number of people

said yes to the survey question/ Total
number of survey responses) *100

There is virtually no limit to the number of good KPIs you can find.
It all depends upon the nature of the business and the industry you work in.
For example if you work in an industry where majority/all of the conversions happen offline via
phone calls then you can use Phone Calls as your KPI.

Forget Click-Through Rate: 10 Metrics To Track For Display Advertising

October 14th, 2013

Digital ad spending continues to climb, with US budgets expected to reach $42.5 billion this
year and grow to $60.4 billion in 2017, according to eMarketer. Despite this growth, marketers
still struggle to prove their digital efforts are working.
Digital advertising has been and continues to be one of the most difficult ad mediums to
measure. Advertisers often feel unsure about what metrics point to success. To prove their
digital investments are worthwhile, they rely heavily on measurements such as the click-through
rate, which is thought to demonstrate a target audiences interest.
Theres a problem with this approach. While marketers create brand awareness at the top of the
funnel and focus on educating prospects in the middle of the funnel, success is still pinned on
click-through rates and other metrics that point to leads and conversion, which are historically
bottom-funnel metrics. This is especially true with display advertising.
With the B2B sales cycle getting longer, its imperative that marketers measure programs based
on what they want to achieve at each stage of the funnel. This will enable them to take a true
pulse of their growth and stay focused on drawing new prospects into the funnel.
Using CTR to measure display ad performance may make sense for the bottom of the funnel,
but it doesnt work for the top or middle of the funnel.
Here are 10 other metrics marketers can use to measure the performance of display
advertising:
Top-Funnel Metrics
Display ads can be used as a branding vehicle. It can be just as effective as TV, but its more
cost-effective and you can measure it more accurately.
Creative that is geared toward the bottom of the funnel often has strong calls to action so that,
when acted upon, the user is effectively saying they are ready to move forward with your
product. However, much of the audience you hit with display ads may not be aware of who you
are just yet. In short, its equally important to deliver creative ads that focus on driving brand
awareness and educating your audience.
Many of these metrics depend on benchmarking, so marketers should measure, for instance,
their branded search prior to a display campaign in order to gauge the lift when the display
campaign is running. Its important to note that metrics can vary from industry to industry and
from company to company. The best way to gauge the performance of display ads is to
measure them against your own brands performance when theyre not running.
1. Brand Recall: To measure the effectiveness of a branding display ad campaign, you can
commission an online brand study comparing the increase in awareness of your brand among
people who have seen your ad vs. people who havent.
2. Branded Search: Likewise, when your online advertising campaign is running, you should
see a lift in the number of searches for your company or products on Google or other search
engines.

3. Direct Website Traffic: This last metric is helpful to monitor for the top of the funnel. During
an online banner campaign, your website analytics tools should show an increase in visitors
who have typed in your brand name and arrived directly at your website.
Mid-Funnel Metrics
As I mentioned before, the mid-funnel is really focused on engaging and educating
prospects. When running a display campaign that is focused on education, there are several
metrics that will help you understand whats working so you can keep driving prospects down
the funnel.
4. Cost Per New Website Visitor: To calculate the cost of acquiring new prospects, divide your
total campaign cost by the number of new visitors. This will give you the cost per new website
visitor.
5-6. Page View Lift and Web Form Lift: While display ad campaigns are running, marketers
should see target prospects viewing more pages on their websites and completing more forms
as they download gated whitepapers and other content. The two success metrics to track to
here are page view lift and Web form lift, respectively.
Its important to understand the true impact of your advertising efforts so you can identify whats
working and whats not so you can then put more wood behind the arrow of whats driving
success.
Bottom-Funnel Metrics
By now youve gained brand awareness and have educated and engaged your prospects. Its
time to turn those prospects into leads.
7. Total Leads: Bottom-funnel display ads can drive your target audience to your website,
where you can entice them to share their contact information by filling out your Web forms. The
compilation of all contacts whose information you have can be considered total leads.
8. Cost Per Lead: You can also measure the performance of your bottom-funnel display ads by
tabulating cost per lead, which is the number of leads divided by total cost of the ad program.
9. Opportunity Contribution: Lower-funnel display advertising should also provide a boost in
opportunities that make it into your sales pipeline. This is known as opportunity contribution.
10: Revenue Contribution: Likewise, when bottom-funnel advertising is running, you should
see a boost in revenue contribution and total closed sales opportunities that originated from
marketing. A comScore study found that companies combining display and search advertising
saw a 119% lift in attributed sales.
Taking a look at all these metrics will make it much easier to get a handle on the real influence
your campaign is making. When you just look at conversions, you dont get the full picture.
But by taking this full funnel approach, it puts you in a better position to nurture prospects down
the funnel.

Google Adwords Analytics Complete Guide

Google Adwords Analytics is the analysis of the marketing campaigns which run on Google
Adwords, one of the most popular advertising systems in the world. If you do multi-channel
marketing for your company than you simply cant afford to ignore this paid channel. In order to
get optimum results from your Adwords campaigns you must possess good practical knowledge
of how Adwords works and how different campaigns, ad groups, keywords and landing pages
are analyzed and optimized for traffic and conversions.
Google Adwords Analytics process consists of following four phases:
1.

Preparation

2.

Configuration

3.

Analysis

4.

Recommendation
Here the output of each phase provides valuable insight for the next phase. So if you skip a
phase then you wont get optimum results, from either your analysis or marketing efforts.
Phase-1: Preparation

Preparation is the most important phase of Google Adwords Analytics. The quality of the
results that you will get later depends a lot on your preparation. Often marketers/analyst jump
straight into analytics reports without doing the required preparation.
Preparation is investing time and resources in understanding the business, its industry, its
products, USP, short term & long term goals, competition and the target market. If you dont
understand the business, its products, goals and market then you may never know what to
look at and where to look at in any analytics report. You may never know where to direct

your marketing efforts and budget. In short you will have hard time moving forward in the
right direction and producing optimum results through Adwords campaigns analysis.

In the Preparation phase we do following types of analysis by interviewing the client and by
browsing the clients website:
1. Profile Analysis get a basic understanding of the business, its history, brand story, revenue
model, USP, employee base, client base etc.
2. Products/Services Analysis get a basic understanding of what the products/services are
all about? Products cost, products range, most profitable products, least profitable products,
products USP etc. How the products are promoted and sold.
3. Market Analysis get a basic understanding of the target audience. Who are they, where
they live, why they buy the products, best customers in terms of revenue generation etc.
4. Goals Analysis get a great understanding of clients short terms and long term goals
(leads, sales, brand awareness, increase in market share, client retention etc). Without welldefined goals there is no optimization.
5. SWOT Analysis determine the strengths, weaknesses, opportunities and threats for your
clients business. Determine how strengths can be maximized, weaknesses can be minimized.
Determine how opportunities can be leveraged and how threats can be overcome.
6. Competitors Analysis determine the top 3 competitors of your client and do profile,
product, market, goals and SWOT analysis for each of them.

The Analytics behind Google Adwords

In order to get the most out of Google Adwords analytics you must know exactly how Adwords
work and how different Adwords metrics are calculated. The best way of gaining this insight is to
actually go out and run Google Adwords campaigns yourself for at least couple of months. If you
cant manage it, you cant measure it. It is as simple as that.
The second best way is to understand at least the key concepts behind Adwords system as
outlined below. If you are an experienced Adwords user, you can skip this section and jump to
the next section titled: Secret to getting highest possible return on your Adwords Investment.
But there is no harm in reading few more lines. Who knows, you may learn something new.

CPC, CPM and CPA Bidding options

Whenever a user performs a search on Google (or its search partners), the Google run an
auction for clicks known as the Adwords Auction. To participate in any auction you need to bid.
Similarly to participate in Adwords Auction you need to bid on keywords. Your bid is known as
the CPC (Cost Per Click) or CPM (Cost Per Thousand Impressions). In case of CPC
bidding you pay for each click on your ad. In case of CPM bidding you pay every thousand
times your ad is displayed.

CPC bidding is suitable if you are mostly interested in getting traffic to your website. CPM
bidding is suitable if your main focus is on branding, getting site visibility. In addition to CPC and
CPM bidding there is one more type of bidding known as the CPA (Cost Per Acquisition)
bidding. In case of CPA bidding you still pay for each click on your ad but you dont need to
manage your bids manually to get conversions. The bids are automatically managed by Google
Adwords Conversion Optimizer. This type of bidding is suitable if you are mainly interested in
getting conversions.
Note: In order to use CPA bidding, you must have conversion tracking enabled and your
campaign must have received at least 15 conversions in the last 30 days.

Max. CPC, Actual CPC & Avg. CPC

The maximum amount you are willing to pay for each click is known Max CPC. The actual
amount you pay for each click is known as Actual CPC. The actual CPC is usually less than
the Max. CPC because you need to pay only that much to Google which is good enough to
rank your Adwords ad higher than the advertiser immediately below you.
Actual CPC = Ad Rank of the competitor below / Quality Score of the advertiser
To get a sense of your actual CPC look at the Avg. CPC column in your Adwords reports. Avg.
CPC is the average amount you pay for each click on your ad.
Google Ad Rank Algorithm
Google ranks Adwords ads on the basis of Ad Rank. It is calculated as:
Ad Rank = Max. CPC Bid * Quality Score

Quality Score is a factor used by Google Adwords system to determine how relevant your
keyword (on which you are bidding), ad copy and landing page is to a users search query. It is
measured as a number from 1 to 10. Higher your quality score, higher will be your ad rank and
less you will have to pay for each click. Similarly higher your Quality score, lower will be your
keywords first page bid estimate. That means it will be easier for your ad to rank on the first
page of the search results if the keyword has high quality score.

Here advertiser-1s ad wont rank as his keyword/ads quality score is very poor (1). Advertiser-3
has got highest ad rank (12), so his ad will get the 1 position on search results page for the
targeted keyword. Advertiser-2 has got second highest ad rank (9), so his ad will get the
2nd position on search results page for the targeted keyword and so on.
In order to rank higher than advertiser-3, you need to achieve an ad rank higher than 12. You
can get a higher ad rank by increasing your Max. CPC bid, by improving your quality score or
both. In case your Quality Score is already 10, then the only thing that you can do to improve

your ad rank is increase your Max. CPC bid. Off course I have made this all very simple for you.
The ad rank algorithm is much more complicated.

There are three types of Quality Scores you must be aware of:
1.

Quality Score of a keyword it is used when the ads appear on Google Search
Network.

2.

Quality Score of Adwords ad it used when the ads appear on Google Display
Network

3.

Quality Score of mobile ad it is used when the ads appear on Mobile devices.
Note: Quality score of a keyword is calculated each time it triggers an ad.

The historical performance is the biggest component of Quality score. It can be historical
CTR of your keywords, ads, display URLs and your Adwords account. It can also be your
account past performance in a particular geo location(s) or device(s) (desktop, mobile, tablets
etc).
The second biggest component of quality score is Relevancy. Relevancy means how
relevant your keywords (on which you are bidding) are to the users search query and your ad
copy. It also means how relevant your ad copy is to its corresponding landing page.
The third biggest component of quality score is Landing Page Quality. The landing page
quality is determined by:
1.

How relevant your landing page is to its corresponding ad copy and the keywords you
are bidding on

2.

Landing page load time

3.

And other factors like originality of the contents, navigability etc.

Secret to getting highest possible return on your Adwords Investment

If you are a beginner in Adwords and your aim is to get highest possible returns on your
Adwords investment then you should consider running your Adwords campaigns on CPA

bidding as soon as there are eligible for it. If you are an advanced Adwords/Analytics user, you
should read the Super Geeks Section below:

If you are an advanced Adwords/Analytics user, you should avoid bidding on CPA. This is
because Google Adwords use the last click attribution model. So in case of Adwords, the
last click which completed the sales gets all the credit for conversion.
Average PPC marketers bid only on last click keywords. These are the keywords which
completed the sales. They dont bid on first click and middle click keywords. First click
keywords are the keywords which initiated the sales and middle click keywords are the
keywords which assisted the sales:

Different keywords (first click keywords, middle click keywords and last click keywords) work
together to create a sale. So in order to get optimum results from your PPC campaigns, you
need to bid on all the keywords {first click, middle click and last click keywords}. If you
understand Attribution modeling you will get my point. If you wish to learn more about attribution
modeling then you should read the following posts:
Attribution Modeling in Google Analytics Ultimate Guide
Google Adwords Attribution Introducing Effective Click Optimization
Because of Google Adwords Last click attribution model, the CPA that you see in your Google
Adwords report is not your actual cost per acquisition. It is the cost per last click
conversion.
So if you ignore first and middle click keywords and optimize PPC campaigns on the basis of
cost per last click conversions than you wont get optimal results and sometimes even lose
money. This is because if a keyword is not completing a sale, it may be initiating a sale or
assisting a sale (Always Remember That) and if you stop bidding on it because its cost per
last click conversion (the so called CPA reported by Google Adwords) is too high or it is not
completing any conversion then you may even lose money.

The very first step toward getting the highest possible return on your investment is determining
your Maximum Profitable CPA (Cost Per Acquisition). It is the maximum amount you can pay
for each conversion and still make profit on sale.
Let us suppose that you manufacture and sell camcorders. You sell camcorders for $300 per
item. Let us suppose that the total cost of manufacturing, packaging and shipping a camcorder
(including sales tax and other taxes) is $200. So the amount of money you make (i.e. profit) on
each camcorder is: $300-$200 = $100
Let us assume that this profit doesnt include the cost of marketing the products via Adwords
campaigns. So,
Profit per Conversion (before Adwords Cost) = $100
In order to remain profitable your cost per acquisition (or cost per conversion) via Google
Adwords campaign should be below $100 otherwise you wont make any money (profit). The
CPA that you will choose to target depends upon your profit margin.
Profit Margin = (Net Profit/Revenue) * 100
If you operate on high profit margin then your cost per acquisition needs to be low. But bear
in mind that maintaining high profit margins can result in decline in overall sales volume. This is
because the aim here is to get the most profitable sales and not highest possible volume of
sales.
If you operate on low profit margin then you can afford high cost per acquisition. This is
because the aim here is to get highest possible volume of sales and not the most profitable
sales. FMCG companies like Tesco operate on low profit margin. Since they make less profit
per item, they need to sell large volume of items in order to remain profitable. Steep decline in
sales volume will quickly erase their profit and result in net loss.
Side note: I am not a pricing strategy consultant but according to my experience, businesses
which dont operate on high profit margins generally generate more profit than those who
choose to operate on high profit margin. So whenever there is a tradeoff between profit and
profit margin, I would go for profit any time of the day.

Once you know your profit margin, you can decide your Target CPA i.e. the maximum amount
you are willing to pay for each conversion and still maintain your profit margin. Let us suppose
that your target CPA is $20. Then $20 is the maximum amount you are willing to pay for each
conversion and still maintain your profit margin.
If you are a beginner in Adwords you would be using conversion optimizer. While enabling this
tool you can either start with the recommended bid or specify your target CPA. If you are an
advanced user you would not be running conversion optimizer and you would adjust the bids
and do all the calculations manually (not exactly manually but via spreadsheet). This is
because you also need to optimize for first click and middle click keywords as explained above
and keep multi channels attributions into account.

In any case, once you have decided your target CPA, you run the ads for as long as is your
sales cycle (default 30 days) and then note down the Actual CPA. It is possible that your actual

CPA exceeds your target CPA. This happens because Actual CPA depends upon the factors
which are outside Googles control like: Conversion Rate and Max. CPC bid. The conversion
rate depends upon your ad copy, landing page and your brand credibility. Max. CPC bid
depends on the advertising competition. Both of the factors are not exactly in Googles control.
Actual CPA = Max. CPC / Conversion Rate

If your actual CPA is higher than your Target CPA, then you need to tweak your Adwords
campaigns in such a way that your Actual CPA is as close as possible to your target CPA (as
shown in Fig.4 above). The best way to reduce your Actual CPA is to increase the conversion
rate. Higher the conversion rate, lower will be the actual CPA. You also need to keep an eye
on net profit and profit per conversion (including Adwords cost)
Sometimes you may need to increase your target CPA (compromise on profit margins) if you
profit per conversion start declining while you are attempting to bring the Actual CPA as close as
possible to your target CPA. Sometimes your Actual CPA gets even lower than your target CPA
while you are still making incremental profit (as shown in Fig.4 above). In such case you set up
new Target CPA which is lower than the actual CPA and then again tweak the campaigns to
determine the most profitable CPA. So you may need to experiment with different Target
CPAs before you can find your maximum profitable CPA.

Explanation of various metrics used in the table above:

1.

All the metrics are for a particular ad group in an Adwords campaign.

2.

Total clicks, Number of conversions, conversion rate, Max. CPC and Avg. CPC metrics
are determined through Google Adwords reports.

3.

Profit Per conversions (before Adwords cost), Target CPA, Actual CPA, Net profit and
Profit Per conversion (including Adwords Cost) metrics have been calculated manually.

4.
5.
6.

Max. CPC is the maximum amount you are willing to pay for each click.
Avg. CPC is the average amount you pay for each click. Generally avg. CPC is less
than the Max. CPC
The Actual CPA = Max. CPC/ Conversion Rate

7.

Net Profit = [{Number of conversions * Profit Per conversions(before Adwords cost)}

{Total Clicks * Avg. CPC}]

8.

Profit per Conversion (including Adwords Cost) = Net Profit / Number of Conversions.

Phase-2: Configuration
In this phase we configure the Google Analytics and Google Adwords accounts to get all the
right date for deep analysis later on. We need data and correct data before we start interpreting
analytics reports. Any conclusions based on erroneous data can never produce optimum results
and can even result in monetary loss.
Therefore it is critical that we configure the Google Analytics and Google Adwords accounts
correctly. The configuration process includes:
1.

Getting administrative rights

2.

Enabling conversion tracking in Google Adwords account

3.

Connecting Google Adwords to Google Analytics account.

4.

Enabling Auto Tagging in Google Adwords account

5.

Enabling E-Commerce Tracking in Google Analytics account

6.

Enabling Adwords Cost Source settings in Google Analytics account

7.

Enabling Data Sharing settings in Google Analytics.

8.

Importing Google Analytics metrics to Adwords reports.

9.

Importing Google Analytics goals and transactions to Adwords conversion tracking.

10.

Creating a separate profile for tracking Adwords campaigns in Google Analytics

Getting administrative rights

You need to get administrative rights on both Google Analytics and Google Adwords account in
order to work faster. Once you become account administrator it will be easy for you to make
changes to the account whenever you want. Otherwise you have to depend on a third party
every time you choose to make some changes.
Enabling conversion tracking in Google Adwords account
As a marketer you need to know what happens after a user clicks on your ad. Did he purchase
your product? If yes, then which keyword, ad, ad group or campaign triggered the conversion?
By knowing this, you will know which ads, placements and keywords lead to conversions and
are worth bidding on.
The conversion tracking feature in Google Adwords can help you in getting this insight. In
order to calculate theROI of your Adwords campaigns you have to enable conversion tracking
in your Adwords account. Check out the following video to learn more about the benefits of
conversion tracking and how to enable it in your Adwords account:

Connecting Google Adwords to Google Analytics account

Linking Adwords account to your analytics account help you greatly in understanding what
people do after they click on your ad and land on your website. You can understand

the behavior of Adwords visitors in terms of site usage (pageviews, bounce rate, avg. visit
duration etc), goal conversions and e-commerce transactions.
This type of insight helps immensely in optimizing ad copies, keywords and landing pages of an
Adwords campaign. Check out the following video to learn connecting Google Adwords to
Google Analytics account:
Enabling Auto Tagging in Google Adwords account
Tags are campaign variables which are added to the end of destination URL of an ad.
Through campaign variables you can send information (like source, medium, campaign name,
campaign term etc) about your marketing campaign (like PPC, email marketing, affiliate
marketing, display etc) to the Google Analytics server.
Tagging a URL means adding campaign variable(s) to it. You can tag Google Adwords
campaigns either manually or through auto tagging. However you can tag non-Google
Adwords campaigns (like Bing PPC campaigns, Email marketing campaigns, Affiliate
campaigns etc) only manually.
When you choose to tag a URL manually, you manually add following campaign variables to the
end of the destination URL of your ads:
1.

utm_source used to specify traffic source. For example: google, yahoo, facebook,
bing etc.

2.

utm_medium used to specify traffic medium. For example: cpc, ppc, banner, email,
affiliate etc.

3.

utm_campaign- used to specify the name of the campaign. Campaign name can be a
product name, promo code etc.

4.

utm_term used to specify the paid search keyword. For example: event-planningcourses, event-management etc.

5.

utm_content- used to specify the ad version. For example: banner-link, text-link etc.
Note: the use of the campaign variables utm_term and utm_content is optional.
When you choose to auto tag a URL then Google automatically ads GCLID to the end of the
destination URL of an ad. GCLID stands for Google Click ID. It is a unique ID used by
Google Analytics to track and display Adwords clicks in your reports. You can see the GCLID in
the landing page URLs of your Adwords ads (provided the auto tagging is enabled).
Example of non-tagged URL: http://www.abc.com
Example of auto-tagged URL: http://www.abc.com?gclid=CLjTpNrg8NIC
Example of manually tagged URL: http://www.abc.com/?
utm_source=bing&utm_medium=ppc&utm_term=car-insurance&utm_content=textad&utm_campaign=car-insurance-promo-feb
Note: You should always Google URL builder to manually tag URLs.
Best Practices for Tagging URLs

1.

Avoid manually tagging your Adwords URLs. Use auto-tagging instead.

2.

Always use Google ULR builder and spreadsheet to tag multiple URLs.

3.

Use consistent names and spellings for all of your campaign variables values.

4.

Use only the campaign variables you need.

Note: When you use auto tagging, Google automatically tags the campaign source and
medium of your AdWords ads as google / cpc.

Advantage of Auto tagging over manual tagging in case of Google Adwords Campaigns
Google strongly recommends using auto tagging for Google Adwords campaigns and there is a
strong reason for that. When you manually tag your adwords URLs, the Adwords reports in
Google Analytics show results only by campaign and Keywords. But when you enable auto
tagging, Adwords reports (in Google Analytics) show detailed information about your Adwords
campaigns.
You can then see results by:
1.

Campaign

2.

Keywords

3.

Ad Groups

4.

Ad Content

5.

Match Type

6.

Display URL

7.

Destination URL

8.

Keywords positions

9.

Day parts etc

The other benefit of auto tagging is that it saves time. You dont need to manually tag each and
every destination URL of your Adwords ads. This is a life saver esp. if your Adwords account is
very big.

To enable auto-tagging follow the steps below:

1.

Sign in to your Google Adwords account.

2.

Click My account tab > Preferences.

3.

In the Tracking section, click on the Edit link

4.

Check the Destination URL Auto-tagging checkbox.

5.

Click on Save changes button.

Note: You should not use auto tagging and manual tagging at the same time. This can result
in data discrepanciesin your reports.

Factors which can prevent auto-tagging from working properly and how to test for issues
There are several factors like third party redirects, encoded URLs and server settings which can
prevent auto-tagging from working properly. These factors can cause GCLID parameter to be
dropped from the landing page or generate error pages. Dropped GCLID parameter can cause
Google Analytics to treat Google Adwords traffic as organic, direct or referral traffic instead of
paid search traffic.
So you need to make sure that third part redirects or server settings are not preventing your
auto tagging from working properly. You can do this by following the steps below:
Step-1: Add ?gclid=test to the end of the destination URL of your Adwords Ad. For e.g.
http://www.abc.com/?gclid=test. If glcid=test is not the first parameter, then add &gclid=test to
the end of the destination URL of your Adwords Ad. For e.g. http://www.abc.com/?
source=google&gclid=test
Step-2: Copy-paste the modified URL into the address bar of your browser window and press
enter.
Step-3: If the URL of the resulting page doesnt display gclid=test then auto tagging is not
working properly.

Enabling E-Commerce Tracking in Google Analytics account

In order to get ecommerce data (revenue, transactions, average value, e-commerce conversion
rate, RPC, ROI and Margin) for your Adwords campaigns in Google analytics reports you need
to enable E-Commerce Tracking in your Google Analytics account and add e-commerce
tracking code to your order confirmation page(s).
You can learn more about enabling and setting up e-commerce tracking from here.
Related Post: How E-Commerce Tracking works in Google Analytics Ultimate Guide

Enabling Adwords Cost Source settings in Google Analytics account

In order to import cost data from Google Adwords into Google Analytics account, you must allow
your Google Analytics account to receive the cost data in the first place.

You can do this by following the steps below:

1.

Sign in to your Google Analytics account.

2.

Select the account and then the web property that contains the profile you want to edit.

3.

Click the Admin tab.

4.

Click on the profile whose Adwords Cost Source settings you want to enable.

5.

Click on the Profile Settings tab.

6.

Under AdWords Cost Source Settings, check the apply cost sources checkbox.

7.

Click on the Apply button.

Enabling Data Sharing settings in Google Analytics

In Google Analytics, your Data Sharing Setting must be set to: with other Google products
only so that Google Analytics can share its data with Google Adwords. You can learn more
about Data Sharing settings from here.

Importing Google Analytics metrics to Adwords reports

Once you have linked Google Adwords and Google Analytics account, you can then add Google
Analytics columns to your Adwords reports:

You can do this by following the steps below:

1. Sign in to your Google Adwords account.

2. Click on the Campaigns tab
3. Click on Campaigns or Ad Groups sub-tab
4. Click on Columns drop down button > Customize Columns
5. Click on Google Analytics (as shown in the image above)
6. Click on Add or Add all columns (as shown in the image above)
7. Click on the Apply button

You can now see the Google Analytics metrics in your Adwords reports.
Importing Google Analytics goals and transactions to Adwords conversion tracking
Not every action (conversions) that we want visitors to perform on our website can be tracked
by Adwords default conversion tracking. For example, if you dont have a Contact Us form with
a Thank You page on your website, but have an email link instead which opens up clients
outlook email, then it cant be tracked by default Adwords Conversion tracking. To work around
this problem you need to track click on the email link as Event Goal in Google Analytics and
then import the goal from Google Analytics into Adwords conversion tracking.
Once you have linked the Adwords and analytics accounts, enabled data sharing and auto
tagging, you can then import Google Analytics goals to Adwords conversion tracking by
following the steps below:
1. Sign in to your Google Adwords account.
2. Click on Tools and Analysis tab > Conversions
3. Click on Campaigns or Ad Groups sub-tab
4. Click on the Import from Google Analytics button
5. Select the conversions you want to import and then click on the Import button

Creating a separate profile for tracking Adwords campaigns in Google Analytics

Filtered profile is a great way to apply advanced customization to a report without the risk of
messing up the original data. Filtered profiles are most useful if your analytics account has
got data sampling issues. The data that is filtered at a profile level is unsampled. For example
if you apply the advanced segment paid search traffic to the All Traffic report (so say you can
determine the e-commerce conversion rate of your paid search traffic) then your report data
will be sampled. But if you create a filtered profile which shows only paid search data then your
report data will be unsampled.
Note: Data sampling issues are big problem only for high traffic websites (which get more than
10 million pageviews/month) and can cause highly inaccurate reporting of metrics. Your metrics
from conversion rate, revenue to visits could be anywhere from 20% to 80% off the mark if
you have got data sampling issues.

You should use enterprise level analytics tool like Google Analytics Premium to minimize
data sampling. But do remember that even GA premium cannot fully eliminate data sampling.
Therefore you have to use filtered profiles regardless of the analytics tool (GA Standard or GA
premium) you use if you have got data sampling issues. To learn more, check out this
post: Google Analytics Data Sampling Complete Guide
Once you have a separate profile just for tracking Adwords campaigns you can do all type of
report customization without the risking of messing up the original data in the main profile. For
example by default Google Analytics group all Google Search Partners for Adwords (like AOL,
ASK, mywebsearch etc) as google/cpc. So you will never know which Google search partner is
actually sending traffic and conversions. You can fix this problem by creating and applying
following two filters one after the other to your Adwords Profile (courtesy of: Brian Clifton).

Once you have applied these filters, wait for few hours and then go to Traffic Sources >
Sources > All Traffic Report. You can now see all the Google search partners which are sending
traffic to your website:

Phase-3: Analysis
Once you have configured your Google Analytics and Google Adwords account and have got at
least 4 weeks of data in your reports, you are in a position to do some serious analysis of the
Adwords data. You can now analyze Google Adwords campaigns performance both through
Google Analytics and Google Adwords reports.
Let us start with Google Adwords reports in Google Analytics:
Adwords Campaigns Report

You can access the Adwords Campaigns report by going to Traffic Sources > Advertising >
Adwords > Campaigns
Through this report you can measure the performance of each Adwords campaign (and their ad
groups and targeted keywords) on different types of devices: all devices, non-mobile devices,
high-end mobile devices (like smart phones) and tablets in terms of:
1.

Site usage (visits, pages/visit, avg. visit duration etc)

2.

Goal Conversions (Goal Conversion Rate, Per visit Goal value, Goal 1 conversion rate
etc)

3.

E-Commerce (Revenue, Transactions, Average Value, E-Commerce Conversion Rate

etc)

4.

Clicks (Impressions, Clicks, Cost, CTR, CPC, RPC, ROI etc).

Note: You can click on a campaign name (in the Adwords Campaign report) to check the
performance of all the ad groups in that campaign. You can click on an ad group name to check
the performance of all the keywords in that ad group.
Through the clicks tab you can get information about clicks and the keywords spending. Most
of you are already familiar with metrics related to site usage, goal conversions and ecommerce.
These metrics are pretty standard and are available in almost every Google Analytics report.
But the metrics related to Adwords Cost data and ROI is unique. So let us explore these
metrics:

Here,
Visits is the number of visits from Google Adwords ads
Impressions is the number of times your Adwords ads were displayed
Clicks is the total number of clicks on your Adwords ads

Data discrepancy between Adwords and Google Analytics reports

Here one thing that you need to keep in mind that the number of clicks on your ads generally
dont match with the number of visits in your Adwords reports. Following are the reasons
for such data discrepancy between Adwords and Google Analytics reports:
1. Google Adwords track clicks whereas Google Analytics track visits (or web sessions).
2. A single click on Adwords ad can result in multiple visits.
3. In a single visit a user can click on the same Adwords ad multiple times.
4. Google Adwords can report clicks even if the javascript, cookies or images are turned off by a
visitor. Google Analytics cant report visits in such case.
5. If the landing page of the Adwords ad doesnt contain Google Analytics tracking code, then
Google Analytics will not be able to track visits but Google Adwords can still track clicks.
6. Redirects in landing pages may prevent the Google Analytics Tracking code from being
executed. In this case Google Analytics will not be able to track visits but Google Adwords can
still track clicks.
7. Google Adwords can filter invalid clicks but Google Analytics cant filter invalid visits because
of such clicks. So Google analytics will track and report visits even for invalid clicks.
8. Google Analytics treat visits from untagged or improperly tagged Ad URLs as organic visits
instead of paid search visits.
9. Profile filters may remove some of the visits data from your Google analytics reports.
10. If visitors bookmark the landing page of your Adwords ad along with the GCLID parameter,
then Google Analytics report visits from such bookmarks as paid search visits instead of direct
visits.
Cost is the total costs of clicks on your Adwords ads.
CTR (or Click through Rate) is the number of times your ads were clicked/number of times your
ads were displayed. So CTR= (Clicks/Impressions) * 100
Through CTR you can determine how much visible and convincing your Adwords ad is for
targeted keyword and ad position. You can improve the CTR of your Adwords ad in two ways:
1.

Bid for higher ad position (increase your Max. CPC)

2.

Write a more convincing ad copy

CPC is the average cost you paid for each click on your ad. CPC = total cost/total clicks
RPC is the average revenue you generated for each click on your ad. RPC = (Total revenue
generated through Adwords ads+ total goal value generated through Adwords ads)/total clicks
on the ads.
Note: Your RPC numbers could be all zero in your Adwords reports in Google Analytics if you
have not set up Goals and Goal values and/or you have not enabled ecommerce reporting.

ROI is the Return on Investment of your Adwords campaigns. It is calculated as:

ROI= {(E-Commerce Revenue+ Total Goal Value) cost}/cost

Margin is the Gross Margin percentage of your Adwords campaigns. It is used to estimate the
gross profit of the Adwords campaigns. It is calculated as:
Margin = {(E-Commerce Revenue+ Total Goal Value) cost}/E-Commerce Revenue
If Gross margin percentage for a campaign is 62% and the revenue generated by the campaign
is $50000 then the estimated gross profit for the campaign would be: $50000 * 62% = $31000
ROI reported by Google Analytics for Adwords campaigns is incorrect as it doesnt take into
account your profit margin. So the correct ROI would be:
ROI= {(E-Commerce Revenue+ Total Goal Value) * Profit Margin cost}/cost
ROI of 0% => means no profit, no loss. You spent x and earned x in revenue.
ROI of 100% => means you spent x and earned 2x in revenue.
ROI of 1000% => means you spent x and earned 11x in revenue.
ROI of -100% => means you spent x and earned 0 in revenue.

Important Points about Negative ROI

1.

2.

It is common for brand new campaigns/keywords to show negative ROI for first few
weeks. Therefore you should keep this in mind before you pause or delete your negative ROI
campaigns/keywords.
You can assess keywords profitability through RPC and ROI metrics.

3.

You should never assess the performance of keywords/campaigns on the basis of few
clicks or few days worth of data as some visitors can take several days or weeks before they
turn into customers.

4.

Your ROI numbers can be all zeros in your Adwords reports in Google Analytics if you
have not set up Goals and Goal values and/or you have not enabled ecommerce reporting.

5.

Make sure that your Adwords and Google Analytics accounts are set to the same
currency. Otherwise the ROI data wont be accurate.

6.
Adwords Keywords Report
You can access this report by clicking on Traffic Sources > Advertising > Adwords > Keywords in
Google Analytics.
Through this report you can measure the performance of the Adwords keywords (i.e. the
keywords you are bidding on in Adwords) and Ad Content on different types of devices: all
devices, non-mobile devices, high-end mobile devices (like smart phones) and tablets in terms
of:
1.

Site usage (visits, pages/visit, avg. visit duration etc)

2.

Goal Conversions (Goal Conversion Rate, Per visit Goal value, Goal 1 conversion rate
etc)

3.

E-Commerce (Revenue, Transactions, Average Value, E-Commerce Conversion Rate

etc)

4.

Clicks (Impressions, Clicks, Cost, CTR, CPC, RPC, ROI etc).

If you are running your Adwords on Google Display network (a network made up of millions of
websites which have partnered with Google to display relevant Adsense ads on their web
properties) then the keywords report will show content targeting in the keywords column:

Google Analytics group all the keywords which resulted in clicks on your ads (placed on the
websites which are part of Google Display Network) as content targeting. The best way to
measure the performance of the keywords grouped together as content targeting is by
selecting placement domain as a secondary dimension:

Placement domain is the website where your ads were displayed and clicked. So when you
select secondary dimension as placement domain you can determine the performance of your
ads on a particular domain.
Adwords Matched Search Queries Report
You can access this report by clicking on Traffic Sources > Advertising > Adwords > Matched
Search Queries in Google Analytics.
Through this report you can measure the performance of Matched search queries (keywords
which actually triggered the ad) and match types (broad match, phrase match and exact match)
in terms of:

1.

Site usage (visits, pages/visit, avg. visit duration etc)

2.

Goal Conversions (Goal Conversion Rate, Per visit Goal value, Goal 1 conversion rate
etc)

3.

E-Commerce (Revenue, Transactions, Average Value, E-Commerce Conversion Rate

etc)
This report becomes super useful when you add keyword as secondary dimension. In this way
you can determine which keywords you are bidding on and which are actually triggering the
ads:

Adwords Day Parts Report

You can access this report by clicking on Traffic Sources > Advertising > Adwords > Day Parts in
Google Analytics.
Through this report you can determine most profitable Hours and Days of the week for your ads
and then re-schedule your ads and adjust your bids accordingly. For example, if an ad
generates significant amount of revenue during certain hours of the day say between 12 pm to
4pm, then you can raise your bids during those times.
Adwords Destination URLs Report
You can access this report by clicking on Traffic Sources > Advertising > Adwords > Destination
URLs in Google Analytics.
Through this report you can measure the performance of your Adwords ads landing pages in
terms of: site usage, Goal Conversions, E-Commerce and Clicks. This report becomes super
useful when you add Landing page as a secondary dimension to verify whether the destination
URL is taking the visitors to the right landing page.
Through this report you can also measure the performance of Ad Distribution Network in in
terms of: site usage, Goal Conversions, E-Commerce and Clicks. You can determine which
method of distribution (Google Search Network or Google Display Network) is more effective.

Adwords Placement Report

You can access this report by clicking on Traffic Sources > Advertising > Adwords > Placement
in Google Analytics.
Through this report you can determine how your ads are performing on Managed placements
and Automatic Placements of Google Display Network. Managed placements are those
websites on Google Display Network which you have manually selected to display your
Adwords ads. Automatic placements are those websites on Google Display Network which have
been selected by Google to display your Adwords ads.
Adwords Keyword Positions Reports
You can access this report by clicking on Traffic Sources > Advertising > Adwords > Keywords
Positions in Google Analytics.
Through this report you can determine where your Adwords ads ranked on Google SERP
(Search Engine Result Page) when the visitors clicked on it and what is the impact of the
ranking position in terms of site usage, goals and ecommerce. Through this report you can
determine the ranking positions which deliver best performance.
Conversion Metrics used in Google Adwords

There are two types of conversions available in Google Adwords reporting interface:
1)
Click Conversion It is the conversion triggered through a click on an Ad. A click
conversion can be Conv. (1 per click) or Conv. (many per click).
Conv. (1 per click) => one click on an ad resulted in only one conversion.
Conv. (many per click) => one click on an ad resulted in multiple conversions. However these
conversions must have occurred within the next 30 days following the click on the ad.

2)
View through Conversion It is the conversion triggered through an impression
(viewing) of a display network ad that has not been clicked in the last 30 days.

If a user clicks on your ad and purchase an item and signup for a newsletter then:
Conv. (1 per click) = 1
Conv. (many per click) = 2
==================
If a user clicks on your ad and purchase an item then later again come back to your site by
clicking on the ad again and sign up for a newsletter then:
Conv. (1 per click) = 2
Conv. (many per click) = 0
=================
If a user clicks on your ad and purchase items then later again come back to your site directly
and sign up for a newsletter then:
Conv. (1 per click) = 1
Conv. (many per click) = 2

Competitive Metrics used in Google Adwords

Competitive metrics are some of the most useful metrics available in Google Adwords.
Understanding of these metrics is critical in order to optimize Google Adwords campaigns.
Search Impr. Share It is the search impression share for your ads on the Google Search
Network. It is calculated as:
Total Impressions your ads received / estimated number of impressions your ads were
eligible to receive on the Google Search Network

Through this metric you can identify opportunities to get more impressions and clicks if your ads
have got low search impression share. You need to make sure that you keep the search
impression share as high as possible.

Search Exact Match IS It is the search impression share for your ads on the Google Search
Network when the search terms matched the keywords (on which you are bidding) exactly or
very closely. It is calculated as:
Total Impressions your ads received / estimated number of impressions your ads were
eligible to receive on the Google Search Network for search terms that exactly (or very
closely) matched your keywords
Through this metric you can identify opportunities to get more impressions and clicks if your ads
have got low exact match search impression share. You need to make sure that you keep the
exact match impression share as high as possible.

Search Lost IM Share It is the search lost impression share. It is the estimated percentage of
impressions your ads didnt receive on Google Search Network because of poor Ad rank. You
need to make sure that you keep this impression share as low as possible.

Display Impr. Share It is the impression share of your ads on Google Display Network. It is
calculated as:
Total Impressions your ads received / estimated number of impressions your ads were
eligible to receive on the Google Display Network
Through this metric you can identify opportunities to get more impressions and clicks if your ads
have got low display impression share. You need to make sure that you keep the display
impression share as high as possible.

Display Lost IS (Rank) It is the display lost impression share. It is the estimated percentage
of impressions your ads didnt receive on Google Display Network because of poor Ad rank. You
need to make sure that you keep this impression share as low as possible.

Relative CTR Through this metric you can get an idea of how your ads are performing on
Google Display Network in comparison to the other ads on the same websites. It is calculated
as:
CTR of your ad / average CTR of others ads running on the same websites
A relative CTR of 1x means that the CTR of your Display ad is equal to the average CTR of
others ads running on the same website(s).

Read more: http://www.seotakeaways.com/complete-guide-to-google-adwordsanalytics/#ixzz31hTqrMTR

20 KPIs you should monitor in Google Analytics

A Key Performance Indicator or KPI refers to a set of measurements reflecting
the performance orsuccess of an organization in terms of progress of its goals. In this article
we present the most important website KPIs from online marketing perspective and we discuss
how to monitor them in Google Analytics.
Most online marketing professionals, SEO engineers and webmasters have in their daily routine
the monitoring, reporting and data analyzing tasks followed by decision making regarding the
optimization of the performance of their websites. Within web metrics, charts and pivots lots of
information can be found unveiling new ways to optimize their strategy.
Nevertheless all these numbers, metrics and statistics can be confusing. Which ratios should be
taken into account during the above analysis? Which are the most important stats? Many of
these questions will be answered shortly since in the following lines we will discuss the
importance of website goals and we will list the most important KPIs that are used to measure
the defined targets.

Website Goals & KPIs

Setting specific and measurable goals is a vital stage before defining Key Performance
Indicators (KPIs). Depending on its type, a website can have much different goals. Common
goals of E-commerce sites are the increase of the number of purchases, the number of items in
basket, the average transaction value etc while for content websites common goals are the
increase of media consumption, subscribers, video viewers, online game players etc.

KPIs are:

Indicators of Success

Can be presented through rates

Require comparison

Depend on the industry and type of website

General KPIs about Website

1.

Conversion Rate: This ratio displays how many visitors are converted into
desired actions.

2.

Goals Conversion Rate: Shows how many visitors reached at least one of the goals
that you have setup by using the Google Analytics service.

3.

Type of Users (user defined): The User defined is a variable that helps you define
specific types of users that have completed a goal or a specific action in the website
(pageview, form completion etc).

4.

Bounce Rate & Time on Site: These are 2 extremely useful KPIs which indicate
whether your visitors find what they are looking for in your website or if they leave your site

immediately. This metrics can be found in the Visitors section of Google Analytics, nevertheless
it is also very useful to focus on them when you evaluate the various channels/sources of traffic.
5.

Type of Sources: This is a complex report which is generated by segmenting the traffic
by specific sources and mediums such as Search Engines, Referring sites, Direct, E-mail or
custom campaigns. Focus not only on the total number of visitors but also on the quality of the
traffic (bounce rate, time on site, transactions etc).

Visibility KPIs
1.

Traffic of Non branded keywords: This is the common Keywords Traffic report filtered
to excludebrand name combinations.

2.

Traffic generated by specific terms: The long or short tail keyword strategy can be
evaluated using this segmentation. Usually the keywords traffic report that can be found in
Google Analytics returns too many combinations. By using filters you can break down the
keyword list and focus on the ones that contain specific terms or you can check for 2 words
phrases, 3 words phrases or for terms that satisfy aspecific rule. To generate such a report,
use regular expressions in the advanced filter.

3.

Bounce rate per keyword: This can be found on the table of keywords traffic report.
Focus on the column called bounce rate which shows the average bounce rate per keyword.

4.

Keyword Ranking: Find your keyword rankings by using the keyword battle tool and
then compare the results with the Organic traffic reports of Google Analytics to find out if your
keyword selection istargeted and if your SEO strategy is successful. Focus on how
much traffic you get from each top ranking keyword and see if you need to adapt/change your
SEO strategy by focusing on more popular or more targeted terms.

5.

New Vs Returning Visitors: This metric can give you insights about the loyalty of your
audience and show you how many new visitors you attract on your website. Depending on
various factors such as industry and website type, it is useful to analyze their behavior. This
report can be found under the Visitors section of Google analytics.

Interaction KPIs
1.

Social Media Interactions: Monitoring the amount of visitors that interact with your
social media profiles (visit them by clicking on the appropriate buttons of your website or
like/tweet/share your pages) can be extremely useful. To monitor this you need to use event
tracking or virtual pageviews.

2.

Media Consumption: This KPI focuses on how users consume the content on the
website, how many of them read posts, watch videos, listen to podcasts etc. This report is under
the content section but it requires you to setup special tracking mechanisms in cases of video or
interactive flash.

3.

Contact/Subscribe: Knowing how, when and how many visitors contact the website
owners via e-mail, contact forms, live chat etc is extremely useful. In most of the above cases
this action can be tracked easily by using goal tracking in the thank you pages or event
tracking.

Transactional KPIs
1.

Cost per Transaction: This metric measures the promotional cost per transaction for
specific campaigns (adwords, banners, newsletters etc). It measures how much money you
have to spend on each campaign in order to generate one transaction. This is very important
when you want to see how to allocate your advertising budget and it is particularly useful in
decision making.

2.

Average transaction value: This KPI shows the efficiency of the cross selling and up
sellingtechniques that you use. The report can be found under the Ecommerce section of
Google Analytics.

3.

Average items in basket: Similarly to the above this KPI shows how many items are
purchased on average in each transaction.

4.

Conversion Rate per Medium: This KPI shows the conversion rate of each medium and
it is extremely useful to monitor it in order to distinguish your top selling channels. The report
can be found under the All Traffic Sources menu by using the Medium view option.

Geo Targeting KPIs

1.

Transactions distribution per Country: This report provides very useful insights since
it allows you to distinguish the nationality of your clients. It can be found under the Visitors
Section in the Map Overlay Report. The information is located in the e-commerce tab of the
previous page and it shows you the transaction distribution by country/territory.

2.

Bounce rate distribution per Country: This info can be found on the same map overlay
table and it shows the distribution of bounce rate by Country/territory.

3.

Traffic Distribution by Country/Territory: This information is provided in the map

overlay reportand it can easily be found under the Visitors menu of Google Analytics console.

KPIs for measuring content marketing ROI

An easy start-point
Below is a simple matrix of ideas to help you set the KPIs or metrics based on what weve used
on different projects. Were not saying this is the way you must do it or that you need to use all
of these KPIs. Instead, we hope this is a useful framework to help select the best type of KPIs
for different markets.
Weve taken three angles here to illustrate, so weve got the full range of measures covered
from hard sales vs softer engagement metrics.
Using these different types of measures is even more important for companies with long
purchase or repeat purchase cycles, such as automotive, furniture or maybe PCs and
certainly for B2B businesses. The longer buy cycles require the need to demonstrate ongoing
engagement.

Commercial measures: These are the harder business or commercial measures and
what usually takes the longest to be demonstrable. These are the measures for the senior
managers although they may well also need to know about Likes! Think audience share, sales,
leads or at least clear indicators from people such satisfaction ratings or % that fed back.
Remember that these need to be incremental and ideally attributable to your content marketing.
Dave will show you how to attribute these using Google Analytics in a separate post.

Tactical measures: These include the views, clicks, interactions with your content so
involves the social shares such as Likes and Tweets. You might also use link shortening tools to
help measure, at Smart Insights we use PostRank rating and also metrics from Facebook
Insights. These are hard indicators that your content is visible and worth sharing so very key.

Brand measures: These are easier for bigger brands or where theres less competition,
simply because the tools seem to work better in that space. Think brand or key-phrase
mentions, sentiment, share of market mentions over competitors and certainly site traffic. These
are the bigger needles to get moving and often require a bit more momentum.

Combining measurements and social media optimisation

As you can see from the table above, content marketing KPIs go hand in hand with social media
marketing, content fuels social media. The two come together when working on social media
optimisation (SMO) which Dave has recently posted on. SMO for me centres on the distribution
of social objects and their ability to rise to the top of any related search query [Dan - I disagree
on this - the poll in our post show that most think it's broader - maximising reach and interaction
in social channels to achieve your goals].
Brian Solis talks about SEO + SMO = Amplified Findability in the traditional and social web. I
think thats a great way to summarise it [Dan like that although Id call it Amplified
VisibilityFWIW for me Findability is about efficient customer journeys on websites its a usercentred design technique, but I guess Brian doesnt know about that!).
Since tracking within SMO is also important, how do you do it? At the centre of a SMO
programme are social objects. Social objects represent the content we market via social media
images, videos, blog posts, comments, status updates, wall posts, and all related activity that
creates the potential for online conversations. It follows then, that the goal of SMO is to
measure, monitor and improve the visibility of social objects as a means to connecting with
individuals who are proactively seeking additional information and direction.
Given that social objects are contextualized through keywords, titles, descriptions, and/or tags
so the measures here are not so different to SEO in terms of inbound links, as well as referring
web sites where your content, the social objects, are placed. So you need to develop an
analytics dashboard that reviews your effectiveness within this content eco-system.

Actionable analytics for content marketing

Following on from the above table, these measurements are great and you also have to be able
to do something with them. The analytics gurus like Avinash Kaushik, and of course Dave
Chaffey will always talk about actionable metrics. How might that apply to content marketing,
here are a few examples of questions to ask for which you need to review the analytics to get
the answer:

Q1. Which keyphrases related to content are most effective at driving visits and
outcomes? Ensure that you have an idea of what audience personas or segments whom those
keywords relate to as well, so you know who youre writing content for. Build on the keyphrases
that are most effective. When you identify high bouncing keywords try surveying those users on
exit or placing calls to action directly on the page to ask for feedback, tools like Kampyle can
help with that.

Q2. Which referring partner sites or social networks have helped with link
generation and measurement (for SEO) and the driving of traffic, referenced above as a
part of SMO. Check for traffic volumes from those domains and how those users (segmented
by referring domain) bounce and click through the site are their needs being met? Of course,
you want more of the traffic thats generating results and understand how you might also
improve journeys for those that bounce highest, starting with landing pages. From an SEO
perspective you should review the number and quality of links that your content generates using
these types of backlink benchmarking software.

Q3. How does content viewed on click-paths or journeys affect marketing

outcomes. This reviews the value that a user is finding on your web site and whether its
influencing leads or sales. In a separate post Dave will show how to use Advanced Segments to
precisely show how content is affecting sales.

Q4. Are we increasing the % of engaged users? Engagement can be short or longerterm it might be that someone has viewed more than 3 pages on the site, per session, this is
better than time on site. You can consider improving that by designing site journeys that are for
specific audiences and creating multiple routes to the important content.

Q5. What are the satisfaction ratings for our content? Use different customer
feedback software like 4Q and Kampyle so you get overall ratings of your content and feedback
on specific content. 4Q is great since it shows you what people were looking for against what
whether they were successful and how satisfied.
The general rule of optimisation is to monitor and test and dont stop! Websites and web based
content are not brochures, theyre never done. Focus on testing and trying new things where
the analytics and customer feedback data indicates the best opportunity to improve.