What You Should Measure in Your Paid Media Advertising

Understanding paid media channels, targeting, and tactical capabilities can be overwhelming. Whether it’s paid search, display, or video advertising, trying to discern what you should measure and why can be cumbersome. Now, mix in the gigantic waves of metrics and data and you can quickly feel like you’re drowning.

If you’re just dipping your toes in the paid media pool, it can be a challenge to understand all of the available metrics, why they matter, how to interpret them, and how you can gauge the success of a campaign. If you fall into this bucket, don’t you worry. We’ll provide the floaties to help you start swimming in the paid media pool so you don’t drown.

Now, before you jump in the pool and decide what you should be measuring, you need to establish goals. Are you trying to drive more awareness? Is the goal to get product sales? Or sign-ups? Drive more engaged site traffic?  

These are just some examples. Establishing these goals before activating a campaign is crucial to understanding what you need to measure and if the campaigns are driving success or, ultimately, profit. The KPIs you use will vary by channel and goal, and will help drive ongoing optimizations.  

So, let’s learn the basics. For the sake of this post, I’ll call these our Floatie KPIs. They will help you swim in any channel: paid search, display, or video.

Floatie KPIs

Clicks: When someone clicks an ad, like a paid search ad on Google or a 728x90 display ad on CNN.com, that counts as a click. Clicks can help you understand how well the ad is performing. Relevant, highly-targeted ads are more likely to receive clicks.

Impressions: An impression is counted each time the ad is shown on a search result page, on a website, or on YouTube. Impressions help you understand how often the ad is being seen. They're also used to calculate clickthrough rate (CTR), which is helpful in determining the effectiveness of the ads.

Clickthrough Rate (CTR): A ratio showing how often people who see the ad end up clicking it. CTR can be used to gauge how well the keywords and/or ads are performing. CTR is the number of clicks that the ad receives divided by the number of times the ad is shown (impressions). You can use CTR to gauge which ads and keywords are successful for you and which need to be improved. The more the keywords and ads relate to each other and to the business, the more likely a user is to click on the ad.

Cost: The amount you are charged for advertising. The costs are dependent on the bidding model put in place.

Cost-per-click (CPC): The average amount that you've been charged for a click on the ad. CPC is calculated by dividing the total cost of the clicks by the total number of clicks. Something to keep in mind is that CPC is based on the actual cost-per-click, which is the actual amount you're charged for a click on the ad. Note that the CPC might be different than the maximum cost-per-click (max. CPC) for your bid, which is the highest amount that you're willing to pay for a click. This is primarily used in paid search campaigns, but some display platforms allow for CPC bidding if your goal is to drive traffic vs. impressions (awareness).

Cost-per-impression (CPM): The amount that you've been charged for 1,000 impressions. The CPM is based on the actual cost-per-thousand (actual CPM), which is the actual amount you're charged for an impression on the ad. Note that the CPM might be different than the maximum cost-per-thousand (max. CPM), which is the highest amount that you're willing to pay for an impression or bid against the targeting you have set in place. This is primarily used in display and video campaigns.

Conversions: This is a defining metric for most campaigns. Conversions show you what happens after a customer interacts with your ads. Or, post-click activity and engagement. This can be whether they purchased a product, signed up for your newsletter, made a call, or downloaded your app. When someone completes an action that you've defined as valuable, these customer actions are called conversions.

Conversions are important, and every campaign should be measuring them, as they help understand ROI and help make better informed decisions on campaign spend and, ultimately, success.

Conversion Rate: This tells you how often, on average, an ad interaction leads to a conversion. Conversion rate is the number of conversions divided by total actions (such as clicks for text ads or views for video ads) that can lead to a conversion.

Cost/Conversion (CPC, CPA, CPL): This shows you how much, on average, each of your conversions cost. Cost/conversion is your total cost divided by your conversions. This helps you understand how efficient your efforts are and how much each conversion costs.

Time To Take Off The Floaties!

Now it’s time to head into each lane in the paid media pool and start learning basic metrics that are specific to each. Again, whether you should measure each of these KPIs depends on your overall goal for the campaigns.

Lane 1: Paid Search

Avg. Position (AVP): Ad position is the order in which your ad shows up on a page. For example, an ad position of "1" means that your ad is the first ad on a page. As best practice, it's always good to have your ad appear higher on a page.

Impression Share (IS): Impression share is the percentage of impressions that your ads receive compared to the total number of impressions that your ads could get. How often your ad is shown depends on your ads' targeting settings, budget, approval statuses, bids, and quality. Impression share is a good way to understand whether your ads might reach more people if you increase your bid or budget. We like to think of it like a piece of pie. How many slices of pie can you get for your given budget?

Lost IS (budget): Search lost impression share (budget) estimates how often your ad didn't show purely due to an insufficient budget. If you want to capture more impressions — which helps the ability to get more clicks, conversions, etc. — try increasing your budget.

Lost IS (rank): Search lost impressions share (rank) is the estimated percentage of impressions that your ads didn't receive due to poor ad rank. If you want to capture more impressions, try raising your bids and improving your Quality Score.

Quality Score: Quality Score is intended to give you a general sense of the quality of your ads. The 1-10 Quality Score reported for each keyword in your account is an estimate of the quality of your ads and the landing pages triggered by them. Three factors determine your Quality Score: expected CTR, ad relevance, and landing page experience. Having a high Quality Score means that Google deems your ad and landing page relevant and useful to someone looking at your ad.

Lane 2: Display Advertising

Win Rate: Win rate is a percentage metric in programmatic media marketing that measures the number of impressions won over the number of impressions bid on. Win rates are used to gauge competition in programmatic buys. High win rates indicate either low competition, aggressive bids in comparison to competitors, or selective inventory.

Measurable Impressions: These are impressions that are qualified for viewability. Viewability is used to measure how often ads are in a position that people can see. Not every impression can be measured for viewability, as some factors prevent this level of data to pass through.

Viewable Impressions: This shows the number of times your ad’s impressions were counted as viewable. This is typically counted across multiple platforms, when an ad is at least 50 percent visible and on the screen for at least 1 second. This can help you understand how often your ad appeared where people could see it.

Click-thru Conversions (CTC): These are conversions derived directly from clicking on your ads.

View-thru Conversions (VTC): These are conversions counted when someone sees your ad, does not click on it, but then later converts. These are where the vast majority of your conversions will come through for a display campaign.

Lane 3: Video Advertising

Views: On YouTube campaigns, a view occurs when a viewer watches 30 seconds of your video (or the duration if the video is shorter than 30 seconds) or interacts with your video, whichever comes first. Views can help you understand how many times users see or interact with your ads.

View Rate: View rate is the number of views your video ad receives divided by its number of impressions.

Cost-per-view (CPV): The amount you pay each time someone views your ad. The CPV is defined by the total cost of all ad views divided by the number of views.

Completion Rate: For campaigns outside of YouTube, a completion rate is the percentage of times your ad was watched to 100 percent of the ad. This helps gauge how many users are watching the full video asset.

Video Starts: For campaign outside of YouTube, this is how many users started watching the video ad. This helps gauge how many users began watching the video asset.

Click-thru Conversions (CTC): These are conversions derived directly from clicking on your ads.

View-thru Conversions (VTC): These are conversions counted when someone sees your ad, does not click on it, but then later converts. These are where the vast majority of your conversions will come through for a video campaign.

Wrapping Things Up

Now that the basics are established, your floaties are off and you’re swimming with confidence. And you understand what matters depends on your goals. If you’re trying to drive awareness with display or YouTube, the KPIs that you should be measuring are impressions, views, new users to the site, any attribution, etc. If you want to drive form fills or sales, you should be measuring conversions and conversion-related metrics with the correct attribution model that fits your goals.

Focusing on the metrics that help accomplish your goals and more importantly tell a story that drives ROI, will quickly help you become the Michael Phelps of the paid media pool.

And always remember…Just Keep Swimming!