What are Online Advertising Metrics and KPIs

Online advertising metrics and KPIs are key essentials whether you are running a paid advertising or simply tracking the website metrics. Collection of data is a crucial requirement of analyzing the performance the ad campaign and implement the best practices derived from collected data.

Online advertising metrics helps determine the progress of the ad campaigns and decides what is working well and what needs to be changed. We are going to discuss key advertising metrics in this article that helps to analyze the effectiveness of each ad campaign that are running on the websites.

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Key Performance Indicators – KPIs
  • Impression: It is the number of time ad is rendered or displayed on the web page. The number of impressions used to calculate multiple metrics and KPIs of ad campaign. Counting the impression doesn’t mean that the ad has viewed by the visitor of the web page, it means that the ad has rendered on the ad slot.

  • Reach: This is a KPI that shares number of unique visitors visited to the web pages. The numbers are usually low compared to impressions recorded due to ad might have shown multiple times to user while navigating the web pages.

  • Cost: It refers total cost of the ad campaign that advertiser is spending. The cost will be calculated in different methods based their requirement. The cost includes media cost, agency cost, creative cost, etc.

  • Visits: It refers to number of visitors visited to the web page or a landing page after clicking on the ad. The numbers may vary from number of clicks recorded as a fewer times visitors may not visit the landing page.

  • Clicks: The number of clicks generated by the ad serving on the web page and redirected the user to a landing page associated to it. The number of clicks counted may vary when the user is not redirected to the landing page due to technical issues. The Ad server may not count the clicks during these scenarios.

  • Conversions: It defines number of actions taken after clicking on the ad. This is one of important metrics that advertisers usually look for to covert the visits to purchase or complete the desired action. Ex: purchase, signup for a newsletter, downloads, filling up the form, etc.
Advertising Metrics:

CPM (Cost Per Mille): This is one of the basic metrics to calculate the cost per 1000 impressions served. The display advertising cost is always based on the CPM model. The “M” – Roman numerical for 1000 numbers. The cost will be calculated based on the 1000 impressions.

Formula: CPM = Cost of Advertising / (Impressions generated / 1000)

CTR (Click Through Rate): It is the number of click recorded per impression from the ad serving on the web page. This number will be converted into percentage.

Formula: (Click / Impressions) x 100%

CPC (Cost Per Click): It is a cost that advertiser needs to pay per click for publisher. The advertisers may prefer to run a CPC model to attract the users if there are any events. CPC will be calculated by dividing the cost with number of clicks recorded.

Formula: CPC = Cost/Click

eCPM (Effective CPM): It represent the average earnings of a publisher per 1000 impressions. 

Formula: eCPM = (Total Ad Spend / Total Impressions Served) x 1000

Bounce Rate: This is a percentage of visitors left the web page without taking any actions.

Formula: Number of visits with one-page view / total number of visits

Page Views Per Visit: It is a metric that shows how many pages viewed by each user. This metric will help the publisher to assess how their web pages are performing.

Conversion Rate: This is a percentage of visitors resulted in the conversion action.  

Formula:  Conversion Rate = Total conversions / visits x 100

Cost Per Conversion: This is the total cost divided by the number of conversions from the visitors redirected through the ads.

CPA (Cost Per Action or Acquisition): This pricing model is based on paying for direct results. The advertiser will pay to the publisher if the user has purchased the products, signup for newsletter, filled the form, downloaded the newsletter or software or any desired actions. 

Formula: CPA = Average Cost Per Click / Conversion Rate

CPL (Cost Per Lead): This pricing model usually pays the amount to the publisher if the users are subscribing to the newsletter, filled the lead form, etc.

Formula: CPL = Total Cost / Total Number of Leads

Conclusion: Measuring key success of the ad campaign in online advertising is quick and easy if you know the advertising metrics and KPIs. These advertising metrics and KPIs are essential to review the performance of an ad campaign, how advertiser is spending the ad budget, and/or how publisher is earning through serving the ads on the websites. There are multiple advertising metrics available in the online display advertising, however, we have covered the most used metrics in this article. Please feel free to comment below if you are using any other metrics frequently.