What KPI´s to focus on
Walk into online and digital advertisement with as little judgement as possible. Accept that data and machine learning know your customers better than you do.
Never take segmentation and user study’s as an absolute truth. They merely quantity and describe the world as it most likely to happen. The strength in digital marketing is that you can free yourself from approximation and rely on what customers really do!
WHAT KPI’S TO MEASURE
Begin with establishing what your top funnel KPI is and what behavior you are looking for your audience to do.
For most advertiser’s relevance will be of the outmost importance. For video content relevance is expressed through VTR (view through rate) and for click ads it is CTR (click through rate). VTR/CTR expresses that the audience finds you content relevant. If you are successful in being relevant in the top funnel it will drip down to your lower funnel and ultimately drive happy customers and revenue.
VTR/CTR should never stand alone. Often relevance parameters should be accompanied by a CPC (Cost per Click). The CPC will express how much you pay for each visit or view.
A different and often overlooked parameter is unique users. Unique users express how many individuals have seen your advertisement. By adjusting the frequency, you will control how many times everyone will see your ad without interacting with it. Traditional advise on advertising will advocate for an optimal frequency on around 4-7 before you can expect your audience to interact or remember your brand. In an online world expect the number to be smaller. In my experience the optimal number is between one and three.
WHAT IS CTR, CPC AND FREQUENCY?
If you decide to work with VTR/CTR as your KPI and unique users and CPC as your supporting parameters, you need to establish what defines success.
When setting the success parameters, I would not rely on industry benchmarks or generic online benchmarks on VTR/CTR or any other metric. They will never express where you are as a company - you might be completely new to the trade or well into it and ahead of the competition.
Instead I would establish where you are. Find out what the current CTR/VTR, CPC and frequency performance is. When you have that knowledge set a goal for where you want to be a quarter from now! In many incidences it is not unrealistic to grow performance by 25% in a quarter. Most companies will be looking on CTR’s on around 0,10-0,3% on banner ads and 2-5% from social ads. For those companies working compelled with this they can improve significantly! In best case scenarios you will be looking at CTR rates on 10% from banner ads 70% on social ads – everybody can get there but it takes time and effort.
How to improve your VTR/CTR?
When you have established what your VTR/CTR level is and you have set an ambition for where you want to go the next easy step is to set aside a test budget and begin AB testing on your different attributes and data-points. To get valuable information you do not need a massive investment for many companies 500 usd will take you very far. The real challenge is to know what to test on giving yourself adequate time to do so and an extensive test can take from 2 weeks until 2 months depending on your scale.