YOUR ULTIMATE RESOURCE ON THE NEW
DIGITAL ECONOMY
Topics about Smart Cities, Fintech, Digital Marketing, Internet of Things, Social Media and Everything Else
by Yap Heng Kiong
Online Advertising
You have probably come across many metrics used in online advertising like the ones shown below.
Online advertisement is a good way to increase site traffic and hopefully brings about more business. There are many online metrics used by the online advertising industry such as Ad impression, Click-Through-Rate, Cost-Per-Click, and Conversion Rate, etc.
Understanding these online metrics will help you better understand your advertisement dollar effectiveness. What exactly do these metrics mean? This post attempts to explain with the help of a spreadsheet, such as Microsoft Excel. Open your Microsoft Excel and type the following:
Let's say you have spent $100K on a particular online advertising campaign, e.g. Google Adwords. Type $100,000 into cell B2 in your Excel spreadsheet.
Let us now fill in the Ad Impression B1 cell onto the Excel spreadsheet.
Open up your Google Adwords Control Panel as shown below. Each time your ad appears on Google Search Page Results or on Google Display Network, it is counted as one impression. You cannot have Clicks without Impressions. Users need to see your Ads before they can decide whether to click on them. In this example, you have spent $100,000 to get 10,250,000 ad impressions.
Next, check out the number of interactions under your Google Adwords control panel. An interaction is the main user associated with an Ad format. "Clicks" for Text and Shopping Ads, "Views" for Video Ads, and so on. The interaction column counts different user actions depending on Ad formats, Regardless of formats, this column indicates how well your Ads are meeting your advertising goals.
Fill in 27,560 under Clicks in cell A6 in your Excel Spreadsheet.
Next, we are going to fill in the Opportunity response which is also known as 'Conversion'. A Conversion happens when someone clicks your ad, and then takes an action which you define as valuable to your business such as subscribing to your company's newsletters.
Conversion Tracking is a free tool in Google Adwords that show you what happens after someone clicks on your ad, whether they purchase your product, sign up for your newsletters, call your business or downloaded your app. When someone completes an action which you define as valuable, these actions are defined as conversions.
For information on how to set up conversion tracking, click below resource.
Retrieve the number of conversions from your Google Adwords Conversion Tracking dashboard as shown below and fill in the number in your Excel Spreadsheet.
Now that you have entered the four basic information into the Excel Spreadsheet, let us now proceed to work on the rest.
Click-Through-Rate (CTR)
Click-Through-Rate (CTR) is the ratio of users who click on the Advertisement link to the number of Ad Impressions.
Hence, type the formula =B6/B1 into Cell B3. You should get 0.27% for CTR. Cost-Per-Thousand (CPM or CPT)
Cost-Per-Thousand is a marketing term used to denote the price of 1000 advertisement impressions.
Type the formula =B2/B1 * 1000 into Cell B4. You should get $9.76 for CPM. Cost-Per-Click (CPC)
Cost-Per-Click (CPC) refers to the actual price you pay for each click in your online advertisement.
Type the formula =B2/B6 into Cell B7. You should get $3.63 for CPC. Conversion Rate (Action)
Conversion Rate is the average number of conversions per Ad click, shown as a percentage. Conversion Rate is computed by simply taking the number of conversions and dividing that by the total number of Ad clicks.
Type the formula =B10/B6 into Cell B8. You should get 51.89% for Conversion Rate. Cost-Per-Opportunity
To find out the Cost Per Opportunity,
Type the formula =B2/B10 into Cell B11. You should get $6.99 for Cost-Per-Opportunity. Conversion Rate (Sales)
Assuming you made a total 1,235 sales after spending $100,000 in online advertisement campaigns, let us now calculate the Conversion Rate for your Sales.
Conversion Rate for Sales is calculated by taking Sales divided by total number of conversions. Type the formula =B14/B10 into Cell B12. You should get 8.64% for Conversion Rate. Cost-Per-Sales
To find out Cost-Per-Sales, simply
Type the formula =B2/B14 into Cell B15. You should get $80.97 for CPS.
To watch a video about this post, please click below
Summary
Let us summarise the following key metrics with the help of a Sales Funnel diagram as shown below.
1 Comment
3/5/2024 11:28:47 pm
Registering a company involves legally establishing a business entity with a governing authority, often a government agency. This process includes selecting a business structure, choosing a name, completing registration forms, and paying associated fees. Proper registration ensures legal recognition and compliance with regulatory requirements, providing a foundation for transparent and effective business operations.
Reply
Leave a Reply. |