I know what you’re thinking: “This isn’t difficult, Lewis. You put in X and get out Y.”

And at the most basic level, you’d be right. But without understanding all the intricacies and nuances that happen between those two points, you’re probably going to make bad decisions that are going to massively hamper the growth of your business.

The rise in the number of analytics platforms over the last decade has given business owners access to tens of thousands of pieces of data every single day. And that’s great. Data is the lifeblood of any business. But without knowing exactly what you’re looking at and why it matters, you can very quickly go down a rabbit hole of data-driven anxiety.

Marketing performance should never, ever, ever be measured in silos. ALL effective marketing campaigns are multi-channel. The moment you start treating your channels as enemies competing against each other, you’ve already lost.

We had a luxury e-commerce client recently who didn’t believe that paid social campaigns were effective as there wasn’t much being attributed to them in Ads Manager. So they asked us to switch them off.

14 days later their Direct Revenue in Google Analytics had dropped by 24%. As you can imagine, they very quickly asked us to switch them back on.

Why did this happen?

Because the reality was that the products they were selling were high value, so customers took longer than 7 days to make their buying decision. The default conversion window in Facebook is 7 days, so any purchases that happen outside this window would not be attributed to FB/IG.

We all want to believe that people will see our ads, click on them, & buy something straight away. But in the real world, it’s just not how people operate.

Do you think brands that advertise on TV measure the success of their campaigns by how many people see their ads and then instantly run out to buy the product the same day?

Nope. They understand that those ads are part of a larger, multi-touchpoint picture.

Stop for a second and think about how YOU buy things

How many times have you clicked on an advert for a brand you’ve never heard of and bought something right there and then?

You don't.

Instead you:

  • Stalk their socials
  • Have a nosey around their website
  • See what their reviews are saying
  • Look for any special offers/discounts
  • Compare them against other similar brands
  • Ask your friends and family what they think

And all those things might take place over a period of 1-120 days, dependent on what it is that you’re buying, how urgently you need it, and how much money you’re being asked to part with.

As a business, you NEED to factor that buying process in when you’re trying to measure the success of your marketing campaigns.

Paid advertising is often heralded as a “quick fix” to get results. And if you’re comparing it to SEO, Content & Organic Social, it definitely is.

But fast overnight

Ok, So What Are The Key Metrics To Measure?

Blended Cost per Acquisition (CPA)

How much does it cost you to acquire a new customer?

We work with lots of brands who run “loss leader” campaigns to get new customers through the door. This means they don’t mind paying a high price to acquire new customers, because that value will be recouped through tactics like retargeting & email campaigns, which produce huge returns for very little cost.

The higher your returning customer rate & lifetime value are, the more leeway you have with your CPA to ensure it remains profitable.

Returning Customer Rate

How many of your customers come back and buy again from you? If this number is low, then you need to figure out why this is happening.

Is the product good enough?
Did you ask for feedback from the customer?
Is there an opportunity for you to add more value to their lives?
Have you even tried to upsell or cross-sell anything new to them yet?

Customer Lifetime Value (LTV)

How much does a customer spend with you over the course of 30/90/180/365 days?

If I’m selling a product for £20 and it costs me £15 to get that customer, you might think that’s terrible.

In fact, if the average customer returns 5 times over the year, spending a total of £150, your “terrible performance” just became a 10x return on investment.

Too many brands overlook lifetime value when assessing marketing performance, and fail to appreciate that a large proportion of those returning customers propping up your bottom line were actually a product of paid ads.

Website Conversion Rate

You can have the best ads and the best product in the world, but if your website or landing page looks like a fisted quiche, then you probably won’t get any sales.

Improving your website is one of the easiest ways you can quite literally double your revenue overnight, without spending an extra penny on ads. Ask yourself:

  1. Is it structured effectively?
  2. Does it load fast enough
  3. Are there enough CTAs on there?
  4. Do you have instant pay options?
  5. Do you have social proof on there?
  6. Do you remind customers when they're about to leave without purchasing?
  7. Are you asking for too may fields in the checkout process?

Everything you do should be focused on getting that customer to complete a purchase in the smoothest and quickest way, before they can get distracted by the kids or before that dreaded buyer’s remorse kicks in.

FYI- the current average e-commerce conversion rate is 1.8%, so if you can get above this, then you’re on to a winner.

Blended Return On Ad Spend (ROAS)/ Marketing Efficiency Ratio (MER)

This is your total revenue/amount spent on advertising. We use this as our golden metric.

Attribution will always be the biggest source of arguments between agencies and clients. Unfortunately, no matter how hard you try, none of the advertising or analytics platforms you use will ever match up exactly.

Think about this for a second:

Someone sees an ad. They screenshot and send to a friend on WhatsApp. The friend types the name into Google and searches the site. They get hit with a retargeting ad and subscribe to the newsletter. A month later, they make their first purchase.

Who do you think gets the credit for that sale? I’ll give you a clue… it won’t be your ads.

So what can you do in this situation?

1) Spend several days a month trying to micro-attribute every £ to a specific post/ad and slowly drive your business into the ground.

2) Implement a cohesive, multi-channel marketing strategy and measure your performance holistically, allowing you to scale up and increase your profitability.

I’d recommend Option 2.

So would our clients that we’ve scaled to 7 figure revenues.

And there you have it.

That’s my guide on how to measure your paid advertising efforts.

If you’d like to work with an agency that won’t blow smoke up your arse and tell you what you want to hear, then you know where we are.

We’re dead good at this stuff