When developing and deploying your ad campaigns, it's essential that you know how well previous methods of measuring advertising effectiveness performed and use those ad performance metrics to make informed decisions that will work.
Proper use of metrics in advertising can help you be more efficient — i.e., you'll be able to keep using what works in your ad creative and drop messaging and tactics that don't make the cut.
Let’s discuss how you can accurately evaluate ad performance. We'll also dig into four metrics to help you measure ad effectiveness.
What is the Objective of Your Advertising Campaign Evaluation?
To start, you must establish a clear objective for your ad to reach its ultimate effectiveness. It's amazing how much simpler measuring ad metrics can be when aiming for a well-defined target. After all, if your ad meets the objective, it's a success; if it doesn't, it's a failure.
When setting your objective, ask yourself: "What is our company trying to accomplish with this ad?"
For example:
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Are we trying to drive brand awareness?
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Are we looking to enhance our reputation in the market?
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Are we trying to generate more leads?
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Are we focused on boosting our sales?
Once you have one or more clear objectives in place for your ad campaign, you can select metrics that align with those objectives. Of course, there are many metrics from which to choose; however, you want to focus on those with the strongest correlation to your desired outcome. Let's discuss how to measure ad metrics you may want to use in your endeavor.
1.) Conversions
Determining your ad's return on investment (ROI) is usually the best way to measure its success — and your ad's conversion rate is one of the best ways to measure its ROI.
A conversion is when a customer takes action after seeing or clicking on your ad. You can determine an ad's conversion rate by dividing the number of conversions by the total number of ad viewers. You can also look at your average cost per conversion (CPC) by dividing your ad spend by the number of customers who took the desired action. The higher your conversion rate is, the more likely your ad will perform well!
2.) Click-Through Rate (CTR)
Click-through rate measures the number of users that click on an ad (or an ad's CTA button). It is almost always expressed as a percentage and is calculated by the number of times an ad is clicked on divided by how many times the ad is displayed.
For example, if your ad is shown 5,000 times and clicked on 50 times, your CTR equation would look like this: 50 clicks / 5,000 displays = 1% CTR.
CTR is a great way to measure how effectively an ad engages viewers and gets them to take action (e.g., clicking through to your website). The higher the ad's CTR is, the more appealing it is to your target audience.
3.) Cost Per Thousand (CPM)
When evaluating your marketing campaigns, focusing on the results achieved by a particular ad and the costs associated with producing it is important. This is where CPM comes into the picture. (It's abbreviated that way because the Latin word for thousand is "mille;" thus, cost per mille.)
CPM measures what it costs to publish an ad per 1,000 views. To calculate CPM, you simply divide the total cost of an ad by the number of views (in thousands). For instance, if an ad costs $300 to make and 10,000 people view it, the CPM would be $30 ($300 / 10 thousands).
CPM is a strong comparative metric that helps you evaluate which advertising methods are most efficient. It also lets you track the overall cost of your ad campaign.
4.) Video Completion Rate (VCR)
Video completion rate is a metric to consider if you want to evaluate your ad's effectiveness. VCR, also known as View Through Rate or VTR, shows how many users watched your ad to completion. Many reporting tools will show VCR at 25%, 50%, 75%, or 100%.
A 100% VCR means every watcher viewed your ad all the way through, without skipping, which is an excellent sign your ad is compelling. Using this metric to evaluate your video ads can provide you with information to tweak a campaign for improvements, to increase revenue. For example, a 50% VCR might tell you the ad is too long, or it’s not capturing and maintaining viewers’ attention. Knowing your metrics will allow you to pivot and create better video ads.
How to Measure Advertising Using the Right Metrics to Evaluate Ad Effectiveness
It's absolutely vital for you to know how well your ads are performing. Only then can you improve your campaigns and continue refining your marketing efforts. By clearly identifying your ad's objective and then looking at metrics that align with it, you can accurately gauge how well the ad is doing and make any adjustments as needed.
Should You Partner with a Media Agency to Improve Ads?
Of course, one surefire way to ensure that your ads are effective is to partner with an expert digital marketing agency. An agency's experienced professional team can help you enjoy consistent ad performance across all channels. With their help, you can definitively answer that nagging question: "Is my ad any good?"
