10 Metrics You’ll Need to Succeed without Platform Data
It’s no secret that digital marketing is changing. Over the last ten years, marketers and advertisers have become accustomed to having complete access to all levels of data, relying on it heavily to track ad performance and measure success. However, updates from Big Tech companies in 2021 have changed all of that. It’s time to prepare for a world where platform data is limited, leaving us to collect the most critical data ourselves.
While this shift has left many marketers feeling frazzled, this approach to advertising is really nothing new. We’re just going back to the basics, learning to advertise the traditional, timeless way. That requires understanding which metrics to measure and what benchmarks are required to drive success. If you can learn that, you’ll still be in a position to be successful no matter what happens to your advertising platforms.
In this article, we’re going to outline ten metrics that you need to succeed in a world where digital marketing is nothing like we’ve come to know in the last ten years. These metrics are timeless, you can calculate them internally, and therefore reliable and useful for any type of advertising (even TV!).
What is required for measuring success without 3rd party metrics?
Before diving into the metrics, there are a few things you need to be aware of. The first is to not get lost in the weeds. Normally when people look at a dashboard or Google Analytics, they get overwhelmed by all the metrics being measured and distracted by what’s green or what’s red. When this happens, prioritize common sense rather than deep analysis. Focus on the metrics that matter to your business— the metrics that help you achieve conversions, and nothing else. At the end of the day, it’s not really about the nitty gritty details of the individual platforms and all of the metrics that come with them. It’s about getting the right message to the right audience. That’s it.
The 10 Most Important PPC Metrics for Ecommerce Sites
Let’s dive into the 10 most important metrics digital marketers need to pay attention to when advertising for ecommerce sites. These are metrics that can transcend interruptions to the digital marketing space that limit our visibility into the micro actions users take within the funnel.
1. Ad Spend to Revenue Ratio
The ad spend to revenue ratio (or ad spend as a percent of revenue) is the gold standard for marketing. It’s the simplest measurement to track; so simple that you can keep up with it manually in a Google Sheet or a notepad. It’s just a ratio of how much you are spending on advertising and how much revenue your store is seeing. As long as you are staying within a healthy ratio that is healthy for your business and its growth, you’re doing fine. In a healthy stage, the ad spend to revenue ratio should be as low as 35%-40%. In an aggressive growth stage, when you are really grabbing to gain market share, the ad spend to revenue ratio could be as high as 55%.
This is nothing new. In fact, even when we did have access to a bunch of data about which users were taking which actions on the site as a result of which ads, we would use this ratio. It’s our top-down, simplified approach to watching marketing performance. And it’s incredibly useful, because when you’re using multiple marketing channels, spending a considerable amount, and driving significant revenue, direct attribution is almost impossible. In those instances, you don’t necessarily need to know which specific platform is “working”. You just need to look at this ratio to know whether what you’re doing is healthy, profitable, and sustainable.
2. Lifetime Value
The next metric to watch is customer lifetime value, measured at 30 days, 60 days, and 90 days (or, whatever time period is important to your business). Nailing LTV is one of the keys to getting the business to the health stage and being able to scale. The benefit of knowing lifetime value within a certain time frame is it gives you a good idea of cash flow. More than likely, you’ll lose money acquiring a customer for the first time (or if you’re lucky, you’ll break even). But if you know how much you’ll make on that customer after 30 days (or more), you essentially know when you’ll be paid back for those marketing efforts on cold traffic. This helps determine what you can invest, because you know what kind of return you’ll get and when.
3. Cost per Initial Action
No matter what platform you advertise on, you should at least be aware of what you’re paying to get in front of customers. How much are you paying to reach X number of users (cost per reach, cost per impression, CPM)? How much are you paying for a click to your site or a view on your video? Assume that visibility after that interaction will be limited or inaccessible. At the minimum, these platforms will still be able to report basic initial actions like this, which is great, because that determines how much budget is required for the first step of your funnel. It’s critical for comparing different ad budgets and deciding where and how to spend your money.
4. Campaign Metrics & Data Points
With new limited visibility to what users are doing, it’s even more difficult to track which user actions came from which platforms, campaigns, or ads. But it’s still important to know what message for which audience actually led to a conversion. This is where traditional ad tracking comes into use, which include methods such as:
URL variables: This is one of the best ways to track customer activity and see which campaigns generate site visits and sales. One of the most common URL variables are UTM parameters by Google. If you’re using Google Analytics, this is the simplest way to make sure all data flows into Google Analytics for you to track there. If you’re not using Google Analytics, you can use any URL variable to hold information that is then captured on your site and sent to your data manager and/or CRM.
Coupon Codes: When it comes to ecommerce, this the oldest (and possibly the most underrated) tracking method in the books. Simply create a unique coupon code for whatever you need to track and incorporate it into your campaigns. If you’re wanting to know which marketing channel or specific campaign sales are coming from, each channel or campaign should have a unique coupon. However you choose to use these, it’s easy to create a large volume of them and also report on them straight from your ecommerce platform.
Landing Pages: Hopefully you are already creating unique landing pages for your marketing campaigns, but have you thought about using them for data tracking purposes? Create different landing pages for each marketing channel, campaign, or audience and you’ll have a simple method for attributing performance to each. You’ll also have the ability to integrate landing pages with your CRM and send data to it. For example, you might auto tag certain people as they come through to direct that info into your CRM. You’ll need a developer for this, but it’s very doable and worthwhile.
Custom URLs: It’s fairly easy to create a lot of simple branded URLs using a shortener tool like bit.ly or other tools. Under their clean exterior, these custom URLs can auto populate coupon codes, forward to landing pages, or contain URL variables. Depending on how granular you plan to get, setting these up may require some technical skills, but it will provide you with flexibility and the ability to track the results of traffic from different types of sources.
5. Website Traffic & Engagement
It’s also important to keep track of the amount of website traffic your site or landing pages are receiving and measure that against the cost per reach or cost per click we discussed earlier. Simply put, the idea is to watch how expensive actions on the ad side are, and compare how much of that action translates into engaged users on your site.
Speaking of engaged users, you may be fine with measuring page visits. But if you really want to know how high quality that traffic is, look at engagement metrics such as pages per visit, time on site, add-to-carts, and bounce rate.
6. Conversion Rate By (Persona, Landing Page, Etc.)
It’s important to be aware of your ecommerce store’s conversion rate for store performance purposes, but that won’t tell you much about how your marketing is contributing to that performance. In fact, overall conversion rate is important to be aware of, but gives you no course of action. If you want to change it, you need to look deeper.
For that, you’ll need to look at conversion rate broken out by persona, landing page, campaign, etc. If you are tracking your ads using URL variables, custom URLs, or any of the other metrics listed above, it will be relatively simple to track this in Google Analytics.
7. Incentivized Feedback
Another way to get a sense of where customers are coming from is to simply ask them. When a customer purchases, consider popping a simple survey that asks where they heard about you. This could just be a quick list where they check “Instagram ad”, “Hulu ad”, “YouTube video”, etc. You could get more creative in how you ask, which would improve the participation. In order to get responses, you may need to incentivize this feedback with a small coupon or points toward a future purchase.
8. Add to Cart Rate
This metric looks at the ratio of how many people viewed the product page to how many people added a product to their cart. Keeping track of this in your ecommerce platform or Google Analytics is crucial for understanding whether you’re driving the right traffic to the site and how well your ads’ message translates to your product page and ultimately getting them to purchase.
9. Abandoned Cart Rate
Similar to add to cart, this metric will look at how many people added to cart and then checked out vs. those who added to cart but then dropped off. Add to Cart and Abandoned Cart are two critical parts of your funnel because they are the users with the highest intent. Watching these numbers will give an indication of where the traffic your marketing is driving ends up dropping off.
Focusing effort here is some of your lowest hanging fruit.
10. Email Offer Opt-In Rate
Every ecommerce store should have an email opt-in with an incentive for visitors to sign up for your brand email list. Of course, you’ll have to communicate (and give) value in signing up. This is crucial for capturing names at the top of the funnel so that you can continue to foster a relationship with them if they leave the site without purchasing (which most will). If the rate of email opt-ins are very low compared to your site visitors, it’s possible that you’re not sending the right traffic, or you need to start testing different offers on the opt-in.
3 Metrics to Stop Focusing On for PPC Advertising
In this new world of digital advertising, there are a few metrics that it’s time to let go of. They’re still important to be aware of in some regard, but if you continue to focus solely on these metrics, you’re going to be buried in the wrong path and losing growth opportunities because you’re chasing a distraction.
1. All Direct Attribution
Being addicted to knowing exactly what channel created what sale and being unwilling to let this go will cause you to be hyper-focused on the wrong things. To put it bluntly, it’s a waste of time trying to match your sales revenue to specific marketing channels. The reality is, they all work together to create the sale, so you’re much better off looking at the ad spend to revenue ratio we discussed above and only looking here to solve problems.
This is another great metric to know, but focusing on return on ad spend can lead you down the wrong path if it’s the most important metric to you. We’ve seen it often: Brands will get nervous when they see a low ROAS for a particular campaign, or an entire marketing channel, and then instantly want to turn it off. The bottom line is no marketing channel controls ROAS, they just REPORT IT. ROAS is controlled by the entire customer journey including your site, your offer, and your product itself.
More often than not, that campaign or marketing channel is contributing to the bigger picture, feeding the top of the funnel and building awareness. When that piece is turned off, it can cause sales in other areas to drop. It’s important to be aware of what return you can plan for across different channels, but it is not the end all, be all of your marketing success.
3. Conversion Rate Per Marketing Channel
Judging a marketing channel’s performance solely on its conversion rate can also get you into trouble. Similar to the other metrics mentioned here, the tendency is for marketers to see a lower conversion rate on one channel and then decide to cut it. The truth is, most of your marketing channels work together to help achieve conversions, and like ROAS they don’t control conversion rate. Facebook or YouTube might have a low conversion rate, but they may also be feeding the top of your funnel and therefore necessary to keep around.
Refocus and Start Winning
The world of marketing is always changing. For some it’s getting harder, but for great brands it can actually be to your benefit if you let it. When things get difficult, the strong thrive. Learning to measure these ten metrics and let go of third party data will make your business and marketing more resilient, no matter how the industry continues to evolve.
If you want to know what to target for several of these metrics or to see where your business and marketing stands currently, check out our post on Ecommerce Benchmarks.
Do you need help navigating your current marketing situation? Do you know what channels are leaving you the most vulnerable? What would happen to your business if Facebook shut down tomorrow? We help some of the most influential brands in the world build more resilient marketing programs. If you’d like to learn more about how we can help you, book a call with us.