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Advertising metrics

Presenting metrics to senior managers

Senior Managers don’t want numbers thrown in their faces, so marketers need to use data to tell a story. An endless stream of data, numbers and metrics are tough to digest and carries less meaning than visual methods of presenting data.

When telling your story, make clear, data-grounded recommendations. For example you may say “You’ve noticed that your organisation spends 20% of the marketing budget on social media, but you’re not seeing great results. I recommend cutting back and allocating money elsewhere.”

Efficient marketing requires data, but senior managers aren’t concerned with every scrap of it. They want a clear view of how your customers behave and how marketing projects impact revenue. To keep your senior managers in the loop without wasting his time, present them with these metrics.

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Measure what can be measured, and make measurable what cannot be measured.  Galileo Galilei

 

Quote of the day

Marketing doesn’t make sense without a clear link to revenue and sales.

Key metric – Cost of acquisition

Different from the cost per lead metric.  Cost per acquisition is focused on the costs associated with warm leads turning into new clients. The key here is that the fees you charge for your goods or service cover your acquisition costs e.g. your market activities as well as the cost of your good and service plus a margin for profit.

Key metric – Cost per lead

For each of your marketing activities, what does it cost to generate a warm lead for your organisation.  If you invest £5000 on a poster campaign and it results in 25 enquiries. The cost per lead is 5000 divided by 25 which is £200.  Not only a great way of measuring how effective an activity was but also a simple way of comparing the effectiveness of different actions.

Key metric – Gross margin

How much money is your company making before factoring in operating expenses?

Gross margin, which is commonly expressed as a gross margin ratio in percentage terms, is a way of describing the difference between revenue and cost minus the direct costs of providing a product or service.

Gross margin can be a great way to compare a business to its peers. In many cases, gross margin ratio ranges are well known for specific industries, so this metric is often one of the easiest ways for a business to establish how it’s doing versus its peers.

Key metric – Cost of customer acquisition (CAC)

What does it cost to acquire new customers? While the importance of knowing the cost of acquiring a new customer is obvious, surprisingly a lot of business owners don’t pay much attention to this metric.

Keeping customer acquisition costs top of mind can benefit a business in numerous ways.

For starters, many companies spend more than they estimate on customer acquisition and in many cases, they continue to invest in marketing channels that make little sense given the lifetime value of their customers.

Additionally, meaningful reductions in customer acquisition costs can provide companies with an unfair advantage against their less conscientious and diligent competitors.

Key metric – Customer lifetime value (CLV)

What is every new customer worth over the lifetime of their relationship with your organisation?

Knowing the lifetime value of a customer is a crucial part of understanding how much is reasonable to spend on acquiring new customers.

Measuring CLV is also a good way to determine whether your business is taking full advantage of its customer relationships.

In many, if not most cases, it costs less money to increase revenue from existing customers than it does to acquire new ones.

Yet still, marketers are still more focused on acquisition than retention.

Key metric – Reach

In the application of metrics to advertising and media evaluation, REACH refers to the total number of different people or households exposed, at least once, to a medium during a given period. Reach should not be confused with the number of people who will actually be exposed to and consume the advertising, though. It is just the number of people who are exposed to the advert and therefore have an opportunity to see or hear the ad or commercial.

Reach may be stated either as an absolute number, or as a fraction of a given population (for instance ‘TV households’, ‘men’ or ‘those aged 25–35’).

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