Beware of Monitoring Clicks and Impressions!
Though every online advertising platform willingly offers clicks and impressions as metrics in reports, it can be extremely dangerous to use them when measuring the success of your campaigns.
This blog post will explain the dangers of focusing on clicks and impressions as well as how to properly use clicks and impressions along with other metrics to evaluate your business’s online advertising campaigns.
Defining Clicks and Impressions
Online advertising offers an abundance of data and metrics you can track. Among them are metrics called “clicks” and “impressions.” Let’s define the terms.
Clicks - The number of times your ad is clicked by a consumer. Depending on how your ads are configured and which platform your ad is running on, this metric might count multiple clicks from the same person.
Impressions - The number of times your ads were viewed. This metric will count multiple ad views from the same person.
Why the Hate?
If you couldn’t tell, we’re painting clicks and impressions in a criminal light. This is because they’re often the source of wasted marketing budgets.
In isolation, clicks and impressions are only indications of how well your ads are delivering. If you have very few clicks or very low impressions, you know your ads are not delivering to many people.
With this data, you can decide to adjust your ads so they may show to more people (e.g. increasing bid amount, increasing the audience size, changing the bid strategy, changing the audience type, etc.).
In isolation, these metrics ARE NOT an indication of how well your ads are performing in relation to your campaign’s objectives, your other marketing channels, or your overall marketing plan.
This is where the danger lies.
Many business owners, staff, and ad agencies will report on clicks and impressions without pulling in other data that is necessary for accurately measuring the outcomes of a campaign.
By focusing on clicks and impressions, business owners and staff can be fooled into pushing more ad spend into campaigns that are generating high clicks and impressions but not actual sales or potential customers.
For example: A business spends $2,000 on Google ads to get 3,000 clicks and 22,000 impressions. If they are only focusing on clicks and impressions to determine the success of the campaign, they might find these results favorable. However, they might overlook the fact that they didn’t gain any increase in monthly sales.
You might think it’s highly unlikely for a business to spend that kind of money on ads and not notice the lacking results, but you’ll be surprised at how many businesses do this.
Businesses often have trouble attributing sales to the several advertising campaigns they’re running, customer referrals, and other methods from which they acquire new customers.
Because the results are not tied directly to the campaigns, they will continue to spend money on all of them because they are either unsure of which campaigns are driving the sales OR they believe that all the campaigns are contributing to the sales.
This is where much of the budget waste occurs. In most cases, one or two campaigns are responsible for the bulk of new business. Spending on any campaign that is not contributing to the bulk of sales is waste!
In the example with the $2,000 in Google ad spend, imagine if that business spent $2,000 per month for a year without knowing that the campaign was useless.
They would waste $24,000 on a campaign that isn’t generating any sales! What’s worse is that the money could have been used in the campaigns or marketing channels that were responsible for the bulk of sales – which would result in significant growth!
Should You Even Consider Clicks and Impressions?
We’ve bad-mouthed clicks and impressions, but they can be helpful in monitoring the success of your online advertising campaigns when combined with other metrics and data.
By enriching click and impression metrics with other metrics and data, you can get a more complete picture of the performance of your campaigns as they relate to your objectives, other campaigns, and overall marketing plan.
Here are some metrics and data to combine with clicks and impressions.
When combined with cost, these clicks and impressions will tell you how much it costs to run your ads – do “cost per click (CPC)” and “cost per impression (CPM)” ring a bell?
CPC and CPM are helpful in determining how much it costs to generate a lead or to acquire a new customer.
When compared to historical cost data, CPC and CPM can be used to gauge whether the money you’re spending on ads is higher or lower than usual to generate the same results.
These two metrics can also be used to run projections of future campaign results.
For example: You want to acquire 10 new customers in 1 month. Your sales team can close 10% of the leads you get which means you need to generate 100 leads to close 10 customers. For every 5 clicks, your company gets a lead, meaning your ads need to generate 500 clicks to get 100 leads. With a CPC of $3, your company would need to spend $1,500 to acquire 10 new customers.
It’s important to note that there is no industry standard for CPC or CPM. They will depend on your ad configuration, the competition for keywords or audiences, your ad maintenance, the time of year, and several other factors.
The best data to compare your business’s CPC and CPM to is historical CPC and CPM data from your past campaigns.
We also want to warn you against only evaluating your campaign's success using just CPC and CPM. Much like viewing clicks and impressions in isolation, only considering CPC and CPM will result in an incomplete evaluation of your advertising campaign.
Combining cost, click, and impression metrics with additional metrics and data will help you get a better understanding of how your ad campaign is performing.
There are several options for what is to be considered a conversion. In online advertising, conversions can be form submissions, calls, downloads, video views, sign-ups, and even purchases.
What you consider to be a conversion depends on the purpose of your campaign and your overall marketing plan. It’s important that you clearly define the conversion(s) related to your campaign.
When layering in conversion data, you can begin to see what clicks and impressions mean to your campaign as they relate to conversions.
Conversion rate is one of the best metrics to determine the success of your online campaign. It shows you the number of people who completed a conversion action (e.g. submitted a form or downloaded a file) as a percent of the number of people who viewed your landing page.
The conversion rate can be calculated by dividing the total number of campaign conversions (e.g. form submissions or sign-ups) by the total number of landing page views; then multiplying the number by 100 to get a percent value.
This metric is a strong indicator of whether your campaign is just getting clicks and impressions or actually leading potential customers to take action.
As you might have noticed, we used landing page views in the conversion rate formula.
Depending on what you’re assessing, you can also calculate a conversion rate that shows conversions as a percent of clicks rather than page views. We like to call this a click-to-conversion rate.
The click-to-conversion rate can be calculated by dividing the total number of campaign conversions (e.g. form submissions or sign-ups) by the total number of clicks the campaign received; then multiplying the number by 100 to get a percent value.
This is the most important bit of data your business needs to consider when running online advertisements.
If an ad isn’t making your business money in some shape or fashion, what’s the point of running it?
Adding revenue metrics to your online ad campaign reporting isn’t as difficult as it may seem. Let’s look at a couple of examples on how to layer in revenue figures.
Example 1: Your business is running an ad campaign that is gathering sign ups for your email newsletter. If you know that on average every 1 in 10 people who sign up for your newsletter becomes a customer worth $2,000; then you can determine how much revenue a sign up conversion is worth. You would simply divide $2,000 by 10 or calculate 10 percent of $2,000 to get $200.
Example 2: Your business is running an ad campaign directing people to submit a form to receive a quote for its services. If your sales team closes 25 percent of people who submit a form for services worth $4,000, then you can determine that each person who submits a form is worth $1,000.
Adding revenue figures into your campaign reports will help you determine how much a given campaign or advertising channel is worth – which can help you answer questions such as:
How much money should we spend on this campaign?
Should we continue running this campaign, or should we shut it off?
How much money will it take to reach our sales goals?
What’s our most valuable online ad campaign?
Is this campaign really worth the money?
Landing Page Views
In the conversion rate section, you might have noticed that we used the term “landing page.”
In online advertising, we often direct people from the online ad to a page on the business’s website specifically oriented in a way that leads the page visitors to take action (convert).
That page is called a landing page.
When evaluating an online advertising campaign, a simple metric to note is landing page views – which is the number of people who actually saw your ad campaign’s landing page.
So why is this important?
Due to several factors including website load speed, ad relevance, internet strength, device type, etc.; there is often a drop off between the number of people who click your business’s ad and the number of people who actually view the landing page.
This metric can help you determine if there is a breakdown in your ad campaign. If the number of landing page views is significantly less than the number of clicks your ad received, you know there’s an issue that needs further exploration.
Note: When running an ad that is prioritizing impressions, you will notice that the number of landing page views will not be anywhere near the number of impressions your ad receives. This is completely normal because the ad platform is prioritizing views of the ad, not clicks or views of the landing page.
If there’s one thing you can take away from reading this blog, it’s that you should seek to incorporate more data and metrics into your online advertising campaign reporting than just clicks and impressions.
Evaluating online advertising campaigns using only clicks and impressions will give you an incomplete view of the performance of your campaigns and will lead you to make decisions that might harm or limit the potential of your advertising strategy.