Simple metrics make marketing easy.

If you can't explain it, you don't understand it well enough. This famous quote by Albert Einstein can be applied to marketing or business in general.

In digital marketing, we measure everything, and the metrics are the key advantage of digital tools compared to traditional marketing. However, we must not overdo it. Good managers make decisions based on simple metrics. Should we have clear metrics and data, decision-making tends to be easy.

In a recent talk with one of our customers, he said, "How do I know my marketing tactics work? We spend USD 200k monthly to generate leads. We follow up on the leads and make USD 3 million monthly revenue. As long as we continue to do so, it is a no-brainer; we will continue to invest in lead generation." This is one example of simple metrics being implemented.

Sometimes, our processes could be more straightforward, and we may need to take care of more details. Even then, we should focus on the key metrics rather than complicating our decision-making process, thus possibly losing time on the aspects that will not impact our business results significantly.

Our agency business focuses on two types of services: lead generation and e-commerce performance advertising. I will share the key metrics we focus on since these services are relevant to most businesses:

- Cost per lead, determining the number of prospective clients we can reach, given the advertising budget. We aim to keep it as low as possible while maintaining relevancy and quality. We will typically measure and compare the cost per lead on different networks, for instance, Google vs Facebook-generated leads.

- Conversion rate is a quality metric. It answers two critical questions: how relevant our offer is to the target audience and how optimized our campaign setup is. One of the questions we get from our client is, what is the reasonable conversion rate? And we usually have a pragmatic answer. We are happy with it if it allows us to get a positive return on ad spend. Some research provides good advertising benchmarks for different industries, a good topic for another occasion. We are usually happy with a 300% return on ad spend.

- Average (lifetime) user value tends to be a more critical metric with ever-increasing online traffic costs. When we pay for an online presence, we are competing with everybody. This information helps us determine if our online campaigns are profitable and, more importantly, if we can scale them. If we pay an average of USD 1000 to acquire a customer, and they will spend USD 3000 buying our services, we are at a great place to scale our business within our internal resource capacities.

- CPA/ROAS are the critical metrics for e-commerce businesses. We aim to get a low CPA (cost per user acquisition/conversion) in the testing phases. This approach seeks to get more customers to buy from a website, collect more data to help Google and Facebook get to know our customers and optimize the campaigns using learning/AI algorithms. Besides, we aim to build our customer base to communicate our products directly. Direct communication is the best channel for e-commerce businesses in the long term.

Once we have enough data, we switch to ROAS. These metrics help us focus on the key customers who tend to spend more on our website, thus increasing our average order value and overall profitability. This is the most important metric from the paid advertising point of view. Once implemented, we can partner with Google and Facebook and scale our campaigns to the targeted market limits.

Once these key metrics are in place, we can finetune other aspects of our online communication and test and compare different advertising channels and communications. The possibilities are virtually endless. But our time is a precious commodity, so we advise our clients to invest it in tracking the most necessary data and focus on their core businesses. This practical approach will allow the growth we all aim for.