The effectiveness of a site is not measured by the position of the site in the TOP, and not by the number of visitors, although most often site owners track and pay for these metrics. The effectiveness of the site is measured by the number of calls, orders, applications from the site - the number of targeted actions performed by visitors on the site.
Now such a model of payment for promotion services is popular.
The maximum allowable cost of the target action (appeal, order, application) of a visitor on the site (CPL / CPO)- the cost that the company can afford under the current or forecast situation.
The model of payment for targeted actions is attractive because payment occurs after the fact and at first glance has less risk. But there are two main risks to be aware of:
- In an effort to get more hits, there is a chance to pay more for the hit than is profitable for the business;
- The risk of not getting the right number of hits because the business offered too little price per action.
The main question arises: “At what cost of the target action will such a model be profitable?”
To do this, you need to determine the CPL / CPO and compare these indicators with offers on the market.
What determines the maximum allowable cost of the target action?
- Conversion of requests from the site into transactions
- Average check deals
- % of the marginal profit that the business receives from each transaction (excluding the cost of website promotion)
- The portion of the profit that a business is willing to pay to complete a transaction. How much of the margin profit are you willing to spend to complete the deal? 25%? fifty%? 100%? Or 150%? It depends on the likelihood of repeat sales to the attracted customer and the competition in the industry in which the business operates.
- Client lifetime. The frequency of the client's purchases, placing orders. If the client contacts the company again after the first order/purchase, then the marginal cost of the action may be higher than the % margin profit from the transaction.
It can be concluded that the maximum allowable cost is not a universal indicator and it is different for each business.
Examples of calculating the maximum allowable cost of the target action of a visitor on the site for different business sectors
Consider the definition of the permissible marginal cost of action using the examples of two very different businesses - an auto center and a flower delivery service.
Example 1
The AutoLeader auto center collects contact information for an application for a test drive using the landing page. The number of requests per month is 16. Of the 16 people who signed up for a test drive, only one person becomes a car buyer. Thus, the conversion of requests into transactions is 6.25%. The average check is 700,000 rubles. Let's say that the dealership has a 25% marginal profit.
Calculate the maximum allowable cost of the target action on the site.
- Average check 700,000 rubles
- Marginal profit 25% or 175,000 rubles
- Permissible expenses for attracting a transaction 20% of the margin or 35,000 rubles
- Conversion of calls to deals 6.25%
CPL/CPO = 35,000 x 6.25% = 2187 rubles for the target action
Speaking about the cost effectiveness of attracting one customer, it is worth remembering the frequency of purchases by the customer. In the case of a car dealership, the frequency of buying a new car is on average once every five years. Therefore, there is no point in agreeing to the cost of a visitor's action on the site, which is more than the maximum allowable.
Example 2
Flower delivery service "Dandelion".
The target action for flower delivery will be an order with filling in the contact information form.
- Average bill 1,500 rubles
- Marginal profit 30% or 500 rubles
- Allowable expenses for attracting the first transaction of the client are 100% of the margin or 500 rubles. Since those who applied once to the flower delivery service at good service and reasonable prices with a high probability of becoming a regular customer.
- Conversion of calls to deals 90%
CPL/CPO =500 x 90% = 450 rubles for the target action
We looked at how you can calculate the maximum allowable cost of a visitor's action on the site. But in practice, calculating this value can be much more difficult. Not every business knows the conversion of requests into deals, monitors the frequency of requests regular customers to a company, goals may not be configured on the site.
This makes it difficult or almost impossible to determine the cost of an action.
But there is one more difficulty when promoting with payment for targeted actions - the discrepancy between the cost that the business is willing to pay and the rate offered by the promoting companies. The reason for this may be high competition in the industry in which the business operates, low demand on the Internet for the proposed product or service. Then you need to either raise the rate, or choose another payment model for website promotion - promotion for a monthly fee.
Do you know the conversion of calls to deals and want to pay only for targeted actions?
CPA
Price for 1 action
CPA Calculation Formula
The CPA indicator stands for Cost per Action - the cost per action. In this case, the action can be anything: a call, an application, a subscription to a mailing list, a transition to a group in in social networks and much more. In fact, it can be anything that can be measured. The CPA calculation formula is very simple and similar to , but we do not count clicks, but target actions.
CPA Calculation Examples
Our favorite puzzles! I remind you that each of the calculations can be checked on the calculator above.
CPA = 12,000 rubles / 32 applications
CPA = 375 rubles per application.
As you can see, the clinic receives contacts of potential clients for 375 rubles. The task is very simple, so let's do something more difficult.
Example #2. Within a week, the advertiser invested 18,549 rubles in Yandex.Direct. During this time, 14 calls were received (3 failed), 22 requests (4 duplicate) via mail and 7 effective requests through an online consultant. Let's calculate the CPA for this advertiser:
CPA = 18549 rubles / (14-3+22-4+7) requests
CPA = 18549 rubles / 36 applications
CPA = 515.25 rubles.
As elsewhere, some applications are rubbish and duplicate. This is very important when determining the real cost per target action. However, the arithmetic here is simple - we exclude irrelevant applications and count only those that brought real customer contacts. But this is too easy a task, let's take the following example.
Example #3. The seller of baseball caps invested 144,000 rubles in the advertising campaign. Ads were seen 14,535,855 times (more than 14 million times) and clicked on only 0.16% of that number. Of the resulting amount of interested people, applications were left by 3.4% of the number of clickers. Let's calculate the cost of CPA.
We do not have real numbers, but only percentage data. At the same time, 0.16% is the CTR indicator, and 3.4% is the conversion rate. It is easy to find out the number of clicks: we multiply impressions by CTR. And then we multiply the clicks by the conversion and get the number of targeted actions.
Clicks = 14535855 * 0.16 / 100 = 23258 clicks
CTA = 23257.4 * 3.4 / 100 = 791 actions
CPA = 144,000 rubles / 791 targeted actions = 182 rubles.
Most often, all these indicators are calculated automatically by systems, but there is nothing better than manual verification.
What is a target action?
The target action can be anything that is subject to calculation:
- application via form feedback;
- purchase of goods;
- newsletter subscription;
- call;
- transition to a social network;
- downloading a price list, etc.
All targeted actions have their place in the sales funnel, so it is important to work on improving conversion rates. CPA is a direct factor that reflects page conversions. And then it's up to the sales department and those who process applications.
As you can see, CPA is very easy to calculate. The main thing is to understand what is the target action. At the same time, the formula for calculating CPA is the same as for clicks, so it’s simply impossible to get confused.
Thank you for your attention, stay tuned
To evaluate the effectiveness of advertising, there are a huge number of tools, counters and indicators. To assess whether the advertising budget is not wasted, first you need to decide on the goals advertising campaign. Then select tools. And in the end, evaluate the necessary marketing indicators. Stanislav Rybakov, founder and leader, helps us understand all this. marketing agency Increase .
— Legendary American businessman and one of the founders of modern advertising John Wanamaker noted back in the 19th century: “Half the money I spend on advertising is wasted. The only problem is that I don’t know which [half of the budget].”
Founder and head of marketing agency Increase
Currently, there are a huge number of special tools for determining the effectiveness of advertising, the main thing is to know where to look for them, how to use them skillfully and which one to give preference to.
Setting priorities
Having overloaded modern society advertising, we have created selective Internet users. Now they pay attention only to ads that are of particular value to them. So in order to calculate whether our advertisement reaches target audience First of all, you need to define your goals. Having knowledge of the characteristics of the audience and having built a goal-setting system, we will be able to select reliable metrics to evaluate the effectiveness of advertising.
For most commercial projects growth in sales is of interest, but for some, for example, the media, an increase in the number of visits will be enough. In this case, we will use visit control metrics until we reach the desired goals or acquire new ones.
We select tools
For a competent analysis of the effectiveness of online advertising and obtaining statistical data, it is important to choose the optimal set of tools.
Below are the possible and popular tools used today to collect and store various kinds of statistics on Internet pages:
- Internal counters - located on the site itself, provide access to real-time statistics and guarantee the confidentiality of information. Such counters can be self-developed (to create, you need to know a programming language, such as PHP), provided by a hosting platform or a separate service (CNStats)
- External counters are special script programs that communicate with a specialized statistical server when a website page is loaded. As a rule, these are free statistics services (,). Some of them allow you to participate in the ratings, but require the placement of a picture with the service logo on the site (LiveInternet, Rambler, Mail.ru, OpenStat)
- Programs for analyzing Cookies - files containing dynamic information and remaining on the user's computer (Cisco)
- Programs for analyzing log files that record events on the site (Semonitor, AlterWind Log Analyzer, AWStats)
- Analysis systems that can comprehensively replace counters and analyzers of Log files (for example, such as "Site Statistics" from NetPromoter)
- Data statistics systems for online advertising campaigns (Yandex.Metrika, AdTracker, AdsControl, etc.), as well as sets modern instruments web analytics (free Google Analytics or Microsoft AdCenter)
Explore performance indicators
Marketing indicators for evaluating the effectiveness of advertising. To determine them, you need to visit the advertiser's account or carefully study the interface of the page under study.
The most popular marketing metrics for evaluating advertising effectiveness are CTR and CR. In fact, there is nothing in common between these two abbreviations, except for the letters C and R. Let's take a closer look at what these and other marketing metrics for evaluating advertising effectiveness are.
1. Metrics for monitoring visits. The first and simplest indicator is the actual number of visits, although it only shows the tip of the iceberg. If advertising is used correctly, the number of visits should be at a constant level, otherwise the campaign should be optimized.
It is also important to pay attention to the audience by determining who visits the page, where your visitors are from, whether there are new guests and whether there are those who returned to you again. Information about how long users view your page can also be a signal to edit the site due to identified content problems.
A useful tool for evaluating the effectiveness is a landing or selling page (landing page), which can be a separate page of an existing site or a specially created “one page” site. The selling page becomes a kind of "hook" for the user, where he either has to leave his contact details for further communication, or more closely familiarize himself with individual products at the request of the owner.
2. CTR (Click-Thru Rate) - click-through rate of advertising materials. CTR is a metric that shows the effectiveness of advertising, expressed as a percentage of the number of clicks on an ad to the number of its appearances on the network. Naturally, the greater the number of impressions in the network, the greater the likelihood of an increase in visits. The CTR formula looks like this:
.
3.CR (Conversion Rate) — conversion rate. CR is rightfully considered the main indicator of the effectiveness of advertising campaigns, showing the proportion of visitors who completed the target action after going to the site through contextual advertising. Thus, if out of 100 visitors to the selling page, 10 people leave their phone for feedback, the conversion rate will be 10%.
The conversion rate indicates the quality of the advertising setting and the relevance of the services offered. If users become customers without any problems, advertising satisfies their needs, and landing is a means of solving their problems.
4. CPM (Cost Per Mille/Thousand) and CPC (Cost Per Click) — cost per thousand impressions and cost per click. These are the simplest cost metrics for advertising campaigns.
In fact, CPM is the amount that the client pays for advertising to appear on the network a thousand times. CPC is an average indicator, which means that if during a certain period of time you received three clicks at the price of conditional 1.5, 2 and 2.5 rubles, then the average cost of the click will be 2 rubles.
However, these metrics should not be considered as the main ones, because if you set yourself the goal of lowering the cost per click, you may lose the quality and effectiveness of advertising in general.
Additional indicators for determining the effectiveness of advertising will be discussed below.
CPA (Cost Per Action or Cost Per Acquisition/Cost Per Lead/Cost Per Sale) - the cost of the target action. It is calculated as the result of dividing the amount of advertising expenses by the number of completed targeted actions (registration, subscription to the newsletter, trial period, etc.).
CPO (Cost Per Order) - order cost. This is one of the options for the CPA indicator - provided that the target action is a completed deal. Calculation formula: the amount of advertising costs divided by the number of confirmed orders.
I would like to pay special attention social indicators(Social Metrics), which are determined by the number of mentions, for the most part, in social networks. At present, a campaign can be considered really unsuccessful if, after learning about it, users do not share information on Facebook or Twitter, do not subscribe to accounts on a particular social platform, and do not show activity without leaving comments and likes.
Financial performance indicators of online advertising. Their calculation is possible only if there is a customer relationship management system (CRM) and accounting data. As mentioned earlier, to work with this group of metrics, you need to have information about the number of sales. The indicators presented below are qualitative and quantitative characteristics of advertising. In addition to them, there are simpler quantitative metrics for evaluating the effectiveness of campaigns: the number of transactions, the number of attracted customers, the number of product units sold, etc.
1. ROI (Return On Investment) and ROMI (Return on Marketing Investment) - return on investment in advertising
What is the difference between these indicators? In fact, the difference between these concepts is small, since the term ROI is more general, while ROMI remains a more general name for the metric. The return on investment in marketing is calculated using the same formula as ROI, but it does not take into account financial and accounting costs, logistics costs - in other words, everything that does not apply to marketing.
Thus, one of the main indicators of the effectiveness of an advertising campaign - the return on investment in advertising - is calculated as a percentage according to the following principle:
.2. LTV (Lifetime Value) - customer lifetime value , CAC (Customer Acquisition Cost) - customer acquisition cost
LTV is the most important financial indicator, which evaluates investments in advertising and determines the amount of income from the average client for the entire time of cooperation with the company. Let's dwell on a simpler formula for estimating the value of a client over a certain period of time, where the total amount of a company's profit is divided by the number of clients.
CAC is calculated by dividing the amount of investment in advertising by the number of attracted customers. Tracking the dynamics of the indicator, you can judge the effectiveness of advertising. Growth indicates a drop in efficiency, a decrease in the relevance of the product and an increase in the activity of competitors. The fall is about increasing the effectiveness of advertising, respectively.
Particular importance is attached to the ratio of LTV to CAC, which determines the feasibility of using marketing tools for a long time. An example of such a calculation: with a customer lifetime value of 50 rubles, and an acquisition cost of 20 rubles, the ratio of LTV and CAC is 2.5.
Graphics courtesy of an expert If the calculation result is less than 3, the use of a marketing tool is considered ineffective in its long term. To improve the situation and solve the problems that have arisen, it is necessary to revise the settings of advertising campaigns, as well as pay attention to the quality of customer service.
conclusions
When choosing a set of metrics for tracking and evaluating the effectiveness of advertising campaigns, it is always worth remembering that it is the entrepreneur who decides for himself what results he considers positive. It is important to understand that effective advertising on the Internet should bring a significant return on investment. However, this does not mean that the results already achieved are maximum: any efficiency can always be doubled.
One of the ways to improve efficiency is to work with the ad unit delivery structure. Another possibility is to reduce agency costs by eliminating the most expensive and inefficient means of attracting clients to the client.
Competent complex work with content and tracking of current performance indicators in the presence of clearly defined goals will undoubtedly lead to the desired results.
Maxim Ryzhov, head of department contextual advertising digital marketing agency "Profitator" (Kokoc Group), told the CPU about various methods measuring the effectiveness of advertising campaigns - and explained which one is best to use in your work.
Today, there are four main methods for measuring the effectiveness of contextual advertising used by marketers: CTR (clicks to impressions ratio), CPA (cost per action), CPO (cost of order), ADR (share of advertising costs).
Each of these indicators is useful for analyzing the effectiveness of an advertising campaign and, of course, has disadvantages. We propose to measure the effectiveness of the most important indicator, namely, the final profit of the advertiser.
CTR
Calculation formula: CTR = number of clicks / number of impressions * 100%.
Operating principle: This is the primary metric showing the ratio of impressions advertisement and clicks on it. CTR helps you understand where your ads are getting more clicks from users.
For example, on one resource, an advertisement was shown 10 thousand times, and 100 people clicked on it. At the same time, on another site with the same number of impressions, the ad received 1,000 clicks. Based on the data obtained, the marketer can understand which ads are performing well and which ones should be replaced.
Tools: To determine the CTR, separate tools are not needed, it is automatically calculated by Yandex.Direct or Google AdWords. So, in "Direct" you need to go to the "Statistics" section of an active advertising campaign and select a period.
Minuses: CTR does not reflect the real profit of the advertiser. For example, an ad may attract a lot of clicks, but not affect the number of sales. Therefore, the metric is used only as an intermediate, but not a final performance indicator.
CPA
Calculation formula: CPA = amount of advertising costs / number of targeted actions.
Let's say 100 thousand rubles were spent on the context, and 1000 people called the advertiser, which means that the cost of each call was 100 rubles. If this cost is less than or equal to the allowable CPA, the advertising campaign is considered effective.
Tools: To calculate CPA, you can use almost any contextual advertising optimization platform: K50, Origami, Alytics. Let's look at an example of the Alytics service.
The system integrates with Google Analytics or CRM and automatically affixes UTM tags for each keyword. In this way, Alytics receives information about which keywords and ads are generating sales. The service daily summarizes data on costs for each keyword with sales data from Google Analytics or CRM. As a result, Alytics displays detailed statistics on key metrics, including CPA.
Minuses: The profit may turn out to be negative if the income from the target action turned out to be lower than the planned indicator.
CPO
Calculation formula: CPO = amount of advertising spend / number of confirmed orders.
Operating principle: The idea is the same as that of CPA, but in this case, the target action is only a purchase. The CPO indicator helps to understand how much each order costs the client.
For example, 100 thousand rubles were spent on the context, and as a result of the advertising campaign, the online store made 1000 sales. Thus, the cost of one order was 100 rubles. If this cost is lower than the price of each product sold, then the campaign is considered effective. In this case, as a rule, the overall CPO is set for all orders from the site.
Tools: Since this metric is almost identical to CPA, it is measured by the same tools with a similar action algorithm. Below is an example of CPO calculation in the Origami platform interface.
Minuses: The profit can be negative if the visitors who came from the context purchased the product, the cost of which is below the set indicator. For example, the ad was talking about expensive refrigerators, and customers are buying cheap microwave ovens.
ROI
Calculation formula: ROI = (revenue - investment) / investment * 100%.
Operating principle: Profitability ratio of business taking into account investments. ROI shows whether the business pays off, taking into account all the funds invested in it. For example, for six months the amount of investments amounted to 1 million rubles, and the income for this period was 3 million rubles. So the ROI was 200%.
Minuses: Calculating ROI is complicated by the fact that it is often difficult for a company to evaluate the real investments and profits of online and offline stores.
DRR
Calculation formula: ADR = advertising costs / advertising revenue * 100%.
Operating principle: This metric is very similar to ROI, but it is most popular in Russian e-commerce. DRR is the share of advertising costs, which shows the ratio of costs and real money that the advertiser received.
Since the PRR depends on the final turnover, it gives the most objective assessment of the advertising campaign. For example, investments in the context amounted to 500 thousand rubles, and goods were sold in the amount of 1 million rubles. So the DRR for this campaign is 50%. The lower the score, the more effective the advertising campaign.
Minuses: Calculating DRR is no less complex and time-consuming process than calculating ROI. It is necessary to take into account orders from the site, calls, visits to offline stores (if any). Until recently, it was possible to reduce all statistics only manually, and this took a lot of time.
Solution and tools: The problem with the calculation of the RRR indicator was solved by a package consisting of the "Statistics" and "Optimizer" tools developed by the K50 company.
Advantage of "Statistics": in one interface all data collected from Calltouch, Google Analytics and "Yandex.Direct" is presented. The program provides statistics in its entirety or for a specific parameter, for example, data on key phrases. Thus, the time for collecting statistics is reduced significantly.
The "Optimizer" interacts with the "Statistics" tool, loading campaign data from it, and analyzes its effectiveness.
For example, 100 thousand rubles were spent on contextual advertising, and the profit was 20 thousand rubles, that is, the effectiveness of the campaign is low. Previously, the manager had to independently analyze everything key phrases and manually redistribute rates to more efficient ones. The "Optimizer" does this automatically: it analyzes the entire volume and determines the phrases that brought these 20 thousand rubles. Based on the results, the program raises bids for effective phrases, lowers bids for ineffective ones, and calculates RRR.
Performance marketing implies a clear and measurable assessment of the entire promotional activities. Basically, experts use several metrics that clearly show the effectiveness of advertising campaigns: CPA (cost per action), CPO (cost per order), RRR (share of advertising costs) and ROI (return on investment). Each of the indicators is useful in the work and, of course, has its pros and cons.
Key metrics can be calculated using generally accepted formulas:
CPA (Cost per action) - the cost of the target action.
CPO (cost per order) - order cost
DRR (share of advertising expenses)
ROI (return of investment) - return on investment
Special attention deserves the RRR indicator, which is especially popular in Russian marketing. This metric is similar to ROI and shows the ratio of all costs and money received from advertising. Since the RRR is directly affected by the real turnover and provides the most objective assessment of efficiency.
Let's look at an example
During the reporting period, the organization invested 10,000 rubles in advertising: in addition to the advertising budget, this amount included the creation of creatives and setting up an advertising campaign. The organization received 30,000 rubles of profit from attracted customers.
DRR = (10,000 / 30,000) * 100% = 33%
However, in real life calculation of DRR is a complex and time-consuming process. It is required to take into account all expenses and incomes, which in reality can be many: all orders from the site, purchases in an offline store, calls, design development, payment for specialist services, the cost of special events and advertising settings. Marketers are helped by services that integrate with web analytics systems - Google Analytics, Yandex.Metrica, and also take into account data from call tracking services. Our agency uses the K50 "Statistics" and "Optimizer" platforms for these purposes. The system controls the progress of advertising campaigns, evaluates the quality of work across several channels at once, and analyzes the traffic received.
KPI is a quantitative assessment of the quality of work performed. Metrics should reflect the effectiveness of an advertising campaign in exact numbers and form the basis of a further promotion strategy. Monitoring key indicators helps businesses achieve their advertising and sales goals.
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