Insights, Journals

Marketing Metrics Cheat Sheet

Return on Investment (ROI)

Financial ROI = Profit / Value of Investment

Profit = Sales x Gross Margin % – Marketing Costs

Profit from sales calls marketing = Sales x Retention – Marketing Costs = (Price x no. of new unit sales) x Retention – (no. of sales call x cost per sales call)

Marketing ROI (MROI) = [Incremental Sales x Gross Margin – Marketing Investment] / Marketing Investment

= [Incremental Gross Margin f/ Marketing – Marketing] / Marketing Investment

Incremental Gross margin f/ Marketing is the Gross Margin that can be attributed to Marketing

Lift = new sales / old sales: increase in sales in response to promotions

Customer Lifetime Value (CLV)

CLV is a prediction of all the value a business will derive from their entire relationship with a customer. CLV facilitates business decision on how to optimise acquisition spending based on maximum value earned rather than minimum costs incurred.

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Noted that the above formula is for the case when customer pays before using the service e.g. apartment rentals, Netflix.

For cases when customer can pay after using the service:

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Refer here to read more about CLV.

Web Analytics Metrics

Impression is counted whenever an ad is displayed on a user’s screen, regardless of clicks

Click is counted every time a user clicks on any part of an ad

Click through rate (CTR)/ Click through per impression: CTR is the percentage of impressions that resulted in a click

CTR = Clicks / Impressions

Click through conversion rate CTC = Clicks that have converted / total no. of clicks received

Click through conversion: occur when a user is shown an ad, clicks on it, and converts (purchase, lead, etc. – depends on the conversion goal)

View through conversion rate VTC = View through conversions / total no. of impressions received

View through conversion: occur when a user is shown an ad (an impression), they do not click on it, but later visit the site and convert. Sometimes number of conversions is larger than number of clicks because of view through conversion.

Other important web analytics metrics are:

Cost per acquisition: the cost associated with acquiring a new customer

Percent new visits: percent of total visits by people who are visiting your site for the first time

Bounce rate: percent of visits in which the person left your site from the entrance page without interacting with the page

Page depth: number of pages viewed in a session

Loyalty: number of visits over a specific period of time

Event/ Visit: average number of pre-defined actions completed during a session

Checkout abandonment rate: percent of filled carts that are abandoned without completing the purchase process

Macro conversion rate: simply number of sales divided by the number of visitor sessions

Micro conversion rate: number of predefined goals achieved divided by the number of visitor sessions

Per visit goal value: cumulative predefined value of goals achieved divided by the number of visitor sessions

Days to conversion: average time between purchases made by a consumer

Percent assisted conversions: conversions with more than one ad/ media/ marketing touch prior to converting

Refer here to read more about Web Analytics.

Metrics by Other Media Types

1. Search Engine

Click-through rate, Macro conversion rate, Cost per acquisition

2. Display Ads

Click-through rate, Macro conversion rate, Cost per acquisition

Events/ Visit: average number of predefined actions completed during a session

3. Video Ads

Video views: full-length (‘complete’) and partial (‘incomplete’) views of the posted video

Play through rate: the number of viewers who watch the video to completion, expressed as a percentage

Engagement rate: the number of viewers who participate with the video by taking some defined action (e.g. share video, leave a comment, like, etc.) expressed as percentage

4. Social Network 

Audience growth: increase in the number of people following or liking digital content over time

Amplification rate: rate at which your followers take your content and share it through their network

Applause rate: rate at which your followers attach special recognition to your post (e.g. likes, favorites, etc.)

Micro conversion rate

Brand Valuation

Brand Equity = Revenue Premium – Additional Variable Cost

PV of Brand Equity = (Revenue Premium – Additional Variable Cost) * Long-term multiplier

Revenue Premium = Brand’s revenue share – Private Label’s revenue share

Revenue share = Price * Market share * Unit sales

Additional Variable Cost = Differences in market share * (1 – Margin % of private label) * Price of Market Label * Unit Sales of Brand

Long-term multiplier (LTM) = (1 + d) / (1 + d – r)

d: discount rate

r: stability factor

Refer to Marketing Analytics: Brand for more details

Price/Advertising Elasticity

Price elasticity is the ratio of change in quantity demanded and the change in price of product. Price elasticity shows how sensitive sales are to changes in price.

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Similarly, advertising elasticity can be defined as followed:

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Refer to Regression Analysis to read more about elasticity and regression.

 

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