How can I measure the success of any paid advertising campaign (pay-per-click)?

Advertising campaigns can be costly to administer, so it is important to understand how to evaluate whether a campaign is successful or not. Click here to see how the Home Office is doing! Key performance indicators (KPIs) are metrics that can assist in that evaluation. You should get a full understanding of the items below BEFORE starting any campaign. Once the campaign has started, you can use these key metrics to hold the campaign manager accountable and increase your odds of a successful ad campaign.

Key Business Metrics

You should first understand some key internal metrics about your business. You need to be sure you are able to track the following stats, which will help determine the success of your ad campaign. 

1. Project Revenue - the average amount invoiced to the customer. 

2. Project Gross Profit - includes any or all of the variable costs below. 

• Product Costs
• Labor Cost
• Transaction Fees

3. Project Net Profit - the Project Gross Profit less Ad Spend

4. Close Ratio - the likelihood that you convert a qualified lead to a sale.

Key Ad Campaign Metrics

These metrics will help determine whether an advertising campaign is successful.  If this is too much for you, don't worry!  The Home Office team can walk you through each to ensure you understand how to rate performance.

1. Cost Per Click (CPC) - the cost of the click.  For example, how much did you spend for one person to click on your ad and be directed to your ad page. 

Ad Spend / Clicks

2. Cost per Lead (CPL) - the cost per lead where a lead is defined as any form submission or phone call that can 100% be traced to an ad campaign. You need to ensure that the firm you are working with does not include phone calls from other sources (i.e., referrals or random searches).   

Conversions / (Clicks or Ad Page Visits)

3. Cost Per Appointment (Quality Lead) - the cost per lead where a lead is defined as one that schedules an appointment. 

Ad Spend / Appointments

4. Revenue Return on Ad Spend (ROAS) - the revenue generated per dollar of ad spend. 

Revenue / Ad Spend

5. Return On Investment (ROI) - the after-ad cost gross profit generated per dollar of ad spend.

(Gross Profit - Ad Spend) / Ad Spend 

Understanding and tracking these five metrics will improve the likelihood of a successful paid digital advertising campaign, which ultimately leads to a more profitable business.