A Key Performance Indicator helps to understand how the operation is performing. It acts as a compass, helping us understand whether we are taking the right path toward our strategic goals. To be effective, a performance indicator must be well-defined and quantifiable, and applicable to our operation. We use a suite of media metrics to benchmark our projects right from the beginning.
CPM – Cost per thousand impressions. The CPM stands for cost per thousand impressions is the rate to be charged or paid for every 1,000 times an advertisement is displayed
CTR – Click Through Rate. The page click-through rate (CTR) is the number of ad clicks divided by the number of page views.
CPC – Cost per Click. The cost-per-click (CPC) is the amount you earn each time a user clicks on your ad.
Formula – CPM. The formula for calculating CPM based on CTR and CPC is: CPM = 1000 × CTR × CPC.
Formula – CPC. The formula for calculating CPC based on CTR and CPM is: CPC = CPM / (1000 × CTR).
Formula – CTR. The formula for calculating CTR based on CPM and CPC is: CTR = CPM / (1000 × CPC).
Customer Acquisition Cost. All Sales and Marketing costs (advertising, salary, commission, bonus, overhead and other) in a period divided by the number of new customers in that period.
Marketing % of Customer Acquisition Cost. Take all the Marketing cost, and divide by the total Sales and Marketing costs you used to compute CAC.
The ratio of Customer Lifetime Value to CAC. To compute LTV. take the annual payments from a customer. adjust for your gross margin. and divide by the annual cancellation rate or churn. Then divide LTV by CAC for the ratio.
Time to Payback CAC. Take the CAC and divide by how much your customers pay you on average each month.
Marketing Originated Customer %. Take all new customers you signed up in a period, and look at what % of them started with a lead that Marketing generated.
Marketing Influenced Customer %. Take all new customers you signed up in a period. and look at what % of them had any interaction with a Marketing activity.
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