The Glossary of KPI's

In digital marketing, several key performance indicators (KPIs) are essential for evaluating the effectiveness of an advertising campaign. These KPIs provide crucial insights to refine strategies and optimize return on investment (ROI). Among the most commonly used are CPC, CTR, CPA, ROAS, and CPM. Let’s take a closer look at each one and how they are used.

1. CPC - Cost Per Click

CPC (Cost Per Click) is one of the most commonly used KPIs in "Pay Per Click" (PPC) campaigns. It represents the amount spent each time a user clicks on an ad. This KPI helps measure the effectiveness of an ad in terms of traffic generated to a website. The lower the CPC, while maintaining well-qualified traffic, the more efficient the campaign is considered.

Example :

If you spend 100€ on a campaign and get 500 clicks, your CPC will be 0.20€ (100€ ÷ 500 clicks).

2. CTR - Taux de Clics

The CTR (Click-Through Rate) is the percentage of users who clicked on your ad compared to the total number of impressions (when the ad is viewed). This metric evaluates how attractive your ad is. A high CTR indicates that your ad successfully grabs attention and encourages users to take action.

Example :

If your ad has been seen 1000 times (impressions) and generated 50 clicks, your CTR will be 5% (50 clicks ÷ 1 000 impressions).

3. CPA - Coût Par Acquisition

CPA (Cost Per Acquisition) measures the cost needed to acquire a conversion, meaning an action defined as a goal (purchase, sign-up, download, etc.). This KPI is crucial for evaluating the profitability of a campaign. A low CPA typically indicates an effective campaign where the cost to acquire a conversion is controlled. Of course, the cost may vary depending on the type of product offered and the targeted action.

Example :

If you spend 200€ on a campaign and get 50 conversions, your CPA will be 4€ (200€ ÷ 50 conversions).

4. ROAS - Retour sur les Dépenses Publicitaires

ROAS (Return On Advertising Spend) is an indicator that measures the revenue generated in relation to the money spent on advertising. It is used to calculate the return on investment of your advertising campaigns. A ROAS greater than 1 means that the campaign generated more revenue than it cost, while a ROAS less than 1 suggests insufficient profitability.

Example :

If you spend 100€ on advertising and generate 500€ in revenue, your ROAS will be 5 (500€ ÷ 100€).

5. CPM - Coût Par Mille

CPM (Cost Per Mille) is a metric that measures the cost for 1,000 impressions of an ad. It is often used for brand awareness campaigns, where the goal is to maximize visibility rather than generate clicks or conversions directly. CPM is therefore a good KPI to evaluate the cost of ad visibility.

Example :

If you spend 50€ on a campaign that generates 50 000 impressions, your CPM will be 1€ (€50 ÷ 50 000 impressions × 1 000).

Conclusion

These indicators above are essential for measuring the performance of an online advertising campaign. Depending on the objectives of your campaign (acquiring clicks, generating conversions, increasing brand awareness, etc.), you will choose the most relevant KPIs to evaluate the effectiveness of your actions and adjust your strategy accordingly. Using these tools correctly will allow you to maximize your return on investment and optimize your online advertising campaigns. Need support? Let's talk about it, click here.