Measure marketing performance for a startup—with an Excel template
If you are a startup you need to scale as fast as you can. You might be lost in a variety of metrics figuring out how to analyze your performance. In this article I am going to explain you how to calculate key metrics for two marketing channels — Facebook Ads and Google Ads and provide you with an example.
When analyzing the performance of your campaign, we are foremost seeking to find the following:
- how much money have we spent
- how many clients have we attracted
- the ratio between costs and sales
Case Study
Assume that you are a technology startup in telecom and sell various hardware — routers, access points to WLAN, etc. You run two campaigns — Google Ads and Facebook Ads. Depending on the channel, your monthly average cost-per-click can be around $0.50 for Facebook and $2.30 for Google. The latter is usually more expensive, because you have an opportunity to obtain direct leads. So, we have this indicator in a group of given data, highlighted in blue.
The number of impressions counts each time your ad is shown. It might be, for instance, 100,000–120,000 impressions per month. The actual ‘Number of clicks’ is usually much lower than impressions. Let’s say you will receive 5,000–10,000 clicks out of this campaign.
The last given indicator is conversion rate — the total number of conversions (client’s actions in response to the marketing messages) / total number of sessions * 100.
Calculations
With this information, we can identify key metrics important for future campaigns’ decision-making.
- Click through rate
Click-through Rate (CTR) = No of Clicks / No of Impressions
So, we have 5200 clicks and 120,000 impressions for our Google campaign in January, and our CTR will be 4.3%.
Since our company operates in the technology industry, in the Business & Industrial category, where the average CRT index equals 3.8, we are slightly above the market.
2. Total Cost
Total Cost (No of Clicks * Cost-per-click)
Let’s say we got 7446 clicks on our Google ads in June. Meanwhile, we paid $ 1.85 for every click. That means that we spent a total of $13,775.
3. Total Sales
Sales = No of Clicks * Conversion
We got 800 clicks in February for Facebook Ads with a 5% conversion. That means our number of sales is going to be 40.
4. Cost per Conversion (CPC)
Cost per Conversion (CPC) = Total Cost / Sales
This metric shows us important information — how much we have spent compared to how much we have sold. Don’t be confused with Cost-per-click, also often abbreviated as CPC. In our example, it’s going to be 66.
Since the industry average is $55, we may want to explore ways to optimize our costs. Maybe there are some issues with placing the orders on the website, or poor product statement results in a high bounce rate. You should measure what is working and what’s not. It is also important to analyze all these metrics cumulatively to make the proper conclusions.
I hope you have enjoyed the reading.
Have a nice day.
You can find the document here
