How to set KPIs for projects in digital marketingTrent Yunus - Data Science Director,
Compared to traditional media (e.g. OOH, radio, etc), digital marketing provides a wealth of metrics to measure performance with relatively high accuracy. Marketers can track and analyse engagement, taking affirmative action during campaigns in ways that aren’t possible with offline, traditional forms of media.
For example, marketers can track whether a paid search ad was clicked on, along with a host of other metrics: the precise amount spent on a specific paid search campaign, Cost Per Click (CPC), Return on Ad Spend (ROAS), total number of conversions and so on. With analytics, it's possible to identify what content or product on websites generates the most interest through pageviews, time spent on each page and more.
In this article we discuss how to set digital marketing KPIs that are relevant and informative, empowering marketers to think critically and ask better questions.
The problem with digital marketing metrics and KPIs today
Not all metrics are useful. Ranking at the top of a SERP (Search Engine Results Page) for a keyword is not useful when just over 3% of organic users from retail sites convert, or if most visitors leave the site as quickly as they land. Ranking first for high volume search terms that are not engaged and do not convert could be considered a vanity metric, serving no other purpose than to reaffirm the current bias of senior management.
Some metrics tell an interesting picture on their own, but when paired with other metrics tell a completely different story. For example, generating hundreds of likes from a Tiktok post might be great from a social media engagement perspective, but if users are shepherded towards a website with shocking user experience most will leave immediately.
WHAT DO KPIs ACTUALLY MEAN AND SHOULD THEY ONLY FOCUS ON FINANCIAL RETURNS?
KPI stands for Key Performance Indicator. Digital marketing KPIs help us understand the effectiveness of digital marketing activities. When considerable time and money is invested in planning and launching digital marketing campaigns, at the very least senior marketers must be able to measure the cost involved (e.g. ad spends), against whether activities generated tangible financial returns (e.g. Revenue / ROI / ROAS / Profit Margins).
However, effectiveness should not be determined by financial metrics alone. A social campaign might only achieve moderate direct conversions, however organic engagement for the same campaign could have been massive and sustained. Through this lens, the campaign was effective – just in a different way.
The value and relevancy of certain KPIs will differ amongst teams. A B2B media team may identify total enquiry submissions as a critical KPI, whilst sales teams prioritise SQLs or High Intent Sales Ops (HISO).
With so many factors and variables to consider, where do we even start when trying to set digital marketing KPIs?
Be SMART about it: How to set KPIs for projects in digital marketing
One of the enduring business frameworks for goal setting is the SMART approach, which is also useful for setting KPIs.
S – Specific. Ensure that the metric chosen is not vague and tied to a specific strategic outcome.
M – Measurable. The observed activity must be measurable. The metric chosen should be available (or made available) from the tools / platforms in use.
A – Attainable. The KPI needs to be achievable. If it is not achievable then there is no point having it.
R – Relevant. The KPI needs to be relevant to the respective teams and connected to relevant overarching business goals.
T – Time-bound. Is this a monthly, weekly or yearly KPI? Are there due dates that must be accounted for?
Reporting is always time sensitive. As such, it’s useful to monitor changes consistently and set up comparisons against previous time periods.
Think about unifying KPIs together so that online digital marketing metrics flow through to offline outcomes. The key is to generate a full view of end to end (online to offline) performance. But KPIs should not be developed solely for your current day-to-day operations. It’s imperative to consider the future as well.
Taking it a step further
In general, the usefulness of metrics is determined by the visibility they provide to marketers in the short term i.e. campaign performance over the last quarter at monthly, weekly and daily intervals.
At twentysix, we like to go further, using additional dimensions to inform the KPI planning process. As discussed in our recent whitepaper, we also split KPIs into two categories:
The metrics of your current state. Sustaining metrics affect immediate performance in the short term. They are metrics based on current, established capabilities of the business. For instance, if the firm has an established and mature inhouse paid media team, then expected Sustaining metrics would include CPC, ROAS, CTR (Click Through Rate), impressions, and other standard reporting measurements.
KPIs relating to a desired future state. Here we deviate slightly from the SMART framework because the necessary metrics may be unclear at the outset. They only become fully formed over time through experimentation and innovation.
Depending on the strategic objectives of the business, Disruptive KPIs could e.g. cover the accuracy of customer churn models, or the percentage increase in basket value as a result of recommendation engines. In other words, Disruptive KPIs are metrics that may impact the future, relating to tomorrow’s customers. Disruptive KPIs require new capabilities to be developed internally.
It isn’t all about revenue: Achieving strategic outcomes with digital marketing KPIs
Strategic outcomes are not always financially based, so not all KPIs have to be related to revenue, profit or return. At the same time, we should not only focus on short-term KPIs that rely on current sustaining capabilities – we must look to the future: our desired future customers, as well as the capabilities we need to cultivate them.
By focusing on wider challenges, marketers can design processes and strategies that are hyper-relevant to their business’s overarching goals.
Set the best digital marketing KPIs for your marketing function
At twentysix, we support marketers from across industries to develop KPIs that drive results and growth. We guide senior leaders to collect the right data to power excellent decision-making, future-proofing businesses in an unpredictable economic environment.
For more on how CMOs and senior marketers can use KPIs to increase their influence, download our free white paper now.
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