“If you don’t know where you’re going, any road will take you there.”
Alice in Wonderland, Lewis Carroll.
As with any marketing activity, when executing sales campaigns in online commerce, it is important to have pre-set goals. This way, we can measure the effectiveness of sales campaigns.
The goals are of several main types:
- raising awareness/engagement with the brand
- increasing traffic to the website
- customer acquisition
- generating sales
Each of the above goals (or a combination thereof) is important for different stages of establishing the brand on the market.
To measure the effectiveness of sales campaigns, it is important to use PPC tools for their reporting. Most PPC platforms offer built-in tools that provide valuable data on your campaign’s performance. Here, we will focus only on the last goal – generating sales.
What are the Main Indicators when Measuring Sales Campaign Effectiveness?
To assess the effectiveness of sales campaigns and identify areas for improvement, it is important to track key metrics such as impressions, clicks, click-through rate (CTR), conversion rate (Conversion Rate), and cost per click (CPC). Our recommendation is to pay special attention to 2 important indicators that will help you effectively measure the final result of your campaigns – CPA and ROAS:
CPA (Cost Per Acquisition) and ROAS (Return On Advertising Spent) are the two indicators on which PPC specialists at Power Brand base their sales generation strategies. They monitor them constantly in search of optimizations. The role of CPA and ROAS is to show you the quality of the generated sales. It is not only important to reach a certain amount of sales. It is important to ensure that they are financially profitable and beneficial for your business. Many digital marketing agencies monitor results on the surface, such as sales volume, without necessarily looking for those that generate meaningful profits and stimulate business development.
How is an Effective ROAS Determined?
The first and foremost thing is to know what your gross profit is per product/product line or segment. Let’s assume it’s 20%. This means that if you have a return on investment in PPC advertising of 5 times (ROAS 5), you will be at zero in sales. That is, you will pay all the costs for the business, but you will not have a profit. Anything above ROAS 5 in campaigns would bring you profit and is an indicator of advertising effectiveness. This parameter varies greatly depending on the industry, competition, and profits, but if you achieve ROAS above 6, you are certainly among the winners.
How is the Value of CPA Determined for Sales Campaign Effectiveness?
CPA is determined by dividing the investment made by the number of sales. For example, if we invested BGN 2,000 this month and received 100 sales, our average cost per acquisition is 2000/100=BGN 20. This may sound good, but to be sure, you need to know what the profit from this product is. If it is BGN 20 and we have invested BGN 20 for acquisition, then perhaps you have not actually encountered some of the most attractive scenarios.
As you can see, CPA and ROAS provide critical information that allows you to financially assess the effectiveness of your advertising campaigns. It is important to keep in mind that it is not enough to monitor only 1 or 2 parameters – in order to have a complete picture of how your campaigns are performing at every level of communication or in relation to a specific goal. We recommend that you do not forget the basic indicators as well.
CTR (Click-through-rate). This indicator measures the ratio of clicks on the ad link to the number of impressions.
While CPA shows you whether conversions are achieved at a profitable price, CTR gives an idea of the quality of traffic. CTR values vary depending on the medium, industry, brand awareness, and other factors. For example, in 2023, the average CTR for search campaigns in Google is 6%. For the sale of shoes and clothing in Meta – about 2%. If users are not clicking on your ad, look for the reasons. Analyze in depth before changing direction. First, check if you even have an intriguing call to action. A low CTR may be a signal to review the keywords and phrases you are targeting. It is possible that they are outdated or no longer match the way your customers are searching. CTR helps you understand how well you are communicating with your potential customers and whether you are managing to grab their attention.
Conversion Rate.
The conversion rate is another great indicator for tracking the effectiveness of a campaign. It gives us information on what percentage of visitors to our page have clicked on the “buy” button. We assume that you have come across sales campaigns where you have great traffic to the site and very few clicks on the target pages/products. That’s why tracking this performance parameter will help you identify the problem and eliminate it. If this is the case, then it is certainly time to optimize.
What are the main reasons for a low Conversion rate?
- Improve the ad text and ad messages, use keywords and phrases, test something new, see what the competition is doing. Very often, they inspire us for new ideas – see which keywords they are targeting and what their strategy is as a whole.
- Poor user experience on the page. Make sure your landing pages are intuitive and easy to use, simple to navigate, load quickly, and are optimized for conversions. You can use a number of tools that record the behavior of visitors to your site and give a clear idea of areas for improvement.
- Another reason may be if the prices on the site are not up to date and people only browse and buy from their competitors. Make constant price checks to make sure you are adequately positioned in the market. There are many tools that automatically optimize in this direction.
We hope that we have given basic guidelines on how to measure the effectiveness of sales campaigns, especially in Google and Meta. If you have any questions or want us to help you, we are available for consultation. Do not hesitate to call us or send us an inquiry.
