7 Key Metrics at the Ad Level

Oftentimes overlooked, understanding the key data points can be the difference between a struggling and a thriving online business. In order to understand these metrics, we first need to talk about tracking.

Tracking is the most important part of running an online business successfully. Unfortunately, many people don’t realize how important tracking is.

Once tracking is set up, we can talk about metrics:

CPC – Cost Per Click

This shows how much you pay for every click on the ad and it’s calculated by dividing the total money spent on ads by the number of clicks.

CTR – Click Through Rate

This shows what % of people are clicking through the ad to get to the sales page.

CPL – Cost Per Lead

This shows you how much every lead that opts-in costs you.

CVR – Conversion Rate

This shows what % of people bought the product or service you are offering

CPA – Cost Per Acquisition ( Cost Per Sale )

This shows how much it costs you to get a sale and it’s calculated by dividing the total money spent on ads by the number of sales.

CV – Conversion Value

This shows the amount of revenue that was generated.

ROAS – Return On Ad Spend

This shows how much did you get back after spending on ads and tells you if your ads are profitable or not.

Let’s look at an example:

Say you are paying $50 for an ad and that ad has 1000 impressions, meaning 1000 people saw it. Out of 1000 people, 50 clicked your ad. 

This means you have  a CTR of 5%.

If your total spend was $50 and you’ve got 50 clicks, that means your CPC is $1.

Now, if out of those 50 people, 10 people opt in and 5 of them bought your product, you’ve got a CVR of 10%. Based on that, we can easily calculate the CPA is $10 ( $50/5) as well as the CPL, which is $5 ( $50/10 leads ).

Now, let’s look at the value of those sales. Say for example, your offer is $50 for every product or service bought.

So your Total Conversion Value is $250, 5 sales of $50 each. Based on that, we can easily calculate the ROAS: $200. Cause you spent $50 to get $200, which is a pretty good investment.

Now this is a simple example, to better understand these metrics. In real life, it’s not gonna be that pretty.

When you have all the data at your disposal, you can then look for weaknesses and try to optimize them.