Contextual advertising is one of the most dynamically developing areas of advertising activity. A unique tool that guarantees maximum transparency of the use of financial resources and analysis of their payback.
Many people, turning to contextual advertising as a modern tool for attracting a target audience, expect a very specific, tangible and measurable return. Namely, an increase in sales volumes or specific marketing metrics.
A significant portion of those who have resorted to the services of specialists in this area feel deceived in their expectations if this does not happen quickly and swiftly. The reason for disappointment and, as a consequence, disbelief in the success of advertising events in the virtual space is a misunderstanding of the mechanism of such advertising and statistics in general. Paradoxically, questions arise not in relation to Internet technologies, but concern the specifics of assessing its effectiveness or payback and understanding the factors influencing these indicators.
We will highlight 3 groups of contextual advertising performance indicators that should be of interest to every customer.
➊ Google Ads impression performance metrics
👉 CTR - % clickability, which shows how effective the creative is and how well the audience is selected.
👉 % of TOP 1 impressions - the percentage of ad impressions in the highest position.
👉 % of TOP 4 impressions - the percentage of ad impressions in the top positions.
👉 Percentage of impressions received in the search network - shows how much the ads cover the real search demand.
👉 Conversion rate - the percentage of traffic to conversions.
👉 Unique users - shows the reach in the context-media network.
➋ Financial metrics in Google Ads
👉 ROI is a calculated indicator that shows how many monetary units of profit you will receive from each monetary unit invested in advertising:
ROI=(profit margin)*(sales volume)/(advertising costs)
Multiply by 100 to get the return in percent. For example, the cost of 1 pair of boots includes a profit of 50 UAH. With the help of contextual advertising, 20 pairs of boots were sold, while the costs for it (campaign budget) amounted to 800 UAH.
ROI=50*20/800=1,25 or 1,25*100=125%
Based on the results of this simple calculation, we can conclude that the funds invested in advertising pay off, since for every 1 UAH of expenses there is 1.25 UAH of profit. If the coefficient is 1 (100%), then advertising does not bring profit to your company, which is a good indicator for certain product groups. If the coefficient is less than 1 (100%), then advertising does not pay off, which requires a more detailed analysis and, possibly, adjustment of the advertising campaign.
👉 ROMI - shows how many units or percentages of profit were generated by one unit of expenses invested in advertising.
👉 LTV - the total value of a customer for a certain period, taking into account repeat purchases and cross-selling.
👉 Average check - the average value of the purchase price in a completed shopping cart.
👉 Number of items in a check - the average number of items in a check.
👉 Percentage of advertising costs from turnover - what percentage of turnover is spent on advertising.
👉 Time to purchase - the average time from the user's first visit to making a purchase.
➌ Customer metrics on the business side
Here, customized settings are already in place individually for each business, depending on the availability of CRM and the quality of maintaining the client base. This could be the dynamics of the growth of new clients, the share of new clients, as well as an understanding of the final efficiency of new clients. Everything depends on many business processes on the client's side.
For a more detailed understanding, you can contact the agency for contacts. You can conduct an audit of contextual advertising, set up analytics, and so on.
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