How To Know & Measure Your Marketing CPL & ROAS
The most common problem we face every day with our customers is getting enough data to know if their marketing is working. A lot of new business have a chicken or egg issue as well. Trying to decide where to best invest their money can only be done when you have the performance information for all of the various channels you are considering.
Here are some simple steps and resources to start getting a better measure on your marketing.
Having the right metrics to measure is important so let’s cover the most common and important metrics.
CPL – Cost per lead:
Maybe you’re not generating leads, don’t be fooled. You do have a CPL. Your leads might be phone calls, contact forms or even shopping cart payments. A CPL is the most basic requirement for advertising online.
$1,000 spend / 50 leads = $20 CPL
ROAS – Return on ad spend:
ROAS is one of my favorite metrics. It really tells a story about your advertising. Your return on ad spend will tell you how much revenue you receive from each dollar you spend in advertising. This can be done most easily for eCommerce clients with revenue per transaction being calculated accurately (more on that later). If you’re more lead based you could use your estimated ROAS based on your average order value or value per customer also.
$5,000 revenue – $1,000 spend / $1,000 spend = $4 ROAS
or for average order/customer value
50 leads x $100 per lead = $5,000 revenue – $1,000 spend / $1,000 spend = $4 ROAS
It wouldn’t be fair to start talking about advertising performance without talking a little about attribution. Attribution answers the question, “what if I have a visitor who comes to my site from Paid advertising but they come back and purchase the next day by visiting my site directly.
Each advertising channel will have attribution settings to know and understand. For example, Google AdWords will attribute any unique conversions to it’s advertising if that person converts in 30 days by default. In most cases where you are sending traffic directly to your main site this means you’ll attribute any referral source to AdWords if they convert within the set time frame.
Your Analytics profile might not totally agree in this situation. Analytics uses a simple last attribution model. For example, if a visitor comes from AdWords but then later returns from clicking your post in Facebook the sale is attributed to Facebook, not AdWords.
There is no ‘right’ answer with attribution. In many cases, it’s important to review attribution trends to identify if you’re receiving more or less value than your ROAS or CPL might be indicating.
Find more information about how to use Analytics to review your attribution here:
Getting trustworthy tracking setup is the most common issue our clients come to us with. So, let me introduce you to the requirements of tracking and the resources that can make this a much less daunting task.
Google Tag Manager
Tag manager allows you to fire codes via rules simply by placing the GTM code on your site. Here’s a list of common things GTM can handle for you easily once you’ve placed it on your website:
- Conversion tracking of forms
- Cross domain tracking
- AdWords conversion pixels
- Facebook conversion pixels
- Custom audience tracking for AdWords
- Custom audience tracking for Facebook
- Phone call tracking
So, get GTM installed and make your life a whole lot easier!
Not enough? Still stuck on trying to break down a conversion issue? Think we missed something that’s an absolute must for businesses? Tell us in the comments below!