
In the digital realm, where programmatic advertising dominates over 80% of digital display ads, understanding and leveraging Key Performance Indicators (KPIs) is fundamental. These metrics serve not only as numbers but as insightful guides to the success and direction of your advertising efforts. With the vast majority of digital display ads being purchased programmatically, the importance of understanding and applying the right KPIs cannot be overstated.
Understanding KPIs
The cornerstone of any successful programmatic campaign lies in setting the right KPIs. These metrics, ranging from impressions, CTRs, clicks, and more, are not just numbers—they are the markers of success, the indicators of where your campaign stands, and the signposts guiding where it needs to go. Properly setting these KPIs is akin to charting a course through uncharted waters, ensuring your campaign reaches its desired destination.
Essential KPIs in Programmatic Advertising
- Impressions: Impressions are a vital baseline metric worth tracking. They help you calculate your brand awareness by indicating the number of times that your ad was displayed on a third-party site. It is worth noting that impressions do not indicate who has seen your ad, so they do not offer a quantitative measure of the people you reach. However, it is valuable in calculating other vital metrics that result in better campaign performance. There are two types of ad impressions. One is served impression, which refers to when the transmitted served content counts as an impression. The other one is the viewable impression, where additional data is used to determine whether the user saw the served content or not. Viewable impressions are more accurate than served impressions since they offer reliable performance data to data analysts for campaign improvement.
- Clicks: Clicks come in handy when seeking to understand how well your target audience responds to your ads. This metric is quite straightforward since you are tracking how many clicks your ads get. The higher the number, the more interest your product has, which is the first step in converting viewers to customers. If your campaign aims at getting clicks, you can use a mobile app or video campaign to get users to click and learn more. It is inaccurate to assume that all clicks indicate a new customer since not all will lead to conversions. However, combining clicks and impressions can help you calculate an actionable percentage and make informed campaign budget decisions to optimize your ad ROI.
- Conversions: Conversions refer to when a user completes a particular action on the landing page. This metric is unique since it allows you to customize what you are looking for. In other words, you can calculate the conversion rate based on your specified campaign goals, such as actual product sales or free trial sign-ups. Your conversion rate will help you understand the overall engagement and determine which ads drive the targeted audience to take action.
- Click-Through Rate (CTR): A click-through rate (CTR) is a digital advertising metric that uses a ratio to show how often users who see an ad end up clicking it. CTR is the number of clicks that an ad receives, divided by the number of times that the ad is shown. CTR is typically displayed as a percentage, so you’ll multiply the resulting number by 100 to generate a percentage.
- Video Completion Rate (VCR): Video completion rate (VCR) is a video marketing metric that measures how many users watched a video ad from start to finish. This rate helps advertisers figure out whether or not their audience is finding the content they’ve produced engaging
- Cost Per Completed View (CPCV): Cost per completed view (CPCV) is an ad pricing model where marketers pay a publisher every time their video is watched from start to finish. This helps marketers target high-quality users. CPCV is calculated by dividing the budget of an ad campaign by the total number of completed views.
- Reach: Reach is a vital metric in measuring brand awareness. It helps you understand how many people your programmatic campaign has reached. As opposed to impressions, which are calculated per potential view, reach is calculated per person. Tracking your reach will help you control the parameters of your upcoming ad campaigns. You can couple this metric with others like clickthrough rate (CTR) and frequency to understand your ad success better.
- Conversions In programmatic advertising, your ad conversion refers to the desired action that a user takes after clicking on an ad. This could be anything from making a purchase, signing up for a newsletter, downloading an app, or any other call-to-action that aligns with the goals of the advertising campaign. The process typically involves the following steps: A person visits a website The website owner puts the ad impression up for auction (SSP) Advertisers offer bids for the impression (DSP) The highest bidder wins the ad impression The ad is served on the website to the user The user clicks on the ad and converts Conversions are crucial in programmatic advertising as they indicate the effectiveness of an ad campaign. They help you understand whether your ads are compelling enough to drive users to take the desired action.
- Viewability Rate: Viewability rate measures the percentage of ads that are actually seen by users. With the rise of ad fraud and non-viewable impressions, ensuring high viewability rates is crucial for maximizing the impact of your programmatic campaigns.
Optimizing KPIs for Programmatic Success
To truly harness the power of programmatic advertising, it’s not enough to just measure these KPIs; continuous optimization is key. This involves A/B testing various ad creatives, refining targeting parameters, adjusting bids in real-time, and leveraging machine learning algorithms to predict and improve campaign outcomes.
Moreover, aligning KPIs with overarching business objectives ensures that programmatic efforts contribute meaningfully to the bottom line. Whether the goal is brand awareness, lead generation, or customer acquisition, choosing the right KPIs to focus on can make all the difference.
The Future of KPIs in Programmatic Advertising
As programmatic technology advances, so too will the KPIs we rely on. Emerging trends like increased privacy regulations, the shift towards a cookieless world, and the rise of Connected TV (CTV) are set to redefine the metrics that matter most. Advertisers who stay ahead of these changes, adapting their strategies and KPIs accordingly, will be best positioned to thrive in the dynamic digital advertising ecosystem.
In conclusion, while the landscape of programmatic advertising is complex and ever-changing, the careful selection and optimization of KPIs remain central to campaign success. By focusing on the metrics that align with your business goals, continuously refining your approach, and staying attuned to industry shifts, you can unlock the full potential of programmatic advertising to drive meaningful results for your brand.
Source: LunaMedia