Measuring Online Display Advertising: Key Metrics Explained

WHAT IS ONLINE DISPLAY ADVERTISING?

Online display advertising can potentially increase brand awareness and visibility and reach specific target audiences. 

If there’s one thing marketers love, it’s tracking metrics, but not all display advertising metrics are equally important. Learn how to measure online display advertising and determine the effectiveness of your marketing efforts.

8 BASICS OF DIGITAL ADVERTISING METRICS

1. IMPRESSIONS

Impressions are one unit for measuring online display ads you must know. Every time your display ad appears on a web page, a single impression is recorded. On many digital ad platforms, impressions are the basis for how you are charged for an ad. 

Paying for impressions is similar to printing postcards and sending them to your targeted audience. You have to pay for each postcard printed and sent, even though not all the postcards guarantee a new customer. (You can’t even be sure the receiver will even read your postcard.)

Impressions work the same way. You pay to serve your display advertisement to potential customers, but an impression does not guarantee a response, an action, or even more than a passing glance from the person seeing the ad. 

Since you’re online right now, you’ve undoubtedly had display ad impressions served to you. You probably decided to click on some while others you scrolled past. This is why you cannot measure online display advertising by impressions alone—the number of impressions doesn’t give you an idea of the performance of your advertisement.

2. CTR (CLICK THROUGH RATE)

CTR is the next basic metric for measuring display advertisements. Returning to sending a postcard, CTR is like knowing how many people didn’t initially throw your postcard away. CTR is just what it sounds like: the percentage of viewers who clicked on your advertisement. But just because someone brought your postcard inside doesn’t mean they are a new customer. 

There are various reasons why viewers may click on an advertisement, whether by accident, out of curiosity, thinking it’s something else, or out of genuine interest.

3. REACH

Reach sits a step above impressions. Reach is the data about who is looking at your display advertisements. In other words, it’s the number of unique individuals who see your advertisement. When someone is counted as an exceptional view, the system knows not to show them the same ad on a different website.

4. RETURN ON INVESTMENT (ROI)

ROI is an important factor when planning a successful marketing campaign. It’s the question every business person asks themselves: “Are you making more than you’re spending?” ROI tells you if your advertisements work—and how well. 

First, calculate your ROI by recording your spending, including impression rates and other advertisement costs. Then, measure the number of new customers who came from your advertisements and whether the new customers spent more than the advertisements cost.

5. VIEW-THROUGH CONVERSIONS

If you’re concerned that impressions that don’t lead to a click are going to waste, consider the value of a view-through conversion. View-through conversions happen when a customer sees your ad but doesn’t click on it and later converts. This metric can help you analyze which ads are the most effective and what makes them effective, such as which sites they appear on and where they appear on the page.

6. LIFETIME VALUE (LTV)

LTV deals with the accounting and ROI of a marketing campaign. The LTV is the lifetime value of a customer or, on average, how much each customer will spend in a lifetime. This helps you understand how much a new customer might be worth and can guide you when setting budgets for advertisements, impressions, and other digital marketing.

7. CONVERSION RATE

When calculating the conversion rate, you divide the number of visitors to your site by the number of purchases. For example, if you have 675 visitors to your site with 250 purchases, you’ll divide 250 by 675 and get 37%. The conversion rate can help you determine how many visitors you’ll need before reaching your sales goals. 

8. COST PER CONVERSION (CPC)

Now that you have all the ingredients for measuring online display advertising. You can get down one of the most critical metrics, CPC, or how much it will cost to convert a prospect. Divide your costs by the number of converted prospects to find your CPC.

HOW DO I KNOW IF MY ADVERTISING IS WORKING?

Although these eight metrics are ingredients in measuring online display advertising, many other tools can give you a better idea of how your advertisement is working. Looking at a slew of programmatic advertising metrics may be overwhelming. But here at Agility, we are ready to help simplify measuring analytics so that you can understand them, whether you are the owner of a startup, a mom trying to become a famous blogger, or a student studying marketing. We’ll take you through the full-funnel attribution, starting with the basics and drilling down to the nitty-gritty details that give you a better understanding of who sees your advertisements and what they are doing after. We know how to measure online display advertising in a way that gives you results and helps you create a pattern for successful campaigns.

Agility spares you the headache of determining the right digital advertising metrics to track and what they mean. Let us give you the tools you need to be successful and understand digital marketing without putting all the weight on your shoulders. Contact Agility today and begin using our platform to track your Key Performance Indicators (KPIs) for display ads.