Digital advertising key performance indicators (KPIs) are the numbers you judge a campaign against, and the right KPI is always the one closest to an actual sale. Before you turn on a paid media campaign, three things need to be in place: your KPI, the volume you need, and your baseline metrics.
Your KPI should be the closest thing that you can possibly get to a sale -- that should be the thing that you're measuring. The KPI is your shining star, your guiding light. It's the foundational element, the thing that your paid-media team knows it's optimizing towards. It's very important to have this idea solidified in your mind and in the mind of your paid-media team.
For example, if you're doing ecommerce and you can track sales, your KPI should probably be based on sales, return on ad spend (ROAS), and customer acquisition cost (CAC). Simply knowing what your KPI is, is a big, very important foundational step to take before you launch your paid-media campaign.
The next component is volume. How many of the acts do you need? How many sales? How many leads? How many video views? How many clicks? How many site visits? How much view time do you need to see a meaningful impact on your sales? This is the next metric that you want to be looking at. As a business, you can make a determination: 'I need a million sales per month,' 'I need 100,000 sales a month,' etc. Volume is a component to understanding where you should buy advertising and how much you should be spending on advertising.
The final component is your baseline metrics. Even if you've never spent a penny on paid media in the past, you should have an idea of what your cost per sale should be, your CACs, or your cost per lead. Imagine you're a business that determined your cost per lead is $20; that's the number that you think makes sense for the economics of your business. Now, you may run paid media and find that the cost per lead is actually $50, but at least your paid-media team knows that $50 is not good. A lot of this is about giving your paid-media team the knowledge, insight, and foundational components to ensure that they know how to be successful with your investment.
Common digital advertising KPIs, translated
Ad platforms will report dozens of numbers at you. These are the ones worth knowing, in plain language:
- ROAS (return on ad spend), revenue generated per dollar of advertising. The ecommerce north star.
- CAC (customer acquisition cost), total cost to win one new customer. The number your business model actually lives or dies on.
- CPL (cost per lead), what you pay for each inquiry or form fill. The usual KPI for service businesses, where the sale closes offline.
- Conversion rate, the share of visitors who take the action you want. Tells you whether the problem is the traffic or the landing page.
- CPM (cost per thousand impressions), what the ad space itself costs. An input to watch, not a goal to chase.
- CTR (click-through rate), the share of people who click. Useful as a diagnostic for your creative; dangerous as a primary KPI, because clicks are not customers.
One thing that has changed since this video: AI-driven bid optimization is now standard in every major platform, and it optimizes toward whatever signal you give it. Feed it clicks and it finds clickers; feed it sales and it finds buyers, which makes choosing the right KPI, and tracking it properly, more consequential than ever. Setting that up is part of the foundation work our media buying team does before any campaign spends a dollar, using the reporting that demand side platforms surface within hours of launch.
