Marketing Metrics: A Complete Guide to the Most Common Marketing Metrics and Marketing Analytics

What are marketing metrics?

Marketing metrics are measurable key performance indicators (KPIs) that provide insight into marketing activity.

What are marketing analytics?

Marketing analytics is the practice of measuring and analyzing marketing activity in order to improve effectiveness. Because marketers have a finite amount of budget to spend on their initiatives, it is critical they invest in the most effective tactics and strategies. Marketing analytical evaluations are the tools used to maximum effectiveness. Marketing analytics can range in rigor from simply examining metrics at face value to looking at deltas over time, modeling and projecting future values, causal analysis (a brand-new frontier), machine learning and more.

How do marketers use marketing metrics?  

The advent of digital marketing helped progress the usage and widespread adoption of marketing analytics. Digital tactic performance is generally easier to quantify. Marketers were suddenly able to view performance in more detail than ever before. Remember, offline marketing tactics on which marketers solely relied before the internet were difficult to measure and attribute accurately. Slowly, the focus toward analytical marketing increased and spread to all areas of marketing.

A simple example of analytical decision making

Let’s look at a very simple example of marketing measurement and analytical decision making. Suppose a marketer has three versions of a digital banner ad. Her goal is to maximize the revenue generated from a $1,000 digital ad campaign. How should she go about optimizing the $1,000 ad spend?

There are a number of ways this marketer can maximize her investment. Let’s focus on one approach—A/B ad testing. A/B testing is an approach where marketers can test multiple stimuli (in this case, the three ad versions), measure their performance, and determine which ad performs the best.

After testing a small amount of budget and running all three ads, our marketer sees the results below.

The table above shows the amount of revenue each ad generated after spending the same amount of investment on each ad (note that for the test to be comparable, the targeting must be the same for each ad).

So how does our marketer spend the rest of her $1,000 budget? These data above show that ad #2 drives the most revenue for every dollar invested. Thus, our marketer would maximize the total amount of revenue generated by investing all of her remaining budget using ad #2.

What are the main types of marketing metrics?

There are many, many, many types of marketing metrics, analytical approaches and ways to measure performance. Let’s take a look at some common metrics most marketers use frequently.

Here are five types of common marketing metrics:

• Advertisement effectiveness

• Purchase funnel 

• Lead-based

• Investment efficiency

• Customer value

Advertisement effectiveness

Advertising effectiveness metrics are KPIs that help marketers evaluate how ads accomplish a particular goal and which ads best accomplish that goal. Our above A/B testing example is a form of measuring advertising effectiveness.

Ad Recall

Ad recall is a measurement of how consumers remember an ad. Specifically, ad recall is the percentage of people shown an ad or creative who remember the ad or creative at a later date.

Click-through rate

Often abbreviated as CTR, this metric measures the rate at which customers click an ad. To review our more in-depth article explaining CTR, click here.

Engagement

Engagement is a term that can apply to several different marketing measurements. However, it is mostly used in social media applications, and is a measure of how users interact with a particular social post or ad. Thus, the engagement of a social ad is measured as the percentage of users who take any action on that ad (i.e. likes, comments, shares, click, etc.).

Conversion rate

Conversion rate is a measure of how customers complete a desired action. Conversion rate is the percentage of website visitors or ad viewers who complete a desired action such as submitting an email address, filling out a form, or purchasing a product. Customers are usually considered “converted” when they have completed the final action in the marketing funnel. Other metrics such as consideration (detailed below) apply to earlier-funnel actions.

Purchase funnel

Marketers refer to the stages customers take in their purchase process as a purchase funnel or marketing funnel. The measurement of each purchase funnel stage provides critical info to brand marketers. While there are many steps in a purchase funnel, below are some of the most commonly measured stages. Click here to review our complete overview of marketing funnels.

Brand awareness

Brand awareness, as the name implies, is a measure of customers’ awareness of a brand. There are different types of brand awareness. The most common are aided awareness and unaided awareness. Aided awareness is defined as the percentage of customers who have heard of a brand when given the brand name (i.e. providing the brand name as stimuli is the “aid”).

As an example, marketers trying to measure the aided awareness of automobile brands might provide a list of car brands and ask customers to identify the brands with which they’re familiar.

Unaided awareness is defined as the percentage of customers who have heard of a brand (without an “aid”). Unaided awareness is measured by asking customers to list the brands with which they’re familiar in a particular category. Customers are not provided brand names as stimuli when measuring unaided awareness. Read our full overview of brand awareness here.

Consideration

Brand consideration is the second stage in a purchase funnel, directly following awareness. Consideration is defined as the percentage of customers who would consider a brand when making a purchase decision.

Using our previous automobile example, marketers may ask customers to identify the car brands they’d actually consider purchasing. Note that this is different from awareness. Customers first need to be aware of a particular car brand before they can consider it. However, being aware of a brand does not necessarily mean a customer would consider purchasing the brand.

Using a personal example, I love Lamborghini cars. They’re wonderful pieces of design and engineering. In this sense, I am aware of their brand. However, while I’m aware of Lamborghini, I would never consider purchasing one due simply to the price tag. It’s waaaay out of my price range. This is an important distinction between awareness and consideration. Marketers rely heavily on both metrics when building brands.

Lead-based metrics

There are many lead-based business and marketing paradigms. B2B marketers are focused on attracting leads for their sales process. Service-based businesses measure their demand in the form of leads. Leads are a formal expression of interest by a customer. Leads are important in these types of businesses because each customer begin as a lead.

Cost per lead (CPL)

Cost-per-lead (CPL) is the average amount of marketing investment needed to acquire a lead. CPL is calculated by dividing the total lead acquisition marketing investment by the number of leads acquired from that marketing investment.

Cost per acquisition (CPA)

Cost-per-acquisition (CPA) measures the amount of marketing investment required to acquire one customer. CPA is calculated by dividing the total customer acquisition investment by the number of customers acquired from that investment. Click here for our in-depth explanation of CPA.

Investment efficiency

Most marketers want to understand how well their marketing investments are generating results. There are many types of marketing metrics that help marketers understand their marketing investment effectiveness. Let’s explore two common examples.

Return on ad spend (ROAS)

Return on ad spend (ROAS) is a very important metric for digital marketers. It’s a measure of how much gross revenue is generated by each dollar of marketing investment. The goal of this metric is to help marketers compare the revenue returns of various tactics and channels. Explore our in-depth guide to return on ad spend (ROAS) here.

Return on investment (ROI)

Return on investment calculations can very slightly. However, most marketing ROI formulas are a measure of the profit generated for each dollar of marketing investment.

Customer value

The value of a customer is extremely important for marketers. Because a marketer’s primary goal is to attract and retain customers, it is critical to have a detailed understanding of each customers’s value. How much is a customer worth? How much does a customer spend? How long do customers stay? These questions are answered by a series of value-related marketing metrics.

Lifetime value (LTV)

Lifetime value (LTV) is defined as the amount of revenue (or sometimes profit) derived from an average customer over the lifetime of his or her relationship with a business.

Average order value (AOV)

Average order value is defined as the average amount a customer spends on one transaction. This metrics is most often used in eCommerce businesses.

Retention rate

Knowing the amount of time a customer stays with a brand is very important to service-based businesses. In these businesses, retention rate is defined as the percent of customers who remain enrolled in a service for a defined period of time.