December 25, 2019

5 Digital Marketing Metrics That Every Executive Should Know

You may be wondering why an executive would need to be familiar with the minutia of digital marketing. After all, isn’t that for the marketing people? An executive is supposed to be the big picture guy, right? Well, yes, an executive is supposed to look at the big picture, but problems can arise if as an executive you lack a basic understanding of important details. People who work for you can make things up, mislead you or use data to concoct false narratives to drive their agenda.

Entrepreneurs know this well. Before they can delegate, they need to have a basic understanding of the job they’re delegating. So that begs the question, what’s so special about digital marketing that an executive should familiarize himself with the basics?

Three words: Facebook and Google.

These two platforms are eating the world. They’ve grown so large and influential that nobody can ignore them anymore. The political world learned this the hard way and every politician today knows they can’t ignore Facebook. Because just about everyone today has a smartphone, people’s daily realities are shaped by the information streaming through these omnipresent portals. Because they shape the public’s every day reality, your brand is at the mercy of these platforms and it is therefore of paramount importance that if you’re an executive, you understand how they work.

Both Facebook and Google are algorithm-based platforms and therefore have a lot in common. The beauty of digital marketing is that, unlike traditional advertising, just about everything can be measured. There are certain metrics that are universally accepted as performance barometers across all platforms. Due to the nature of how Facebook and Google collect and display data, it’s easy to produce these metrics and executives should familiarize themselves with what exactly it means when someone in marketing says “Our cost per link click went up in the last Facebook campaign.”

Reach

This is simply the number of people who have been served an ad. With Facebook and Google, however, there’s more to the story than meets the eye because they both use a series of complex algorithmic processes to decide who to serve content to. The problem is that there is far more content being produced in the world than eyeballs to consume it, so the algorithms have become very discriminating and thus the vast majority of content produced by brands reaches very few people. If your digital marketing analyst announces in a meeting that reach has been low on the ad campaigns, it’s probably because the algorithms have decided that within the sea of competing content, yours just isn’t of high enough quality or relevance to be worthy of appearing in people’s news feeds. The only way to fix this is to produce high quality ad content that the algorithms decide is relevant to your target audience. And doing that often requires rounds of a/b testing and tons of analysis.  

Engagement Rate

The engagement rate is one of the more important metrics to understand because it’s a measure of the level of interaction from your followers. It provides a window into how emotionally invested people are in your digital brand. Although different platforms may report different engagement metrics, the engagement rate is calculated simply by dividing the total number of engagements by the number of followers on your social media platform. An engagement is any type of interaction such as a like, click, share, comment, etc.

Engagement rate = total engagements / total followers x 100

For example, consider the following Facebook page:

Total engagements = likes + shares + comments = 6,421

Engagement rate = 6,421 / 150,000  x 100 = 4.2%

Most business get less than 2% engagement on their Facebook page. If you can get yours to around the 4-5% range, you’re doing way better than most.

% of Link Clicks vs All Clicks

Within Facebook, this is the most important metric of all because it’s the purest measure of how passionately people are interacting with your brand’s content. To understand this metric, imagine you’re scrolling through Facebook on your phone and you see an ad about snowboards. Normally this kind of thing wouldn’t interest you but it’s the holiday season and you think it might make a good gift for your nephew, so you tap on the ad. Once you do that, Facebook records that as a click. Let’s say you’re compelled by the ad copy so you click on the link that takes you to the company’s website. That’s recorded as a link click. If you divide the link clicks by the clicks on the ad, you get the percentage of people who clicked on the ad who then were interested enough to go to the company’s website. It’s a great measure of how interesting people find your content.

Let’s say that 100 people clicked on an ad in their News Feed and of those people, 15 clicked on the link within the ad that took them to your website. The link clicks vs all clicks % would be:

15 link clicks / 100 ad clicks x 100 = 15%

That means the post is only effective enough to convert 15% of the people who clicked on it. Not so good. Ideally, we want this metric to be above 30%, and the higher the better.

So, a couple of things to understand about the % of Link Clicks vs. All Clicks metric:

  • The higher the percentage of link clicks vs. all clicks the better. We want this percentage to be at least 30% or higher overall. However, to be considered a “top performer,” an ad must have over 60%
  • If this percentage is lower than 30% it indicates that there could be a multitude of factors that need to be addressed. For example,
  1. The content might be reaching the wrong audience
  2. The audience might be saturated with similar content from your competitors
  3. The actual words being used in the ad could be very different than how the audience communicates
  4. Or people might feel as if the body of the ad they clicked on is a bait-and-switch compared to what they expected from the ad title and imagery

Link Click Through Rate

The Link Click Through Rate is another important metric that allows us to gauge the emotional valence of our content. It’s the number of times people clicked on a link in a post or an ad compared to the number of impressions that post or ad got. In digital marketing, an impression is simply the number of times a piece of content appeared on screens.

Link Click Through Rate = total link clicks / total impressions x 100

So let’s say we run a Facebook ad that gets 91,436 impressions, i.e., it appeared 91,436 times on people’s screens. But it got only 47 link clicks.

Link Click Through Rate = 47 / 91,436 x 100 = .05%

Ideally, this number should be at 5% and up. If it’s below that, then your content just isn’t relevant to your target audience and you’ll need to figure out what’s wrong.

Cost Per Link Click

If you want to know whether your ad money is being well spent, this is an important metric to know. It’s calculated by dividing the total money spent on ads by the number of clicks the ad received.

Cost Per Link Click = total money spent / total link clicks x 100

Let’s say you spent $2,100 on an ad campaign which generated 1000 link clicks.

Cost Per Link Click = $2100 / 1000 x 100 = $2.10

Ideally, you want to get this number well under a dollar.

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