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Effectiveness of an advertisement campaign – how to measure it?

May 15, 2014 Paulina Kamińska 5 min read

The basis of creation of an advertising campaign on the internet, just like in case of other types of media, is planning the objective that we want to achieve with it. Our main aim can be an increase in sale profits, an increase in movement on the page or gaining new contact data. Regardless of what our aim is, it is important to constantly monitor and optimize the campaign. Its effectiveness is determined by a group of rates, which should be followed and analyzed. How to do it in order to ensure that the budget that we’ve assigned to the campaign has been correctly spent? First, we’ll have to learn and decipher a few key acronyms: CPM, CTR, CPC, CR… Let’s go!

After placing an advert on the internet we would like to know how many people will see it. Therefore, we are interested in the number of views of our ad, and, as a result, how much we will pay for those. The rate allowing for calculation of the cost for 1,000 views is the CPM. It is a model of accounting for an advert, which enables us to estimate how much we can pay for every 1,000 impressions. Just like in case of all incurred costs, the lower the CPM, the better. Following and analyzing appropriate CPM rates will be most favorable for campaigns aiming at an increase in brand awareness both among our present and potential customers.

When a net surfer sees our advert, the next step that they should take is to click on it, so that they will be redirected to the landing page. The CPC rate specifies the price that we will pay for one click, so – similarly to the CPM – our aim is to make the rate as low as possible. This method of accounting for advertisement ensures that you will pay for every action taken, not just for having your ad displayed.

Another significant rate is the so-called click through rate. With use of this one you can specify how often people that see your ad will click on it. The CTR is calculated on the basis of the number of clicks on the ad divided by the total number of impressions multiplied by 100%. For instance, if your advert has 10 clicks and 2,000 impressions, then the CTR will amount to 0.5%. If you manage to achieve a high CTR, it will mean that your advert is correct and compliant with the users’ expectations. Analysis of the CTR will help with examining accuracy of the key words that you’ve used in the advert, creation of banners or ad texts. You will also be able to test which kind of advert is more effective and attracts more viewers.

The CR calculates the percentage of people that took the desired action after clicking on the advert –bought a product, placed an order, signed up for the newsletter. The CR is a rate that doesn’t relate to the costs that we incur. By using it we will know whether viewing our advert goes hand in hand with the aim that we have planned earlier.

The BR is the rate of bounces; more precisely, it examines the percentage of people that didn’t take any action after being redirected to the landing page. The option will allow us to precisely target our campaigns and see whether the ad attracts the right people. The lower the BR, the better you’ve selected the target group for your campaign. A high BR can also be a sign that the page isn’t appealing to the viewers: it contains uninteresting or contradictory messages, or the graphics put people off staying on the page.

Conversion takes place when a user clicks on our advert and takes an action. Conversion can come in form of making a purchase, signing up for a newsletter, etc. In that case, there are a few separate rates by means of which you can measure particular kinds of conversion. They will give you a possibility of calculating the costs of achieving your aim. You will be aided by the CPA (cost per action), the CPL (cost per lead), the CPS (cost per sale) and the CPO (cost per order). The first one will allow you to check how much it will cost you to have a user take an action. The next one shows the price for receiving data from potential customers. The last two rates are typically sales-related; they will allow you to see how much it cost to make a customer take an action.

There is no single recipe for success in running an advertisement campaign. Frequently what proved efficient in one case won’t necessarily help another campaign. Undoubtedly, for the sake of good campaign management it is advisable to first decipher a few acronyms that at first sight seem repulsive. Learning about the rates and then monitoring them constantly, at the same time analyzing the costs, will allow you to choose the most optimal solutions.


Paulina Kamińska

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