Digital marketing is a subdivision of marketing that involves the use of digital channels and platforms to promote products or services to potential customers. The ultimate goal is to target specific audiences and then convert them into customers. While this seems fairly straightforward, there are a lot of components that fall under the umbrella of digital marketing.
From website-focused strategies to search engines and email or social media, the range is diverse. Despite this, some digital marketing strategies work better than others for some businesses and vice versa. Digital marketing is a highly customized practice, and finding the right combination is both an art and a science. To help you develop the most effective strategies, digital marketing KPIs are a must.
What Is a KPI?
KPI is an acronym that stands for Key Performance Indicator. A KPI may take many forms, but all have a measurable value that aids in assessing the level of progress made toward achieving your specific goal or objective.
The type of KPI an organization relies on will vary widely based on the specific industry and goal. For example, KPIs for a sales team will look much different than the KPIs you might choose and institute to track a customer service team’s performance or operational objectives. Utilizing the right KPIs aids heavily in the decision-making process as an organization works to determine areas of weakness or the effectiveness of a newly implemented strategy or technique.
What are Digital Marketing KPIs?
The digital marketing industry uses KPIs to measure the performance of each digital marketing effort or campaign. Some of the most common digital marketing key metrics include:
- Website traffic
- Engagement rates
- Social media reach
- Click-through rates
- Bounce rates
- Keyword ranking
- Average session duration
- Conversion rates
- Cost per lead
Although there are numerous digital marketing KPIs from which to choose, you must take the time to select yours carefully, so they will align with your digital marketing objectives as a whole. Likewise, you should use the information gained by tracking these KPIs to adjust your current strategies as needed. For example, if website traffic is waning, it may be worth investing in a better Search Engine Optimization (SEO) strategy. After making these changes, you can re-evaluate the KPIs to see if the new SEO methods are making a difference in the level of website traffic. Regardless of the outcome, you can adjust your goals and KPIs accordingly.
Why You Need to Track Your KPIs
Tracking digital marketing key metrics offers organizations highly valuable insight into how their strategies or investments are performing. This aids in the decision-making process and enables those in charge of projects to determine whether the cost is justified.
For instance, business owners may invest a significant amount of time and money to improve their websites’ traffic. They may opt for a Pay-Per-Click (PPC) campaign alongside traditional SEO services. By tracking the progress of both of these campaigns through KPIs, owners can discover which of the two is a more valuable investment. Perhaps PPC campaigns are not successful in converting customers, but valuable blog posts with organic keywords are. This evaluation would likely prompt the owners to stop investing in PPC and instead shift their investment into more effective SEO services.
Without digital marketing KPIs, business owners would likely continue to invest in PPC with little to no return on investment (ROI). Simply put, tracking your KPIs provides decision-makers with the data they need to make the smartest choices for their businesses. Because not all industries and businesses are the same and digital marketing strategies are unique to each, this information is crucial for success in a digital world.
How to Choose the Right KPIs to Track
Digital marketing is a broad term that encompasses a number of channels. From SEO, paid media, and e-mail marketing to social media and sales, all these channels are essential components in creating an effective digital marketing strategy. Despite this shared importance, the components vary widely, and KPIs should be channel-specific.
While a KPI like keyword ranking is critical for SEO, this information won’t be as useful for other channels, like e-mail marketing or end-of-the-funnel sales. Instead, it may be helpful to focus on conversion rates, but that choice ultimately depends on the goals you’re hoping to achieve within your business. To set channel-specific KPIs, start by identifying measurable goals for each channel and then work to determine which metrics will be the most valuable, actionable, and relevant to these goals.
The Most Important Digital Marketing KPIs vs Vanity Metrics
Although there are channel-specific digital marketing KPIs that should be taken into account, the most important KPIs in digital marketing measure the effectiveness of campaigns and the performance of the business as a whole. Those of the highest importance to track include website traffic, customer acquisition costs, return on ad spend, customer lifetime value, and conversion rates.
On the other hand, many business owners get caught up in vanity metrics. At first glance, vanity metrics appear to contain important information regarding business and marketing performance. Data points such as the number of likes and followers on social media or e-mail open rates sound impressive, but they rarely translate directly to tangible business goals like improved customer satisfaction or revenue growth. Instead, decision-makers should remain focused on more relevant KPIs.
Aligning KPIs to the RACE Model
Before you can accurately align KPIs to the RACE model, you must first understand what this model comprises. For starters, RACE stands for Reach, Act, Convert and Engage. It is a strategic framework in digital marketing that follows a step-by-step procedure. Throughout this process, the goals and focus of digital marketers will change drastically as they work through the sales funnel. Because of this, the most effective KPIs will also vary.
The first step in effectively aligning online marketing KPIs with the RACE model is to outline your goals for each stage of the customer journey. In the Reach stage of the framework, for example, a marketer may implement a goal of ranking for certain keywords on the Search Engine Results Page (SERP). These goals should be specific and measurable enough to create a solid plan. From there, you may opt to focus on keyword ranking and organic website traffic. During the Convert stage, however, these KPIs would be less telling in relation to conversion goals.
Throughout each stage, digital marketers must continually evaluate the goals and effectiveness of their current practices to assess which KPIs are most relevant.
Tying Budget to KPIs
In 2022 alone, businesses across the United States spent a staggering 616 billion dollars on digital advertising. Regardless of the areas of digital marketing on which marketers or business owners prefer to focus, they must remain conscious of the overall marketing budget.
In all businesses, there are delicate lines between being profitable, breaking even, and losing money. Spending too much on digital marketing efforts that do not generate any ROI may spell disaster for a business. This means that the budget must be tied into KPIs so that you can monitor overall finances and adjust accordingly during the process.
For example, if you’re using PPC advertising, and there is a goal to increase website traffic by 20 percent, you may choose to increase the budget here but then decrease in other areas that do not align with the current digital marketing goals. Likewise, assigning a budget can act as a benchmark for evaluating the effectiveness of paid strategies.
How to Set KPI Boundaries
You’ll need to establish a target performance level before you can set KPI boundaries. To do this, analyze historical data and industry benchmarks. Taking this approach ensures that the performance levels you are aiming for are realistic and achievable within your specified timeframe. To make it simpler to evaluate performance in the future, ensure that you have high and low boundaries in place.
When you revisit these KPIs to determine performance levels in the future, identifying their effectiveness will be much easier. If they fall well below the range, for example, you will be able to identify this quickly and change strategies before you allocate a significant amount of time and budget.
Sharpen Your Digital Marketing Analytics Skill Set
Analytical skills are a necessity when it comes to selecting and analyzing digital marketing KPIs. To sharpen these skills, aim to develop a deeper understanding of both data analysis and statistics. Many in the digital marketing field hone this knowledge and skill set by taking courses and reading tutorials or books on topics like data visualization and hypothesis testing. After building a solid analytical foundation, you will have a better understanding of reading and analyzing data. From there, you can enroll in an online course like Digital Marketing Bootcamp from the University of Massachusetts Amherst’s Isenberg School of Management. In this comprehensive six-month bootcamp you will take a deep dive into specific KPIs as you learn the inner workings of platforms like Google Analytics and other tools used in digital marketing.
The more you experiment with KPIs and the metrics they offer, the more you will understand the value they bring to the marketing table. In addition to analytical skills, those in the field must also have a natural curiosity and a passion for the industry itself. These characteristics are vital because there are no set rules that apply in digital marketing, and much of the work involved is simply a result of trial and error. Likewise, this is an ever-evolving field, and it is imperative for those implementing digital marketing KPIs or strategies to stay up to date on industry trends that are constantly changing.
You learn everything you need to know to be a successful digital marketer in this acclaimed bootcamp, so check it out today!