Which Metrics Matter Most

Measurement is the name of the direct response game. 

With the advancement of ad technology we can now measure almost everything.

Just open up your Facebook ad manager and look at the endless columns you can customise.

This democratisation of data has resulted in a brand new problem for marketers…

We can now measure what doesn’t really matter.

Rory Sutherland gives a great example using the Titanic.

There was a lot of data the Captain could have been looking at during the journey, but the data point indicating iceberg ahead should have been at the top of the list.

Measurement in marketing is similar. 

Measuring the wrong things can cause leak’s in ad budgets that end up sinking whole campaigns.

Let’s look at a common KPI – click through rate (CTR).

It makes sense in theory to have CTR plastered on every screen of the ads manager. The more clicks you get per 100 people viewing the message, the more resulting conversions you are likely to get on the back end.

That is until you actually run a lot of campaigns and figure out CTR isn’t always the most useful thing to focus on at the ad level.

I spoke to someone working for Nielsen at Cannes Lions this year who had a similar hunch. He told me they decided to study over 478 campaigns from the global brands they work with to look at the real impact of CTR on end outcomes.

What they found may shock you…

CTR had just 1% of an impact on final purchase intent.

What does this mean?

People often click because they are curious about what lies on the other side of the ad. This means you can do a bunch of things that get clicks but don’t actually deliver on what matters to acquiring a customer.

Yet other ads can have a lower upfront CTR but much higher back end conversion.

All of this could lead you into a tailspin trying to figure out which way is up, but there is a better way to look at it.

That is by simplifying and reverse engineering back from the end objective.

Following the same tried and true methods working since the days of Claude Hopkins.

A Better Method

It’s best practise to start at the end objective (not the first i.e CTR).

Then work forward to the end prospect who will take that action.

  • If your goal is to arbitrage traffic through different ad networks then focusing on CTR is the top priority.
  • If you goal is to make a sale cost per acquisition is the top priority.
  • If your goal is to create a customer focusing on lifetime value is a top priority.

Being more objective about your end goals will make you think more critically about the rest of the advertising you do.

Doing so will often pull you away from vanity metrics but nicely in the direction of serving the end needs of people you are trying to help.

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