Some of these are obvious - but worth reminding you of. Others are a bit more neglected. Pay attention to these key indicators in your ad accounts. Reasons why below.
⭕️ Thumb Stop Rate:
- Formula: 3-second video plays / Impressions.
- Why this matters: Measures how effective your video content is at capturing attention in a sea of content.
- What to do: Improve the opening visuals and first few seconds of audio to increase the 'stop' rate.
⭕️ POAS (POAS on Ad Spend):
- Formula: (Revenue From Ad Campaign - Total Cost Of The Ad Campaign - Cost of Goods Sold (COGS) - Other Expenses) / Total Cost Of The Ad Campaign.
- Why this matters: Even with high ROAS, you might be losing money if your margin's are low. It's why commodity products never have advertising firepower and premium ones do. This is the profit you're making on your ads after all expenses.
- What to do: If your POAS is low, look for ways to reduce the cost of goods sold or improve the effectiveness of your ads to drive higher profit margins.
⭕️ MER (Marketing Efficiency Ratio):
- Formula: Total Revenue / Total Ad Spend.
- Why this matters: Provides a broad view of how effective your overall marketing efforts are in terms of generating revenue.
- What to do: If MER is low, reconsider which channels are actually impactful by looking at post-purchase surveys. Skew spend towards the ones that consumers recall and remember.
⭕️ Conv/Impression (Conversion per Impression):
- Formula: Number of Conversions / Number of Impressions.
- Why this matters: This is one of my faves - it combines conv. rate with CTR - giving you a holistic metric that factors in how clickbaity your ad is.
- What to do: If this rate is low, it means either the combo of your ad and landing page isn't working.
⭕️ LTV/CAC (Lifetime Value to Customer Acquisition Cost):
- Formula: Lifetime Value (LTV) / Customer Acquisition Cost (CAC).
- Why this matters: Indicates the return on investment in terms of the long-term value of customers compared to the cost of acquiring them.
- What to do: Aim to increase this ratio by either increasing the lifetime value through upselling and retention strategies or by decreasing the acquisition cost through more targeted campaigns.
⭕️ CTR (Click-Through Rate):
- Formula: (Total Number of Clicks / Total Number of Impressions) * 100.
- Why this matters: Obvious one but this is one of your more pullable levers that really impact your unit economics by slashing your CPC if your creative is really hitting. $5 CPC vs $0.50 means you have to convert 10x higher to reach parity. Can your landing page do that?
- What to do: Test different ad creatives and calls to action to improve CTR. Add social proof, use cases, get crazy with your hooks, etc.
⭕️ Frequency:
- Formula: Total Number of Impressions / Total Reach.
- Why this matters: Tells you how often the same person sees your ad on average. Another obvious one but too many times I see brands shooting the same dead fish in a tiny barrel. Expand your audience and go after new eyeballs.
- What to do: Adjust frequency to avoid ad fatigue; if frequency is too high, refresh your creative or expand your target audience.
Got any favorites? Curious what else folks are looking at.
Share this with the CMOs, marketing leads, media buyers, and creative strategists in your life!
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