The most effective digital marketing KPI goals in 2023: You already know that digital advertising KPIs (Key performance indicators) are an important part of measuring the success of your digital marketing strategy.
The most effective digital marketing KPI goals in 2023: Intro
There are so many choices and so many businesses going through Digital Transformations. How do you decide where to begin or what to shift?
Continue reading to learn about the essential KPIs of digital marketing and how you can choose them for your campaigns and initiatives.
First Off—What is a KPI?
KPI is a measurement that you use to determine performance. They can be used in either a digital or non-digital context. KPIs are numbers that can refer to any business area, such as financial structures, productivity, or consumer behavior.
Your digital marketing strategy will be informed by the right KPIs. It’s important to determine the best KPIs to measure digital performance. To choose the most effective indicators, you will need to identify which areas of your business or target goals should be prioritized.
You’ll first need to determine the best KPIs. Next, look at your goals and find out how you can fill that gap.
To achieve winning marketing strategies and YOY growth, you need to set your Key Performance Indicators and make them SMART KPIs.
Digital Marketing KPIs, or Key Performance Indicators, are quantifiable goals that can be used to measure and track success. It’s important to plan your KPIs for both short- and long-term goals in a constantly changing marketing environment, like today with digital disruption.
Digital Marketers can use KPIs to help set expectations and show that their efforts are having an impact. Although it may seem difficult to measure the success of digital marketing activities, this is not the case. It’s usually easier to track progress on a digital campaign than for an offline campaign.
This post is designed to help you establish digital marketing KPIs that measure what matters most at the moment. It’s done in a way that all parties can agree. Smart marketing planning is crucial for tracking and measuring your progress and demonstrating value. We will discuss budgeting, negotiating KPIs, and how to tie KPIs into the SMART RACE Framework.
Setting digital marketing KPIs
Setting a KPI for digital marketing is the most important step. This is a crucial step. However, you don’t want it to go wrong.
Many times, KPIs are linked to “conversion”. Conversions are becoming more important in today’s competitive environment. Conversions should be precise (i.e. Conversions should be easy to measure and define, and significant (E.G. A user filling out a contact form to make a purchase. Each type of conversion will have its own goals and targets. It is important to be focused on the company’s added value with each event.
What should you measure?
- You should be able to identify quantitative metrics that align with your company’s goals. These metrics will usually be sales leads. It might not be possible to measure leads if you work in a startup, but it is possible to measure reach and engagement.
- Leading Indicators. An indicator that is considered a leading indicator is. It is used by economists as a way to indicate the direction of the economy. Reporting is more important if a leading indicator can be used to show that your efforts and time are having an impact, even though they have not yet shown significant results. You might, for example, measure the number of people who have spent more than 3 minutes on your website even though they haven’t completed the contact form.
What you shouldn’t measure
- Things that you cannot influence. It doesn’t matter if you can’t make it change.
- Vanity metrics. A vanity metric is when a manager wants to rank at the top of Google using a keyword that does not convert.
How to set channel-specific KPIs
KPIs that are channel specific should be used, while others that relate to the overall business goals should be used. KPIs from both channels and overall business goals will be needed by many organizations.
Individual channels will be run by different people or teams in larger companies. Each channel should therefore be measured individually. A smaller team will have the ability to divide it in a way that suits your marketing mix. You can find more ideas on how to set goals and how marketing goals can help you achieve success.
NB Some parts of your marketing mix might need more attention than others. It’s worth prioritizing these priorities and allocating the appropriate resources.
Below is a chart that shows six examples of Leading Indicators and KPIs for digital marketing channels. These indicators were derived from an E-commerce client so that they can focus on revenue and conversions.
It is important to remember that not all channels have the same primary KPI. Because not all channels will have the same primary KPI, this is why revenue/conversions are unlikely to be affected by every channel. It might not be realistic to expect social media to directly impact revenue, depending on what you offer. The primary KPI of social media may be reached.
The primary KPI of PPC is the cost per purchase. Revenue would only be part of the picture in the example above. While a large change in the PPC budget could have an impact on revenue, it wouldn’t necessarily indicate that PPC activity has been going well. Because budget changes are not taken into account, it is better to measure the cost per acquisition.
Digital marketing KPIs can be tied to budgets
This workshop is about prioritizing. A workshop entitled How to Build Your Digital Strategy was presented recently by a man from Indus Techshu, an Indian Digital Marketing agency. One idea stood out among many others:
“You can either fix your KPIs, or your budget. Both can’t be fixed.
PPC Campaigns are particularly affected by the idea that KPIs are so dependent on a budget. Clients and bosses often have an idea of the KPIs they are looking for, along with the budget they wish to spend. This is a good starting point to talk to experts or do research. It is useless as the KPI was essentially a gimmick.
Your boss requests 20 conversions at a cost of PS500. However, your targeted keywords are priced at PS5 per click. The site also has a 4% conversion ratio.
500 [PSspend] / 5 [PSCPC] = 100 (visits) x 0.04 [4% converter rate] = 4 [conversions]
You would then set a KPI for 4 conversions and then discuss what you can do in order to lower the cost-per-click and increase the conversion rate. Based on your past experience and the success of previous campaigns, you might choose to set a more ambitious KPI.
Ask your boss if they are willing to increase the spending to PS2,500 to get 20 conversions. You can link the activity to your SMART goals to show that you need to continue investing in digital marketing to drive results.
Everyone involved must be able to clearly understand KPIs and all goals. Even though a KPI is quantified, it’s easy for people to interpret a goal in different ways. All KPIs should be SMART.
These five factors are fairly self-explanatory (and more on How do you define SMART marketing goals article), so I won’t go into detail about each. It is important to remember that not everyone sees KPIs in the same way as you.
For example, “I need to double your conversions” could be understood differently by different people. It is much easier to interpret “I need to increase qualified conversions by 100% YoY by the quarter end” than “I need to double conversions”. It will save you lots of trouble down the road by making sure your KPIs have SMART.
How to negotiate your digital marketing KPIs
Negotiating skills are sometimes required to agree on KPIs. You will need to be able to maintain your nerves, as with all negotiations. Although it can be tempting to agree to a figure that you don’t believe you can achieve to end awkward conversations and move on, this is not the best strategy.
It’s worth it to be able to argue for your side. It’s not fun to have to explain why you didn’t meet the KPI and why it wasn’t realistic. It’s better to be able say, “We hit that KPI, so let’s set another one.”
You should be ready for whatever the person you are negotiating with might insist on. Roger Fisher and William L. Ury suggest that adding a new element can break down a deadlock in negotiations in their book “Getting to Yes: Negotiating Agreement without Giving in”. Instead of trying to change one figure, both sides can add a new factor that they are more likely to accept.
You might request more budget or more time to achieve the KPI that they requested. You might also suggest that they lower a different KPI to make it more efficient.
How to set KPI Boundaries
Although SMART KPIs can be a great way to clearly define what must be done, they are not always easy to achieve. You either meet them or you fail. A 98% increase of conversions when you agree to a 100% increase can be viewed as either “near enough” (or a complete failure), depending on your level of reasonableness. This can be prevented by a good KPI, which requires all parties to agree on what is acceptable upfront.
Excel can use a traffic light system to measure KPI performance by using boundaries
Shortly after becoming an SEO Account Manager at my first agency, I was assigned a new client. He had already agreed to KPIs and the salesperson who closed that sale. Because the salesperson was being paid a commission, he agreed to double the organic traffic to six subfolders of an international site in six different languages within 6 months. This KPI was unrealistic, especially since one section of the site was in Russian. It was difficult to optimize the site for Russian, and I didn’t have time to learn another alphabet.
I managed to achieve two-thirds of the impossible and increase traffic for four of six subfolders in just six months. Although I was pleased with myself, the client was not satisfied. She had promised her boss the impossible and I failed to deliver.
Aligning KPIs with the RACE model
You’re likely already familiar with the RACE Framework, which divides the customer journey into four main stages.
This framework can be used to match KPIs with different stages of the process.
This is a great way to measure KPIs throughout the funnel, rather than just conversions. It is important to align your KPI tracking with your marketing approach to make sure you are measuring what matters and not just what is easiest.
The RACE Framework is a popular guide for marketers and their teams. It guides them through planning, managing, and optimizing each stage of their customer journeys within their purchase funnels. Our lifecycle tool integrates reach, act and converts to convert and engage. It helps you increase conversions and sales, as well as your customer’s lifetime value.
Measurement of your digital marketing KPIs
Using the SMART model, all of your digital marketing KPIs are time-bound. This will help you know what you need and when. You’ll also be able see how far you have come before the KPI is due. You should inform the other party if you aren’t sure you’ll be able hit your KPI. This will ensure that there are no unexpected surprises. Market fluctuations can have a greater impact on your finances than you might think. It is especially important to track your progress in a recession.
If you’re not on the right track, and it’s not your fault, you should immediately flag it up. If, for example, you are working on an SEO campaign and your developers have not implemented any of the recommended changes (not that it ever happens), you should explain the issue and what the impact will be.
“I can understand why you haven’t been able find the resources to implement the changes. This is understandable considering how much work remains. This is why I believe we should recalculate the KPIs in order to account for this.
This must be done before the KPI is due. If you haven’t raised the issue, you can’t show up to a meeting making excuses.
Did you know that nearly half of all companies do not have a clear digital marketing strategy? 10 reasons you need a digital strategy to get buy-in for SMART KPIs
There are many things to take into consideration when setting digital marketing KPIs in a recession. However, it is well worth spending the time planning ahead. It takes practice to be able to select the right KPIs for digital marketers. This is a crucial skill that digital marketers need to master. While you won’t be able to do it perfectly every time, taking the time to anticipate what you can achieve and measuring your performance will allow you to grow as a marketer.