Which metrics matter (and which ones don’t) to measure the performance of your ads?



Digital marketing is an essential component of most businesses today. Whether you’re a small business or a large corporation, having an online presence is crucial for attracting customers and increasing revenue. 


One of the best ways to make your ad campaigns highly profitable is to understand which metrics matter, because if you’re looking at the wrong numbers, you can’t make your campaigns better.


As a social media marketing agency with extensive experience in Digital Marketing, we’re sharing our expert tips that will help you monitor your campaigns better to increase profitability.


Which platform is right for your business?


Before diving into metrics, it’s important to consider which platforms are best for your business. While there are numerous options available, some stand out depending on your needs. Here are some general guidelines to follow:


  • Google: Ideal for immediate needs or searches, such as phone screen repair, as well as pay-per-click advertising.
  • Facebook and Instagram (Meta): Great for brand awareness and ecommerce sales, especially for beauty and apparel products.
  • LinkedIn: Best for B2B marketing, especially in industries such as planned construction services and business insurance.
  • TikTok: Primarily known for its popularity among millennials and Gen Z customers, TikTok is growing in popularity for food brands and apparel, offering opportunities for brand awareness and influencing buying decisions.


The two key metrics you need to watch


Regardless of which platform you choose, there are two main metrics that you should focus on for any digital marketing campaign: conversions and return on ad spend (ROAS).


  • Conversions: A conversion is when someone completes an action that adds value to your business, such as filling out a contact form or making a purchase. Keep in mind that there are different types of conversions, depending on your business needs.


  • Return on Ad Spend (ROAS): ROAS is a factor of how much your ads contributed to your business’s value divided by how much you spent on them. A higher ROAS means that your ads generated more revenue than you spent. It’s a critical indicator of campaign profitability. The acceptable ROAS depends on your net profit margin – the higher the margin, the lower the ROAS can be to still be profitable.

While other metrics, such as clicks and impressions, are useful, they should be viewed as secondary metrics that provide additional insight but aren’t as important to your bottom line.


So what should you do if your Conversions and ROAS are decreasing?


Declining conversions and ROAS is a serious issue that directly impacts the profitability of your online ad campaigns. 


If these metrics are declining, it’s crucial to examine three other metrics that can help identify the cause: 


1. Click Through Rate (CTR): Indicates the strength of your ads. If your CTR is declining, consider improving your ad copy or visuals.


2. Cost Per Millard (CPM): Shows how much it costs to show your ad to 1,000 people. It’s influenced by the platform, audience, competitors and seasonality. A common example of how the CPM affects results is in the holiday season, when most companies increase their budgets, which increases the CPM.

If the CPM is affecting your results because the cost is increasing, you don’t want to be changing your ad creative or your website. You might have more competitors bidding against you or it might be an expensive time of year to advertise, like Black Friday.


3. Conversion Rate: Of the people who click on your ads, how many take the desired action? This metric reflects the quality and volume of traffic, the strength of your landing page and external factors like competition and seasonality.


If you’re seeing a decline in the conversion rate, you’ll want to look at your ad copy to make sure the call to action is clear or re-work the landing pages of your website where you’re sending traffic from your ads, so they convert better.


Knowing what’s affecting performance and what that says about what you need to change, is vital to avoid wasting money and time on your ads.


To improve your metrics, start by analyzing your data and looking for patterns. Consider making changes to your targeting or messaging and A/B test your ads to see what’s working best. 


Optimizing leads campaigns


It’s important to note that leads campaigns and e-commerce campaigns require different metrics to track success. For many, the key conversion action is going to be getting leads, but there are several ways to get leads and you need to measure all of those ways differently.


We typically track leads from: Form Fills, Facebook Leads, and LinkedIn Leads separately due to their unique cost and quality characteristics.


  • Form Fills: Targeted traffic from ads is driven to a website and then fill out a contact form. 
  • Facebook & LinkedIn Leads: Both platforms have lead capture forms built in to their ads that collect leads’ information in-app without requiring people to go to the client’s website.


To illustrate the differences in lead capture methods, we’ll use a scenario from a commercial real estate client. Here, Facebook leads proved to be cost-effective for generating high volumes of quality leads, outperforming website traffic and form fills. 


However, each business is unique, and the optimal lead generation method requires exploration. 



Balancing lead quality versus quantity is crucial 


At Legendary Social Media, we focus on high-quality, high-intent leads, reducing the sales team’s workload and improving conversions. On the contrary, SaaS platform SEMrush opts for volume over quality, using simple forms that likely attract less committed leads. 


Therefore, a balanced approach to form complexity is crucial to attract genuinely interested leads without deterring them – It should take some work for people to fill in your lead form but not too much work.


Why ad performance fluctuates


It’s essential to understand that ad performance can fluctuate, and there is no set-it-and-forget-it strategy. Ad performance is affected by various factors, including:

  • Seasonality: Depending on your industry, there may be busier or slower times of the year.
  • Ad fatigue: Over time, the same ad may lose its effectiveness, and you may need to switch things up.
  • Competition: Your competitors may increase their ad spend, making it more challenging to stand out.


New search terms on Google can also trigger your ads, so you need to be vigilant to avoid wasting money. Setting up ad campaigns and then neglecting them is one of the biggest mistakes we see businesses making. Constant engagement and proactive adjustments are key to maximizing your ad spend.


Understanding Ad Performance Fluctuations


The perils of a set-it-and-forget-it strategy


One important factor to remember is that a set-it-and-forget-it strategy never works in online advertising. Your ad campaign performance will fluctuate due to numerous factors and the results will never be consistent daily, weekly, or monthly.


Factors impacting ad performance


Several factors can cause these fluctuations:


  • Seasonality: Seasonal changes influence your customers’ buying decisions.
  • Competition: The entry of new competitors or exit of old ones can affect your campaign.
  • Economic Factors: Shifts in the economy can change people’s spending habits.
  • Ad Fatigue: Over time, ads may lose their effectiveness, becoming stale.
  • Algorithm Learning: The algorithms on platforms like Google and Facebook are constantly learning and adapting based on what works with your ads and customers.


The role of Google’s search terms


Particularly on Google, new search terms appear daily that could trigger your ads. These terms could be highly relevant or not at all. It’s crucial to monitor these and decide whether to include or exclude them from your campaign to prevent wasting money.


The importance of continuous optimization


The reality is, without constant attention and experimentation in your campaigns, you may miss finding the optimal strategy that yields the best results for your investment. The biggest waste of money often comes from setting up ad campaigns and then rarely monitoring or adjusting them.


The value of being proactive


Proactivity is always the best approach. Constantly trying new things and optimizing your campaigns is vital to avoid unnecessary spending and maximize your returns.


Wrapping it up


Whether you’re a small business or a multinational corporation, understanding the ins and outs of your ad campaigns is the key to unlocking your online potential.


Choosing the right platform for your ads, whether it’s Google, Facebook, LinkedIn, or TikTok, is a crucial first step. However, the real game begins when you start to dive deep into the metrics – conversions and ROAS are your guiding stars in this vast universe of data.


As we’ve explained, fluctuations in your ad performance are inevitable. Seasonality, ad fatigue, and competition all play their part in this ever-evolving landscape. That’s why setting your ad campaign on autopilot simply won’t cut it. It’s essential to keep an eye on the emerging search terms, and continuously optimize your strategy to keep up with the pace.


When it comes to lead generation, it’s a delicate balance between quality and quantity. Understanding your business’s unique needs and adjusting your strategy accordingly can make all the difference in the world.


So, remember – stay curious, stay proactive, and most importantly, don’t be afraid to make changes. Your ad campaign is a living, breathing entity that needs your attention and care to truly thrive. 


Let’s make your digital marketing journey a Legendary one together – Click here to let us catapult your ad campaigns to new heights!


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