How do you measure success for your advertising campaigns? Marketers care about reach and frequency, views and listens, clicks and likes. But CFOs and their colleagues at the executive table speak a very different language: ROI.
To them, impressions and engagement metrics are a means to an end. What they really want to know is whether their marketing investments are making a difference at the cash register. Of course, not everything has to be a sale or acquisition, but there should always be impact.
Here are five CFO-approved key performance indicators (KPI) that will show impact, unlock budget and impress everyone at the next board meeting.
Cost per lead
Divide your marketing spend by the total number of leads you received. This can be done at the campaign level or for a set period of time, like a month, quarter or year.
It’s a great metric because it draws a direct connection between marketing and purchase interest, and it’s very easy to understand for non-marketers. It’s also very healthy for the rest of your measurement efforts because it requires you to pay special attention to attribution: What platforms exactly contributed to your leads? In what proportions? At what cost?
Lead conversions
How many of your leads actually converted? It can be expressed as a rate (conversions / leads), a raw total over a given time period, or by extension as sales per lead.
It forces you to give some thought to what lead time is reasonable for your industry (a conversion three months after an initial lead might be reasonable for auto or insurance brands, but perhaps not for snacks or pizza delivery) and how it might differ by channel and brand messaging, which is an important consideration for media allocation.
Return on ad spend (ROAS)
ROAS is the revenue brought in by a campaign divided by its cost. It’s a crucial metric because it goes to the heart of the ROI question: How much of your sales can be attributed to your marketing efforts, versus business as usual?
Many consumers would have purchased from you without advertising. External factors like seasonality, weather, or macroeconomic variables might have played a role too, positively or negatively. ROAS is an invitation to look into media mix modeling.
Long-term ROI
Where is the cutoff between short-term and long-term effects for your company’s products and services? Don’t blindly accept the 2X multiplier you might have seen in industry publications, or fall victim to the myth that performance campaigns only have short-term effects, and branding campaigns long-term effects.
Every campaign follows a different curve of diminishing returns, based on factors like product category, messaging, competitors, target audiences, or the mix of platforms and ad formats you used. You can only optimize your campaigns if you understand their full effect over the long term.
Brand equity
This is a broad name for metrics like brand awareness, consideration, attitudes, favorability and relevance. It is also a KPI that needs qualifying. While not directly tied to sales outcomes, brand equity can have a positive impact on several things CFOs care about deeply.
We’ve studied thousands of campaigns over the years, across dozens of industries, and we’ve found that the correlation between upper funnel brand metrics and marketing efficiency can be very strong: overall, we found that a 1-point gain in brand metrics like awareness and consideration typically drives a 1% increase in sales. Additionally, brand equity can influence your ability to retain clients, grow prospects and drive shareholder value.
