Important Numbers for Online Ads#
You need to know how to speak the language if you want to work in AdTech. These are the numbers that everyone is talking about, and this is what they really mean.
The Funnel (Marketers Love Funnels)
Digital marketers break campaigns down into steps—
Upper Funnel: Awareness and consideration (like “I just heard about this brand”). Middle Funnel—Evaluation and intent (“I’m really thinking about getting this product”) Lower Funnel: Buying something and then turning it into something else (“Transaction complete!”)
The metrics you choose will depend on which part of the funnel you want to improve. The top of the funnel? It’s important to get in touch and leave an impression. Lower funnel? Conversions and ROAS are the most important things.
Basic Numbers#
Thoughts#
The number of times people saw your ad, even if no one clicked on it.
Important: An “impression” doesn’t mean that someone saw it; it just means that it was shown. What if your ad loaded at the bottom of a page that no one scrolled down to? It still counts as an impression.
Clicks#
The number of times someone actually clicked on your ad.
It’s a simple way to find out if people are interested enough to do something. Or if they have fingers like mine, they might have accidentally “fat-fingered” the banner on their phone.
Changes#
The number of times your ad got someone to do something that was important to you.
People could buy something, sign up for a newsletter, download an app, fill out a form, or watch a video.
The conversion event is whatever you set up in your tracking. And yes, attribution gets complicated quickly (did the ad really lead to the conversion, or would they have bought anyway?).
Cost Metrics: How Much Do You Spend?#
Cost Per Thousand (CPM)#
Cost per thousand views. Most display ads are priced this way.
For example, if your ad is shown 1,000 times, you pay $5 per thousand views.
Because “mille” means “thousand” in Latin, it is CPM instead of CPI. When I first heard this, I was also confused.
CPC (Cost Per Click)#
The price of every click on your ad.
A lot of the time, this happens with search ads, like those on Bing and Google. You pay $2.50 for each click, even if the person doesn’t buy anything and leaves right away.
Because you only pay for clicks, not just views, advertisers like it. Publishers like it because clicks that show a lot of interest can cost a lot (more than $10 for hard-to-get keywords).
Cost per action (CPA) or cost per acquisition
The cost of getting one person to convert.
Your CPA is $20 if you spent $1,000 and got 50 conversions. CFOs don’t care how many people saw your ad; they want to know how much it cost you to get a customer.
People call this “Cost Per Conversion,” but there are other names for the same thing.
Special Cost Metrics#
Cost Per Registration (CPR)#
The amount you paid to have someone make an account, sign up for a free trial, or download an app.
Good for SaaS businesses and apps where the first step is to sign up, even if they haven’t paid yet.
CPL (Cost Per Lead)
How much you paid for a lead, which is someone who filled out a form, asked for a quote, or set up a demo to show that they were interested.
Big in B2B advertising, where a “conversion” isn’t a direct sale but a conversation that leads to one.
Cost Per Qualified Lead (CPQL)#
It works like CPL, but it only counts “qualified” leads, which are leads that meet certain criteria, such as their budget, company size, job title, and real interest.
Because every lead is different. A bot filling out a form doesn’t do anything for your sales team. CPQL counts leads that might close.
Return on Ad Spend (ROAS)
The difference between how much money you make from ads and how much you pay for them. This is the best way to see if something worked.
If you spent $10,000 on ads and made $40,000 in sales, your return on ad spend (ROAS) is 4x (or 400%).
If you made more than you spent, the number is more than 1. If your number is less than 1x, you’re losing money. This might be okay if you want to get more people to know about your brand or increase the lifetime value of your customers, but you should be ready to explain why to your boss.
These metrics are tracked, reported on, put on a dashboard, and talked about at every campaign review meeting. You can’t just gather the numbers; you also need to understand what they mean and which ones are most important for your goals.
Was the upper funnel campaign supposed to make people aware of it? You might not have to think about CPA all the time. Are you running a direct response campaign to boost sales? If impressions don’t lead to sales, they don’t matter.
Know what you want. Keep an eye on the right numbers.