Measures of Success: Paid Media Metrics & Benchmarks Resource Guide
March 29, 2023
Changes in the macroeconomic environment over the past several months have impacted every corner of business—with departments thinning out, budgets being reallocated, and companies all watching this space very carefully.
With an increased hyper-fixation on value, while we’ve seen many brands looking to cut costs, we’ve also seen clients prioritize specific long-term marketing investments. This has taken shape in the form of increased brand spend and dollars being allocated to the top of the funnel, even though these channels don’t often play a large role when it comes to driving last-click conversion volume.
For Tuff, we continue to explore ways to scale brand spend, lower customer acquisition costs, and drive the most efficient growth possible for our clients and stakeholders. Our ultimate goal, when it comes to paid spend, is to hone in on the healthiest media mix and ensure we’re getting the right message in front of the right audience, at the right time.
Continue reading to find out the latest on how our clients are maximizing their media budgets, what it looks like, and how you can make the most of each channel at every stage of the customer journey.
Forecast media spend but prioritize flexibility
When we’re forecasting spend or refining our media mix, we’re constantly evaluating estimated results based on budget, goals, and channel allocation.
“If I spend X, what can I expect to get?”
While there are dozens of possible scenarios for forecasting spend, we often start by reviewing historical data. We use historical data to build a predict the future based on previous results. If we don’t have historical data, we’ll look to industry benchmarks and estimates by platform.
In either case, forecasting media spend begins with a few simple calculations based on your campaign goals and business objectives.
Forecasting with CAC
Let’s assume you have years of historical data for every platform in your media mix and a consistent blended customer acquisition cost (CAC). This is an ideal scenario to be in for forecasting. You can better forecast how much media spend you’ll need to reach a target of new customers. To do this, you’ll multiply your target by your historical CAC to create an accurate media budget.
Example: 175 new customers per month goal x $300 average historical CAC = $52,500 per month
This is the simplest explanation using a siloed goal. In the above scenario, we are looking to increase new customers. But, net new customers isn’t always the primary campaign objective.
Forecasting with traffic goals
What if the goal is to increase traffic to your landing page? In this scenario, CAC isn’t as relevant. Instead, a metric like cost per landing page view would be more relevant.
Let’s assume in this scenario that you are launching a brand new traffic campaign on Facebook. T he main objective is to drive as much traffic to your landing page as possible and stay within your budget.
For this, you’d leverage your previous campaigns’ benchmarks to forecast a cost per landing page view. Your formula could look something like:
Example: $500 daily budget / $1.50 cost per landing page view = 333 landing page views per day
Both of the above scenarios, use historical data—CAC and cost per landing page view. But, what if you don’t have historical data to leverage when forecasting?
How to forecast without historical data
There are research tools available to help make forecasting for some paid media channels easier. With Google Ads Keyword Planner, you cansee historical cost per click (CPC) data for chosen and related keyword targets. You can also use itseasy forecasting feature to forecast a budget based on your target keywords, even without historical data.
However, you’ll need to get more creative to forecast media spend if you’re campaign goes beyond paid search.
One way to forecast paid media spend without access to your own historical data is industry benchmarks. You can leverage Iconic’s quarterly report discussed below or CPC benchmarks by channel.
First-party data is always the most relevant and useful when factoring in something like conversion rate (CVR). However, third party data can help you establish benchmarks for your own paid media planning. You’ll at least have a sense of what other companies within your industry are spending on their paid media initiatives.
Once you have a benchmark for your campaign, calculate your projections based on your available budget.
Whether you have years of historical data or you’re launching on a channel for the first time, map your media plan back to your business goals. It will keep you accountable to results.
We recommend annual, quarterly, and monthly planning but are often making optimization and budget shifts on a regular basis. If a channel is under performing, we’ll either optimize or shift spend to another channel to support our end-to-end growth targets.
While we always want a roadmap, we stay flexible and in constant conversation.
Use industry benchmarks
When putting together a campaign strategy or media plan, we consider a number of factors including:
Can we get in front of the right audience on this platform based on targeting options?
What does it cost and can I afford it based on the budget?
What role does this channel play in the overall media mix?
We’ve launched hundreds of ads across dozens of channels. And we put each dollar under a microscope. Here are some of the platform-specific benchmarks and trends that help us build a healthier media mix for each account we manage.
TikTok
- CPC: $1.77
- CPV: $0.01
- CPM: $9.72
- CTR: 0.65%
- 6-Second Hook Rate: 13.85%
TikTok only allows for videos as the ad type. It encourages brands to make the first 3-10 seconds of the video especially thumb-stopping.
You’ll typically see a significantly lower cost per view and a much higher hook rate compared to Meta or LinkedIn.
Meta
- CPC: $4.11
- Cost per ThruPlay: $1.06
- CPM: $25.04
- CTR: 1.47%
Meta is one of the original social advertising platforms which makes it extremely effective for a full funnel marketing plan.
- CPC: $7.32
- CPM: $37.62
- CTR: 0.75%
- CPV: $1.18
People come to LinkedIn to engage and connect with people in their network. They also want to form new connections, engage with thought leadership content, and find new professional and/or educational opportunities.
For paid media, LinkedIn is known for its in-platform Lead Generation feature. Rather than driving directly to outside landing pages with forms, you can embed a form on the ad, which often leads to higher lead volume and form submission rate.
With an outside landing page, you might see higher CPCs and lower CTRs. But, with LinkedIn lead gen forms, you reduce friction and limit the number of clicks to encourage action.
YouTube
- CPC: $6.80
- CPV: $0.10
- CPM: $15.26
- CTR: 0.47%
Average Watch Time/Impression: 17 seconds
Note: You can experience lower or higher cost metrics depending on the campaign goals and optimization settings.
For example, video action campaigns that you optimize for conversions will generally have higher CPVs and CPMs. Since they’re focused more on driving traffic that is likely to convert to your website, you’ll enjoy higher CTRs and conversions. On the other hand, you’ll optimize top-of-funnel brand awareness campaigns for higher reach, but you’ll have lower CPVs and CPMs.
Display
Google Display Network:
- CPC: $1.84
- CPM: $6.35
- CTR: 0.54%
StackAdapt (Programmatic Display):
- CPC: $3.45
- CPM: $3.85
- CTR: 0.11%
Similar to YouTube, average costs are highly affected by your campaign goals and optimizations for the individual campaign. Conversion optimized campaigns will typically see higher CPC and CPM metrics, while brand awareness campaigns will have lower CPMs.
Have a roadmap, but prioritize flexibility
Creating benchmarks for your paid media spend is a crucial first step and that you should do with every new paid effort. But benchmarks are just estimates. Only after a new paid campaign has been live for a few days or weeks will you start to see the true cost of your efforts.
Therefore, it is important to be flexible in your approach and constantly monitor performance of your campaigns. If your initial plan doesn’t perform as you thought it would or if your business needs evolve, adapting quickly is the key to paid media success.
Additionally, as you add new content, creative, and messaging to your paid media plan, you’ll need to analyze performance.
Have a testing process in place to isolate performance variables and provide clean data. You want to have a media plan that’s flexible enough to continuously test iterations but still gets you closer to reaching your goals.
Set clear expectations
The traditional way of measuring performance campaigns was to rely solely on a last click attribution model. But, this doesn’t account for any of the other sources that assist in getting website visitors, conversions, and sales. While attribution has grown increasingly difficult, as companies shift into efficiency mode, this has become an even greater challenge.
Making a decision to increase or decrease resources based solely on the last click could have a domino effect on campaign results—and seriously limit your ability to test channels.
You could see a decrease in overall results if you simply increased spend in one source attributed with a high number of last clicks and decreased another with a low number of last clicks.
There’s a lack of awareness and understanding in general around a lot of the intangible spend, It’s our job as marketing leaders to educate. Setting that expectation upfront with your board and CEO is extremely important.
Let’s use Google Search vs. TikTok as an example.
When looking at last-click attribution, your Google Search has high conversions compared to TikTok. So, you decide to decrease TikTok budgets and increase paid search.
You could see a decline in total conversions because you took away the assist—Tiktok. It was the channel that drove awareness and favorability to get the user to search for the brand in the first place.
You want to communicate that a certain percentage of marketing spend will be intangible, primarily used to drive awareness. While it’s not going to offer ROI immediately, it’ll have a huge impact two or three years from now.
Oftentimes, brand’s measure a paid media campaign’s success by performance goals. The questions on the top of our brand partners’ minds are, “What is our CAC?” and “Can we get our CAC lower?”.
Of course, lowering your CAC or cost per conversion is the ultimate goal in most paid media plans. We want to efficiently drive results to grow.
However, even the smartest brands and marketers overlook big picture thinking. Instead, they focus on only the channels that seem to be driving the ‘best results’, according to what their attribution software is telling them.
The problem is that many attribution tools, including the most popular Google Analytics, give conversion credit to the last click or non-direct channel.
These tools don’t tell the full story. They leave out the top-of-funnel brand campaigns that raised customer awareness and put you on their radar to start. When brands only look at last-click attribution, they want to spend more on bottom-of-funnel channels. These may be where audiences convert, but would they have without the education and brand building of top-of-funnel campaigns?
Thinking about your paid media spending in terms of last clicks is short-sighted and ultimately hurts your long term growth. Just because it’s difficult to show a channel’s immediate return, it doesn’t mean that it didn’t contribute to your overall revenue and conversion goals.
This is why we recommend brands look at paid media campaigns with a customer-first approach that allocates dollars to every stage of the funnel. A simple way to view this is to separate your performance campaigns from your brand campaigns.
You design and optimize lower-funnel performance campaigns so it’s easy for high intent audiences to convert. Channels for performance campaigns typically include Search and retargeting.
You design and optimize higher-funnel brand campaigns to drive brand awareness, introduce and keep your brand top of mind to your target audience. Channels for brand campaigns include YouTube Ads, TikTok, and Instagram.
Measure brand-related KPIs
We also recommend brands measure campaign performance with more than one metric and set realistic, clear KPIs for each channel. Brand campaigns may be harder to measure results and understand their big-picture impact, but it doesn’t mean you should spend without direction.
For brand-related KPIs, we recommend looking at metrics that are higher in the funnel than the ultimate conversion.
While the paid media metrics below are not exhaustive, there are ones we recommend for measuring brand campaign performance.
Awareness metrics
Awareness metrics tell you how many people your campaign reaches and how engaged they are with it. . Although they’re the metrics that appear first after launching, you’ll also measure them throughout the life of a campaign.
Awareness metrics are usually related to views (cost per view) and impressions (cost per thousand impressions).
To go further, you can even measure view-through conversions in most platforms. These highlight conversions where someone has seen your ad on one channel but then navigated to complete the conversion through another channel. It’s an often overlooked, but highly important paid media metric to see how your brand campaigns influence your overall success.
Revenue/conversion lift
A successful brand campaign should also prove its weight as time goes on. One ways to measure is by tracking your overall revenue/conversion lift before you launch a new brand campaign vs the period the brand campaign was running and shortly after it ended.
To be successful, keep variables as low as possible. Try not to launch additional marketing efforts during this timeframe.
With this measurement approach, we look for an increase in overall performance metrics during and after the time a brand campaign runs. It also assumes all other marketing efforts were the same or similar before, during, and after going live.
Branded search lift
A branded search lift is similar to a conversion lift, except we’re measuring the increase in traffic and impression for branded search terms (paid and organic).If a brand campaign has the right messaging and reaches a large number of people, then we can hypothesize that branded term impressions and traffic will increase.
A tip to measure effectiveness more acutely is to limit your brand campaigns to one specific geographic area. You can limit by state or metropolitan area, and then measure your branded search lift during and after the campaign is over.
Look for cross-functional teams
Growth doesn’t happen in a silo. It’s not enough for your campaign manager to drive down CPCs or your copywriter to A/B test a headline. The real magic happens when you fine-tune each piece of your marketing machine to drive towards something greater.
Feedback loop between sales and marketing
Marketing generates leads through paid media efforts. Sales receives these leads and determines which are qualified or unqualified. Then, sales reports this information back to marketing teams, who use it to optimize campaigns and strengthen targeting, messaging and creative. Rinse and repeat.
If these two services (sales and marketing) operate in silos, the learnings float into the abyss. They never make it to marketers who are in charge of generating lead volume for the sales team. A feedback loop between sales and marketing helps your business understandlead quality and ultimately grow.
Lead quality assessments at the source and campaign level
The age old question – Which is more important, quality or quantity? Lead quantity is surface-level growth. Lead quality is long-term sustainability.
As mentioned above, people view many different sources before they convert on a website. You must analyze the lead quality and consider all variables to continuously improve user experience up to the point of conversion.
Assessing lead quality tells you if a lead can become a qualified customer and how to structure and optimize your paid campaigns to grow your business.
Putting together lead quality assessments is one way to dive deep into the details and answer questions like:
- Where are the leads originating from?
- Where are the leads dropping off?
- What is the MQL to SQL conversion rate?
- Are users dropping off at a certain point from when they’re an MQL to an SQL?
To understand where leads originate from, you could embed a form on a landing page. The form collects relevant information that helps you pre-qualify leads. You could also meet with the sales team or listen to sales interviews to determine inbound lead quality.
The ultimate goal is to use all the resources available to you to nurture leads throughout the funnel and increase the speed to lead, where possible.
Collaboration between SEO and PPC
When Cross-functional teams communicate and collaborate, each understands their role in driving long-term success. They also share insights and identify opportunities that improve overall performance.
Collaboration between SEO and PPC teams is a no-brainer, specifically when it comes to identifying and optimizing priority keywords. So, what does this look like in practice?
For starters, the SEO and PPC teams can collaborate on initial and ongoing keyword research identify top priority organic and paid keywords, and note when those overlap.. Owning the top spot on PPC results is obviously a much faster process. You can bid on a search term and pay for a search ad (as long as it hasa high quality score). From an organic perspective, ranking for priority keywords takes longer. But, you get the brand recognition benefits of a top ranking organic and paid result together.
Overall, PPC can more quickly drive paid traffic to the site, so you can more rapidly test and identify which keywords drive the best results.
In the long term, you should share these insights and data with the SEO team to inform the organic content strategy. The SEO team can compare the list of high-converting keywords to their organic content plan. If there are keywords that didn’t perform well from PPC tests, then they may de-prioritize them.
Collaboration between paid and ad creative to maximize spend
To maximize spend, paid media and ad creative teams should collaborate. Together, they’ll identify opportunities to scale up and improve the end-to-end user experience.
At Tuff, our creative team relies heavily on data that the paid media team collects. From the very first beginning of developing assets for a partner, Tuff prioritizes the business’ value propositions to serve as the initial jumping off point for asset and messaging ideation and creation. This allows for the paid media teams to test new campaign strategies that speak to the elements of the business that resonate most with the designated audiences.
Maximizing spend looks different for every business., It depends on your stage of growth, the services you want to grow, and other factors.Regardless of what this looks like for your business, you’ll need intentional collaboration and communication between creative teams that craft the messaging and paid media teams that promote it.
Collaboration between CRO and paid media to identify the top converting user flows – and then optimize those
Collaboration between paid media (PPC, social, programmatic) and CRO can begin with sharing data and insights. Similar to the above example, the PPC team can provide the CRO team with data on keywords that drive the best results that can then be incorporated into landing pages and URL destinations. This will help increase CVR and in turn, lower costs.
The paid social team can also share which audiences perform best. There are almost endless options for targeting on platforms, like Facebook and Instagram and you can test and tweak to find a winning combination. Working together, paid social can pull standout audience metrics to help CRO build a bridge from ads to the destination URL.
Collaboration doesn’t have to stop at keywords or copy updates. Consider additional elements to test like lead capture forms or content.
We’ll leave you with this: test, test, test
There is only one constant in life—change. Constantly see businesses evolve in ways they never imagined, and our marketing strategies evolve to align with those changes.
Tuff combines generalists (Growth Marketers) and specialists (Channel Experts) with expertise that spans data, creative, paid media, and owned media. By nature, we’re scrappy, data-driven marketers that constantly collaborate cross-functionally and share knowledge across channels.
