Strategy & Advisory

KPIs and co.: how to measure success in online marketing

Roman Fischer

Digital Project & Account Manager

Anja Brugg

Junior Sales Manager

Published

January 29th, 2021

Updated

March 30th, 2022

7 min

What are KPIs?

Key Performance Indicators (KPIs) are a set of metrics that reflect business performance and serve as an important measure for various areas of a company. They can be used to evaluate all processes and entrepreneurial performance and determine their success or failure. Various activities in companies can be analyzed, controlled, and improved using KPIs.

A KPI is a quantifiable measure that can be used to track the performance of various campaigns. Therefore, KPIs help to examine whether the overarching goals set at the beginning are being achieved or not. For example, in the area of online marketing, these metrics can be used to determine whether certain topics keep readers on the website longer than others. It is essential for the use of KPIs that at the beginning of a marketing strategy, often different things must be measured than one or several months later. Each campaign must, therefore, be evaluated individually and accordingly requires various performance indicators for analysis, depending on the type and period.

What are the benefits of KPIs?

The great advantage of KPIs is that complex business situations can be simplified and presented in an organized manner as numbers, making comparisons possible. Therefore, it is clear how well a process, strategy, or activity is performing. The goal of KPIs is to provide important information to management regarding the performance of departments or processes and provide suggestions for what should be changed or improved. Therefore, the use of Key Performance Indicators leads to overall better performance of companies and their ability to compete against rivals.

Each department and all employees get an overview of how their activities and performance compare and in which areas they need to improve. Especially for executives, KPIs represent an essential performance measurement system.

"Every executive, from team leaders to project managers, department heads to CEOs and board members, must set metrics and use them to plan and control their own areas. Only then can the executive direct employee activities in the right direction."

What is online marketing?

Online marketing refers to marketing activities that are implemented online, specifically on the internet. Due to the increasing perception of digitalization within society and measures taken in this regard, online marketing strategies are becoming increasingly important. This is also reflected in related figures, such as gross expenditures: in 2020, 690 million euros were spent on online marketing measures in Austria, whereas in 2012 the expenditures were only 160 million euros. This corresponds to a percentage change of +331.25%!

Compared to traditional advertising forms, such as print or TV advertising, the aforementioned expenditures in online marketing may seem relatively low:

In 2020, approximately 1.16 billion euros were invested in television advertising in Austria. Statista Research Department, 21.01.2022

However, in online marketing, much can already be achieved with lower expenditures - assuming one has the necessary know-how and a clearly thought-out strategy. Otherwise, it can also become quite expensive here...

👉🏼 If you are interested in taking on your own digitization project, you can find an up-to-date overview of the funding opportunities offered in the digitization sector in Austria here.

What measures are there in online marketing?

An essential advantage of online marketing measures is that data - in contrast to conventional advertising - can be evaluated in detail. Visitors to websites and other communication formats in online marketing are asked for their consent to the use of their data. But if they agree, tailored online campaigns can be created using target group targeting.

This means that the target groups addressed can be defined and restricted according to criteria such as age, gender, place of residence, as well as specific interests or preferences. At the same time, this offers enormous flexibility, as after evaluating initial campaigns, it can be determined which target group specifically identifies with the advertising company's offer. Even subsequent adjustments to online advertisements can be made relatively easily.

With a monthly budget of 1,000 to 1,500 euros for online marketing, SMEs can already carry out successful campaigns! However, the know-how and strategy must be right.

The following advertising formats are sub-areas of online marketing:

Display advertising

The most common advertising formats for display advertising are banners and pop-ups. Banners are usually found in the form of text, images, or videos at the edge of the screen. Pop-ups, on the other hand, appear in the middle of the screen and must be clicked away. In both formats, links are placed that lead to the website or a special offer of the advertising company.

Email marketing

Email marketing is used to bind existing customers or to acquire new customers through newsletters or general information. In emails, customers are addressed personally and can be made aware of discount campaigns, sweepstakes, or other offers.

👉🏼 Read our interesting article on GDPR-compliant email marketing here!

Search engine marketing

Search engine marketing (also SEM = Search Engine Marketing) can be differentiated into search engine advertising (also SEA = Search Engine Advertising) and search engine optimization (also SEO = Search Engine Optimization). The aim of all measures is to show a strong advertising presence - especially in the results of search engines such as Google, Bing, Baidu, etc.

For this purpose, SEO works with keywords that lead customers in their search to specific websites, online shops, or platforms. High-quality content, structured data, and technical finesse are a must for successful SEO.

In SEA, paid advertising or text ads are displayed in search engine results as soon as a keyword booked by the advertising company is searched. The special thing about this is that these ads are listed above the actual search results in a search engine.

Affiliate marketing

Affiliate marketing is, so to speak, online partnerships in which company A promotes the products and services of company B on its own website. By means of links and ads, customers from other websites can be directed to those of the own company.

Social media marketing

Social media platforms such as Facebook, Instagram, YouTube, Twitter or LinkedIn are becoming increasingly important for companies day by day. Social media is THE communication format to (maintain) contact and relationships with customers. The desired target groups can be reached precisely via all platforms and made aware of current promotions, etc. Ads and influencers help to increase reach in social networks.

According to a forecast, spending on social media advertising in Austria is expected to increase significantly by 2024. Statista Research Department, 04.11.2021

However, our social media manager Julia explains in her latest blog post why you should particularly focus on the social media platform Instagram!

👉🏼 Here you can find an overview of our current portfolio of online marketing measures!

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Which KPIs in online marketing?

There are a number of different KPIs distinguished and depending on the company and area, only certain KPIs are relevant for measurement. Thus, marketing uses different metrics than sales or logistics, for example, than controlling or management. Which KPIs should be used and which are the right ones for the activity to be measured always depends on which processes should be checked. For example, performance indicators for analyzing customer behavior play an important role in online marketing. A variety of different metrics are differentiated, such as:

Display advertising

Click-through rate: CTR measures how many users click on the ad, how they behave, and whether they have made a purchase as a result of the ad.
Cost-per-click: CPC is the total budget divided by the number of clicks (during a campaign period).
Cost-per-action: CPA can analyze predefined campaign goals such as downloads, leads, or conversions (calculated similarly to CPC).

Email marketing

Subscriber count: Subscribers quantify the reach of a newsletter. The goal is to increase the number of people who leave their email address and sign up as readers.
Open rate: The open rate (OR) is usually significantly lower than the number of registered readers. The aim is to find out which ones actually open and (probably) read the email.
Bounce rate: Bounces occur when an email is not delivered. A distinction is made between a hard bounce (caused by technical problems) and a soft bounce (e.g. if the mailbox is full or if the email lands in the spam filter).

Search engine marketing

Click-through rate: The CTR is also used in search engine marketing. For example, if a banner ad is displayed 100 times and clicked on once, the click rate is 1%.
Conversion rate: The conversion rate describes the relationship between website visitors and transactions made. This allows a specific advertising measure to be analyzed. Three different rates are differentiated:
- Click-order conversion rate (number of orders / number of clicks)
- Click-inquiry conversion rate (number of generated inquiries / number of clicks)
- Request-order conversion rate (number of orders / number of generated inquiries)
Contribution margin: Another essential metric for measuring various areas is the contribution margin (DB). A distinction must be made here between single-stage and multi-stage and shows every amount that is available to cover fixed costs.

Affiliate marketing

Revenue: Revenue or sales is the most important metric in affiliate marketing and is influenced by a variety of other metrics.
Net monthly sales: Monthly sales show how monthly sales develop on average over the year. This metric can also be used to evaluate and compare individual months.
Traffic quality: Traffic quality shows whether publishers are developing into long-term and successful partners. Individual measurement values are determined to measure this metric.

Social media marketing

Clicks: This metric measures how often an ad is clicked.
Number of followers: This easily determinable metric indicates how many social media users have subscribed to or are following the account.
Number of comments / reactions: These metrics count the number of comments or the number of likes and are therefore easy to measure.

EXCURSUS: website KPIs

While the above KPIs serve to measure individual online marketing measures, this excursion is intended to illustrate which KPIs are important for a company's website. The website plays a central role in online marketing:

Visibility: If a website is not visible, it will not be found. Professional SEO is used to ensure that the content of a website matches the search queries of potential customers. This means that a website also performs better in search engine rankings.
Number of visitors: Not only does revenue reflect the success of an advertising campaign, but also the traffic generated on a website. The number of visitors is the measure for this.
Bounce rate: If the bounce rate is high, website visitors do not find their preferred content. A bounce is defined as a website being left immediately without accessing any other subpages.

Conclusion

Key Performance Indicators play an essential role in verifying areas and measures in companies. Various activities can be measured for their success or failure using these key figures, comparisons can be made, and necessary changes can be implemented. This subsequently has a positive effect on performance and business success.

Online marketing measures represent a significant advantage since data can be evaluated in detail. Statistics show that the majority of companies are already switching from conventional advertising to online marketing and benefiting from increased profits. However, it is advisable to find a balanced mix of online and offline marketing measures.

Which KPIs are suitable for companies or specific areas must be determined individually. In online marketing, particularly key figures for analyzing customer behavior are important. This article presents an overview of the most essential KPIs in online marketing, divided into common communication formats.

👉🏼 Take a look at our freebies to sign up and receive a PDF document that contains a detailed overview of relevant KPIs in online marketing! The PDF contains a more detailed list of performance indicators, including formulas and information on how to calculate them.