Dear fellow marketers, this is the time to check if you're on top of all the trendy acronyms that one must master to deal with the new media. Here is an interesting list I submit to your expertise: - CTR: Click-thru rate
- CPM: Cost per thousand
- CPC: Cost per click
- Conversion Rate
- ROAS: Return on ad spend
- Value/Cost
- Value/Click
- CPL: Cost per lead
- CPS: Cost per sale
- CPA: Cost per acquisition
- Advertising revenue per visitor
- Visitor to browser ratio
- Shopping cart abandonment
- AVO: Average order
Who's saying marketing is not about measuring the outcome of the investment we're making? I increasingly meet Marketing Executives that are working around the clock to produce meaningful dashboards to their management. Search Marketing is no different and probably paves the way for other kind of marketing activities, especially advertising investments.
The trend though is to focus more on CPA than CPM as after all we're measured on the incremental business we can bring back to our brands. ROAS is a tricky one, I'm leaving you with the formula -- the ROAS provides the amount of revenue responsible from the campaign per dollar invested. For example, an ROAS of $1 means that you are generating $1 for every $1 in ad spend:
ROAS = ((Impressions * CTR * Conv rate * Avg sale) – Campaign Cost)/Campaign Cost
Work your spreadsheet for an interesting Marketing 2.0 journey.
2 comments:
But if your conversion rate is 0, then you will end up with a negative ROAS, which is incorrect. The equation is flawed.
If your conversion rate is 0, first of all you're really in trouble.
Then the formula gives you ROAS=-1 i.e. for every $1 invested, you lost $1 which is right as you didn't convert anything. Negative ROAS do exist. Let's hope you'll never face it.
Post a Comment