Advertising Metrics

There was a time when advertisers ran ads in magazines and on TV and largely had to guesstimate how many people were seeing them. The boon (and sometimes bane) of digital advertising is that we can measure just about every aspect of campaign performance down to the scroll, click and conversion. That adds up to a lot of metrics that we group together under as Key Performance Indicators (KPIs). And most of them are, like KPIs, expressed as acronyms, so it’s easy to get lost in a sea of capital letters as you navigate the digital ad scape.

Our Ad Metrics 101 guide is here to help you decode some of today’s most commonly used KPIs. Of course, KPIs expand and evolve, but have no fear—we update this page frequently, making it a resource you might want to bookmark in your browser for easy reference.

Impressions

What are Impressions?
- An ad impression is the number of times your ad was called by the ad server to be displayed. Not to be mistaken for an ad successfully displaying and/or being viewed by a user, an impression is simply anytime the opportunity for an ad to be served occurs.
Why are Impressions important?
- Impressions are important for a few reasons. The first reason being that the number of impressions a campaign generates provides a simple frame of reference for tracking how many people were likely given the opportunity to see your ad within a particular channel. This number then helps advertisers calculate other crucial metrics, such as Click Through Rate (CTR). The second reason impressions are so important—and controversial— is related to cost. Impressions are the commonly used metric for rate structure; many campaigns are bought on a cost per thousand impressions (CPM) model.. But with the threat of digital ad fraud, bots and tech glitches, an impression does not always equal a successful ad opportunity, which is why most advertisers require additional standards to be set into place like “served impressions” or “viewable impressions.”

vCPM

What is vCPM?
- vCPM (also known as VCPM, CPMV, or CPMv) is a newer metric that advertisers use to measure the number of times an ad is actually seen on screen by users, rather than the number of impressions served. The “v” in vCPM stands for viewability. For example, if an ad is loaded at the bottom of a webpage but a user does not scroll down far enough to see it on their screen, that ad might count as an impression served, but it does not count as being viewable.
vCPM vs CPM
- CPM refers to the cost per 1,000 impressions. vCPM is the cost per 1,000 viewable impressions. The benefit of vCPM pricing to advertisers is that they are not charged for any non-viewable impressions.
How to calculate vCPM?
- So how exactly do you measure viewability? There are two factors set by the Interactive Advertising Board (IAB) that contribute to an ad being viewable. First, for display ads, viewability means a user has seen more than 50% of the ad for longer than 1 second. Second, for video ads, viewability counts as a user seeing more than 50% of the video for longer than 2 seconds. Anything less than that criteria does not count as a viewable impression. .

ROAS (Return on Ad Spend)

What is ROAS?
- Advertising is an investment, and it's important to understand if your investment is yielding any profit. ROAS (return on ad spend), measures how effectively you are investing your marketing dollars. ROAS is measured as a ratio—for example, if your ROAS is 3:1, you’re generating $3 in revenue for every $1 spent on advertising.
How to calculate ROAS?
- Calculating ROAS for a campaign is straightforward—you simply divide the revenue generated by the cost of the campaign. For example, if your campaign has generated $1,000 in revenue, and you have spent $100 in advertising, your ROAS is 10:1. For every dollar spent on this campaign, you generated $10 in revenue.
Why is ROAS important?
- Although it may seem an extra step on top of the dozen other metrics you are likely tracking, there is good reason to track and measure ROAS. Marketing, especially advertising, in essence is a tool to drive sales, not just achieve your target goals of clicks or driving traffic. Although those are great metrics to achieve, your goal ultimately is to make money. ROAS helps you understand what is working and what isn’t when it comes to your advertising strategy. This deeper insight allows you to make better decisions that will hopefully further drive revenue.

If you’d like to dig deeper into ROAS, be sure to check out our ROAS 101 knowledge piece.

CTR (Click-Through Rate)

What is Click-Through Rate?
- Click-Through Rate (or CTR) is a ratio that measures the number of times an ad was clicked per number of times it was served across sites, apps, search results and more.
How to calculate Click-Through Rate?
- Click-Through Rate is one of the easier formulas in the digital advertising world. To calculate CTR, we simply divide the number of clicks by the number of impressions.
  For example: An ad served 100 times and clicked by 12 users, gives us 12/100, which we simplify to either 12% or .12 to get our CTR.
Why is Click-Through Rate important?
- Click-Through Rate is crucial to your campaign’s success and a great way to track performance—and optimize it. Simply swapping out an image or a copy line in a digital ad can change CTR greatly and provide you with important insights on what resonates with your audience. Every click an ad earns is not just useful for your current campaign, but a great best-practice lesson for every initiative thereafter.

If you’d like to dig deeper into CTR, be sure to check out our CTR 101 knowledge article.

CPC (Cost per Click)

What is Cost per Click?
- Cost per click, or CPC, is the amount you pay every time a user clicks on your ad. This is an important metric as understanding the amount you pay to generate a click is vital in ensuring your campaign is generating a healthy ROI. However, there is no “one size fits all” when it comes to considering your CPC. It's important to interpret your CPC by the value being generated, as it's not sufficient to pay for clicks that do not yield high quality results. Focus on which clicks are valuable, and ultimately converting before evaluating your CPC.
How to calculate Cost per Click?
- The formula to calculate cost per click is your total ad spend, divided by the total number of clicks your campaign generates. For example, if a campaign costs an advertiser $100 and they received 10 clicks, the CPC would be $10.

Conversion Rate

What is Conversion Rate?
- Conversion rate helps advertisers understand how well their campaigns are getting users to complete the intended action, such as signing up for a newsletter, submitting a form, clicking through to a landing page, or completing a purchase at checkout. The higher your conversion rate, the better your campaign is performing.
How to calculate Conversion Rate?
- Conversion rate is measured as a percentage, and calculating it is quite simple. Take the total number of conversions divided by the total number of interactions and multiple by 100.
What is a good conversion rate?
- Like most marketing metrics, there's no one size fits all approach when it comes to conversion rate, and conversion rate alone may not be indicative of campaign performance overall. Let's consider a campaign with an extremely high conversion rate (something like 50%), yet when we look closer we see that there were only 4 users who interacted with the ad! In this example, although we’ve seen an excellent conversion rate, there are likely issues with the campaign affecting performance overall. Be sure to examine and consider your traffic sources, traffic quality, and even the campaign goals when evaluating your conversion rate and campaign performance. Remember that quality trumps quantity when it comes to users that convert.

Bounce Rate

What is Bounce Rate?
- Although this is more directed towards web-based analytics, it's important for advertisers to understand bounce rate when looking to optimize their campaign’s success. Bounce rate provides advertisers with information on the behavior of a website’s visitors, and how well the website is engaging them. A user is considered a “bounce” when they leave a website before interacting with the site in some way—such as leaving a comment, submitting a form, or even viewing another page.
How to calculate Bounce Rate?
- Calculating bounce rate is straightforward. To start, take the number of visitors who “bounce” (leave the website after only visiting the landing page and not interacting in any way), and divide by the total number of visitors to the site. For example, if 10 visitors “bounce”, and there have been 100 visitors overall, the bounce rate will be 10%.
Why is Bounce Rate important?
- A high bounce rate on a website tells you that the site may have issues with the content being relevant to the user or with the overall user experience. It's important to consider where you are directing your users when they click on your ad. Be sure that the page relates to the messaging in your ad, has an intuitive UI, your content is optimized for web and mobile screens, and has a clear CTA/conversion path. As a rule of thumb, a bounce rate under 40% is excellent, 41-55% is average, and anything over 70% is cause for concern. Review often. Your audience can’t convert if they immediately leave the page!

We hope that we were able to break down and help you understand some of the metrics and acronyms that you will come across in the marketing and advertising world. Although we may not have covered every single acronym in play today, we encourage you to check back often as we do update this page to reflect the latest terms. Of course if there’s something specific you’d like to see covered or discuss, we encourage you to reach out to us using the form below!