As marketers, it’s crucial to understand marketing campaign performance metrics and how you can adjust your strategy along the way to improve the outcome. When calculating return on investment (ROI), many marketers automatically start to measure key performance indicators (KPIs) in the first month of a campaign. While understanding ROI and KPI in digital marketing is essential, many marketers are guilty of gathering data too soon and cannot provide an accurate measurement of their ROI.
According to a study by Insider Intelligence, fewer than two-thirds of marketers have confidence in measuring ROI across various channels. Avoid being part of this statistic by understanding the key differences between ROI and KPI and when to measure the performance metrics of your campaign.
Key Performance Indicators (KPIs) are the short-term metrics you track throughout a campaign to measure progress toward specific goals. These might include:
Cost per acquisition (CPA)
Conversion rate
Return on ad spend (ROAS)
Sales qualified leads (SQLs)
Return on Investment (ROI) is a high-level metric that looks backward—comparing the total gain from your marketing efforts to the costs. It answers the question: Was this campaign worth it financially?
Think of KPIs as real-time markers that guide your strategy, while ROI is the final score that proves success.
KPI metrics allow you to assess the short-term impact; however, they don’t give an accurate reading of the big picture. Evaluating key marketing metrics is extremely helpful in the initial stages of a campaign and can improve the final outcome.
Digital marketers should regularly measure performance metrics to adjust as needed to improve the result. These metrics are a more forward-looking predictor, whereas ROI metrics mark a campaign’s conclusion and look back at the overall performance.
The key takeaway is not to move too fast. We know that digital marketers are often under pressure from outside players to provide proof of performance to secure future budget asks, and because of that, they’ll measure ROI too early. Measure KPIs and let those metrics guide you to a better result.
Understanding and leveraging KPIs and ROI can make all the difference in driving your strategy forward. Let's explore how to use these metrics to optimize your marketing efforts and achieve tangible results.
By leveraging KPIs and ROI when creating a marketing strategy, you empower yourself to make informed decisions, allocate resources wisely, and continuously refine your approach for optimal performance. It's not just about data; it's about fulfilling the full potential of your marketing endeavors.
Need help using KPI and ROI metrics to drive growth? Download our Top Five KPIs for Data-Driven Marketing Cheat Sheet.