Most Important Benchmarks for Direct Response Ad Campaigns
In our campaign management series, we’ve covered how e-commerce advertisers can test their campaigns, and tips for overseeing direct response (aka lead-gen) campaigns. Now, it’s time to jump into benchmarking and explore its importance to direct response advertisers in measuring campaign success.
First, we want to remind you that there is no secret sauce to creating the perfect campaign. As we’ve discussed in previous posts, the most successful ad campaigns stem from finetuning and understanding your ideal audience. In this post, we want to stress the importance of proper benchmarking for direct response campaigns, because we know that moving potential customers through the marketing funnel can be a long and costly process. Only by establishing clear benchmark goals for different stages in the funnel can advertisers accurately measure their campaign performance and make improvements.
Let’s explore the different benchmarks that you should use to evaluate your campaign at various stages of the marketing funnel.
As soon as your campaign is live, the first benchmark you’ll want to examine is click-through rate (CTR). CTR is a measure of the number of clicks you receive on your ad per number of impressions. As such, it serves as an immediate indicator of your ad’s performance. Having a high CTR is a good thing, but there’s a caveat: a high CTR only means that your ad has resonated with the audience that’s currently seeing it, which is not necessarily the audience you want to engage with. This is why accurate targeting is such an important feature in an ad platform.
Moving further down the funnel, let’s look at bounce rate. Bounce rate represents the people who visit your landing page, but then decide to leave without engaging with it or further exploring your website. This is calculated by dividing the total number of single-page visits on a website by the total number of visits to the entire website over the same period. Advertisers should aim for an average bounce rate of no more than 50%. A high bounce rate indicates room for site improvement, technical issues, or perhaps that your marketing efforts are reaching the wrong customers.
The third metric that advertisers should look at is Cost Per Lead generated (CPL), which is a measure of the cumulative cost of all marketing and advertising campaigns that generated new leads for the sales team. To ensure the meaningfulness of this metric, direct response advertisers should make sure that they buy high-quality traffic. Using a platform that doesn’t offer the right filtering options could result in too many unqualified leads moving through the funnel – and chewing up your advertising budget – without ever converting. As a reminder, an ideal ad platform will allow you to filter by state, zip code, geographical location, etc., so keep that in mind when selecting your advertising partner.
Bottom of the Funnel
Once your leads have reached the middle-to-bottom of the funnel, there are some additional benchmarks you’ll want to turn your attention to.
To begin, let’s explore cost per contact, which represents the total marketing and advertising cost to connect your sales team with one prospective customer, often through a phone call. This benchmark measures the efficiency of a contact center and takes into account several components, including the average number of calls by an agent, the agent’s wages and benefits, and the total number of calls handled by the call center.
The next benchmark to examine is cost per assessment. In the case of mortgage lenders, this is referred to as cost per credit pull and represents the total marketing and advertising cost for running a check on one person’s credit. This cost sits near the bottom of the funnel, and direct response advertisers will only move potential customers to this stage if a successful conversion is well in sight. Another closely related metric is cost per application, which is a measure of the total marketing and advertising cost to get one customer to fill out an application. Continuing with the mortgage lender example, this is when the customer provides their information in an application.
Lastly, the final benchmark to measure success is cost per closed deal. Direct response advertisers view this as the ultimate measurement, since it factors into a company’s overall profit calculation. To illustrate this in simple terms, a lender may make $4,000 once a loan has closed, but this is top-line revenue. To find the profit, a company must consider that it spent $2,000 on marketing and advertising, and then the salesperson received $1,000 in commission, leaving a total profit of $1,000 – the “cost per closed deal” or “closing cost”.
In summary, establishing clear, concise benchmarks allows direct response advertisers to accurately measure ad performance, thus setting up a campaign for success.
Up next in our campaign management series, we’ll explore how content advertisers can maximize their native ad campaigns. Please visit the MediaGo blog often for more campaign tips and advice.