One of the most important things to do when building a business is set yourself up for success, but sometimes success is hard to define. Let’s talk about what the right KPIs (Key Performance Indicators) for your business are and then define some benchmarks.
KPIs (Key Performance Indicators)
Most of the time retargeting is used as a performance media tactic; two of the most commonly used KPIs to measure performance are Cost Per Acquisition (CPA) and Return On Investment (ROI). Normally a business that sells goods will use an ROI model and a business that sells services will use a CPA model. This can definitely change under certain circumstances.
However, companies don’t always just focus on ROI or CPA. Businesses that are more focused on upper-funnel marketing will likely have goals such as driving awareness, promoting in-store purchases, or increasing site traffic. These businesses may focus on KPIs such as increasing reach by maximizing the number of impressions or clicks, while minimizing their CPM (cost per 1,000 impressions) or CPCs (cost per click).
Sometimes it is difficult to choose only one KPI. Some businesses may want to drive a specific CPA, but also want to increase their reach by maximizing their impressions. In order to achieve this, create separate campaigns with specified budgets and a single KPI for each.
Now that you have chosen a KPI we need to set the benchmark or goal. What number do you need to hit to be profitable?
If your KPI is CPA, then you will need to look into your books and find out how much you are willing to pay for a new customer. What is the lifetime value of a new customer? Or, start small and ask yourself, what is the value of a customer if they only use your service once? Then determine what the retention rate is for customers that have used once and have become returning customers. These answers will help you determine your customer lifetime value. It is okay if your numbers are a little fuzzy here since you are using this number as a starting point.
If your KPI is ROI, things are simpler. You can usually start at $1.00 ROI, meaning you spend a dollar you make a dollar in revenue. Anything above $1.00 ROI will be viewed as profit. If you have specific margins on the cost of your product then you may want to take that into account as well.
Now that you have defined a KPI for your business and a benchmark you want to hit, there are a few ways you can utilize Perfect Audience to see how we are hitting those KPIs and Benchmarks:
Assigning Revenue Value in Perfect Audience
Ensuring you have a conversion set up properly in Perfect Audience is critical for executing a successful campaign. There are a few things to consider here. If your KPI is a certain CPA, then you can assign a Revenue Value to each conversion while setting up your goal using the process above.
You can assign a Revenue Value by going to Manage > Conversions > Editing a Conversion Goal.
Calling in Dynamic Revenue in Perfect Audience
If your KPI is ROI, you will want to pass your revenue back to us dynamically. When placing your site tracking tag on your website, make sure to include the “pa.revenue” portion. Perfect Audience will apply the appropriate revenue value to each conversion, and display the total in your dashboard. When you hover over the revenue value you can easily see the Post-Click and Post-View value’s broken out. You can quickly see your revenue at a glance and compare to the cost of the media.
Read more about calling in revenue dynamically here.
Adjusting Attribution in Perfect Audience
Another thing to consider when setting up your conversions is your attribution settings. You can set different conversion windows and attribution rates for CTC and VTC. These will be applied to your aCPA in the dashboard. Keep in mind that your aCPA accounts for your attribution settings. For example, if you choose to give 50% attribution to VTCs, we’ll reflect that in your numbers. You can also hover over the CPA to see the Post-Click CPA at a glance. This can be a helpful indicator of your percentage of Click to View conversions.
Sort Function in Perfect Audience
Utilizing the sort function can help prioritize high CPA campaigns with one touch. Just click on the column heading and it will sort from highest to lowest CPA. You can easily manage your budget by moving money to the campaigns with lower CPAs. In the example below the weekly budget is higher for the most efficient campaigns.
Once you have launched your campaign and gathered some data, you can refine your benchmark. If you set your KPI too high and you are not meeting your goal, you may need to optimize toward achieving those goals. If you are still not able to obtain the goal, you may need to consider whether or not you’ve set it too aggressively.
Always remember it is important to define your goals prior to launching a campaign.