CPA (cost per action), CPO (cost of the order), DDR (share of advertising costs) and ROI are key metrics of performance measurement for eCommerce

Performance marketing implies a clear and measurable assessment of all promotional activities. Mainly, experts use several metrics that clearly show the effectiveness of advertising campaigns: CPA (cost per action), CPO (order value), DDR (share of advertising costs) and ROI (return on investment). Each of the indicators is useful in the work and, of course, has its pros and cons.

Key metrics can be calculated by the generally accepted formulas:

CPA (Cost per action) - the cost of the target action.

Formula:

CPA = Amount of advertising costs / Number of actions

CPO (cost per order) - the cost of the order

Formula:

CPO = amount of advertising costs / number of sales

DRR (share of advertising expenses)

Formula:

DRR = Advertising Costs / Advertising Profit * 100%

ROI (return of investment) - return on investment

Formula:

ROI = (Revenue generated by advertising - advertising costs) / advertising expenses * 100%

Special attention should be paid to the DDR indicator, which is particularly popular in Russian marketing. This metric is similar to ROI and shows the ratio of all costs and money received from advertising. Since the DDR directly affects the real turnover and provides the most objective assessment of the effectiveness.

Let's look at an example

During the reporting period, the organization invested 10,000 rubles in advertising: in addition to the budget for spin-off, this amount included creating creatives and setting up an advertising campaign. The organization received 30,000 rubles of profit from attracted clients.

DRR = (10,000 / 30,000) * 100% = 33%

That is, the company spent on advertising campaign 33% of its income.

However, in real life, calculating the DDR is a complex and time consuming process. It is required to take into account all the expenses and revenues, which in fact can be many: all orders from the site, purchases in the offline store, calls, design, payment for the services of specialists, the cost of special events and advertising settings. To help marketers come services that integrate with web analytics systems - Google Analytics, Yandex.Metrica, and also take into account the data of call-tracking services. Our agency uses the K50 Statistics and Optimizer platform for these purposes. The system monitors the progress of advertising campaigns, evaluates the quality of work through several channels at once, and analyzes the traffic received.

KPI is a quantitative assessment of the quality of work performed. Metrics should reflect the effectiveness of the advertising campaign in exact figures and form the basis of a further promotion strategy. Monitoring key performance indicators helps businesses achieve their goals in advertising and sales.

see also

KPI

ROI

LTV (Lifetime Value)