By the Numbers: Online Ad Glossary for Power Users
American businessman John Wanamaker famously said “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” That was in the 1920s, and he probably had no idea that someday there’d be this wonderful place to advertise called the Internet.
Ironically, it remains a great question today. If we still can’t nail attribution 100%, ad tech has gotten us closer, opening up a world in which almost everything can be measured. But what do the key metrics mean and how can you put them to work? I thought I’d dig a little deeper than the typical glossary with the following guide that breaks them down by major categories and offers insight and tips.
Display ads
They’re the workhorse of digital advertising, typified by banner ads. While not as sexy (or effective, some say) as newer forms, such as high impact ads, display ads are popular and generally used to drive clicks and conversions. Here are the key metrics:
- CTR: Click-through Rate: How often does someone click on your ad? CTR tells us this. It’s a simple formula equal to the number of clicks for each impression (i.e., the number of times the ad is displayed), as a percentage: clicks/impressions x 100. The number seems to matter less, as advertisers increasingly think outside the banner, and get more strategic and nuanced in their ads and metrics. Banners and CTR are all about conversions, or the bottom of the sales funnel. But digital advertising is being used these days to go up funnel and help with things like awareness, education and brand building.
- CPM: Cost per thousand. Again, a simple number, used to explain the cost of an ad, per 1000 impressions. CTR and CPM are long-established metrics that work hand-in-glove. As digital ads evolved, other “cost per” measurement models emerged: CPC (cost-per-click), a performance metric for what you pay every time someone clicks on the ad.
- Engagement Rate and Time: As our phones, desktops and newsfeed spaces have become more cluttered, getting users to ignore other noise and focus on your content or ad has become a key goal. It’s no longer just about drive-by clicks or how many people are exposed to the impression. Engagement has emerged as a key indicator of ad effectiveness Engagement Rate, expressed as a percentage, reflects the number of people that engage with a display ad. Engagement Time, in seconds, is the amount of time in which a user engages with the ad (hovering, scrolling or otherwise interacting).
- Reach: This number complements impressions, described above. It reveals how many unique views there were.
Search
Search advertising is another cornerstone of digital. It fueled the rise of Google and spawned SEO and SEM. The field was among the first to employ an auction approach, in which advertisers bid for keywords that elevate their sites and pages in search results. Despite the emergence of other forms, search ads are still big business. The very act of searching signifies intent, which can be an important buying sign. Here are some of the key metrics:
- Quality Score: It is an index, or score (10 being the highest) that dictates position and pricing of PPC ads. It’s meant to improve ad quality; your ranking in the SERP is tied to the product of Quality Score times bid. In other words, the ranking is not just about the highest bid. The variables are some of the same ones that determine organic search results ranking, e.g. relevance; also, historical CTR (described below) for the keywords and URL in question. This link tells you how to find your score.
- CTR: How often does someone click on your search ad? This metric has the same formula as above, for display ads; however it takes on increased importance as CTR is one of the key factors in determining the quality score.
- CPx: These “cost-per” metrics start at the lowest level (CPC, described above) and ascend based on results delivered (e.g. costs-per-action and conversion). They point to ROI for ads; what does the advertiser need to pay to draw a click, action or conversion?
Video ads
They’ve grown in importance with the rise of visual content. Unlike the first two types, video is often used for brand advertising rather than to drive leads or sales. There is also a wide variety which can add to the challenge – and many differences from traditional TV. Television is often looked to as the Holy Grail of digital: as it is well understood, reaches huge numbers and attracts major brand dollars; however digital video and TV are still vastly different, in terms of how ads are consumed, produced, placed and measured.
- Impressions: How many times did the video ad get served? It seems like a simple question but is actually quite complicated. A lot depends on the channel or publisher where the ads run. Definitions can vary, and viewability is an important aspect. Chief Marketing Tech blog says that you should get smart about impressions for each medium, and also the definitions from MRC and IAB.
- Gross Rating Point (GRP): This is a common measure from the world of TV advertising of the number exposed to spots in the targeted (not total) audience. GRP is expressed as a percentage, and can be higher than 100%. E.g. an ad served 10 times that reaches 50% of the target audience has a GRP of 500 (10 x 50%).
- Viewability: An online ad metric that counts only impressions that can actually be seen by users. It’s a controversial area, as many feel that advertisers do not get all of the viewable ads they have paid for. Industry bodies like MRC have issued guidelines to help out.
- View-through Rate (VTR): As the name implies, this is the percentage of viewing sessions that reach the end of the video. Cost for completed view is a model in which the advertiser just pays for these vs. impressions. Cost-per-view, on the other hand, is based on video starts, for every 1000 impressions.
Native ads
They are designed to blend in with other content and not look like ads. There are many types and varying objectives for native ads (e.g. branding, education and thought leadership), so measurement and KPIs can vary too. Most agree that standard measures like CTR, reach and impressions are not as useful. It is important to look at each piece, and the intended effect on the buyer journey. Are visitors reading a blog post until the end, and taking the CTA? Are they engaging with a native ad?
- Brand lift: An increase in brand interaction from a native advertising campaign pointing to results like improved customer awareness and perception. The Hot Mob blog cites an ANA survey that confirms the importance of this metric for publishers; but there is a lack of standards for measuring brand lift.
- Engagement metrics described above, under Display Ads, can be helpful here too.
- Performance metrics quantify conversions like sign-ups and purchases.
Mobile ads
Advertisers are spending more on mobile ads in order to reach people where they’re spending more of their online time, and need ways to target audiences and measure effectiveness. While the same types of metrics apply, there can be important differences due to the unique characteristics of the mobile ecosystem and type of ad (e.g. browser vs. in- app).
- Cost-per-install (CPI): The amount paid across campaigns to gain an app installation on a mobile device. CPI equals ad spend divided by number of installations.
- Engagement: Apps are generally considered to be more engaging than mobile web interaction. The types of engagement metrics for mobile apps can differ from other types of content and web sessions: e.g. Average Session Duration and Session Intervals are important: how long users spend with an app, and time between sessions, respectively.
- Viewability: Digiday cautions that viewability numbers for apps are underreported due to lack of integration between measurement solutions and publisher apps. The article suggests that those seeking to evaluate video ads on mobile distinguish between Web and app ads; and offers ways to improve accuracy for measuring viewability for apps.
Programmatic
As explained in this post on our blog, programmatic advertising automates the process of buying and selling ad space. It’s become somewhat controversial due to brand safety challenges, but continues to grow. In many ways, programmatic is a poster child for ad tech. It is evolving from its roots as a tool for direct response campaigns and lowering media spend to something more strategic. Is programmatic delivering? A story on measurement firm comScore’s blog shares interesting results in key areas:
- Brand Metrics: Programmatic does move the needle on purchasing intent, and has the potential to go up the funnel and boost metrics such as awareness and message recall.
- Campaign Delivery: Programmatic has issues with viewability and invalid traffic rates compared to direct ad buys, especially with video inventory. You need to validate impression delivery to evaluate campaigns, as is the case with mobile app ads, explained above.
Social Media
Like mobile, social media promotion is growing. It gives brands a way to build online presence, extend reach and target audiences with pinpoint accuracy. A challenge is that each platform has its own quirks, dashboards and ways of measuring and achieving success. This Wall Street Journal article points out that the major platforms can’t even agree on the most basic metric, number of users (Facebook is the one to beat with 2.01 billion; Twitter and Snapchat are slugging it out for second place – but they use different methods to count). The social networks capture extensive data about users: their activities, preferences, locations – and this data is increasingly being combined with external information to aid targeting efforts. Solutions like Perion MakeMeReach help ensure success across the major platforms.
Many of the same types of metrics cited earlier apply here too. They can be used to support a number of objectives, according to this StrikeSocial post:
- Conversions: This is a concrete business result such as an app install, sale, website registration or content download.
- Cost-per-view (CPV): is the amount an advertiser pays, in a bidding process, for a view of video content. CPV, along with View Rate (paid views divided by impressions), Views and Impressions aid brand and awareness building.
- Engagement metrics: Likes and clicks (as measured by CTR) take you past views and indicate engagement, a step toward building relationships with users and driving other results like website traffic.
Roee Ganot
Senior SEO & Conversion Manager at Perion
Roee is an SEO, social and conversion expert with a strong performance-based marketing portfolio behind him. As a brand reputation specialist, he has proven success when it comes to revenue, traffic & football trophies.
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