By: Chris Ridley, Head of Paid Media at Evoluted
Are your PPC campaigns truly aligned with your business goals? It's a common challenge for marketers to hit their targets, only to find out that the results didn't translate into meaningful business outcomes. If you've ever felt this disconnect, you're not alone.
Aligning your key performance indicators (KPIs) with your business objectives is crucial for ensuring that your marketing efforts are driving real value. When your KPIs are in sync with the bigger picture, you can make informed decisions, optimize your campaigns, and ultimately achieve better results.
In this post, we'll explore how to bridge the gap between your PPC KPIs and your business objectives. We'll discuss the importance of understanding your business's financial goals, calculating your break-even point, and factoring in all relevant costs. By the end, you'll have a clear framework for setting KPIs that truly reflect your business's success.
Before you can set effective KPIs, you need to understand your business's financial goals.
What are the revenue targets?
What profit margins are expected?
What are the acceptable customer acquisition costs?
These are just a few of the questions you need to answer to ensure your PPC campaigns are working towards the same goals as the rest of the business.
Your break-even point is the minimum amount of revenue you need to generate to cover your costs. This is a critical metric for understanding the financial viability of your PPC campaigns. To calculate your break-even point, you'll need to factor in all your costs, including ad spend, agency fees, software subscriptions, and any other relevant expenses.
Many marketers overlook hidden costs when setting KPIs. These can include software subscriptions, taxes, refunds, and cancellations. By factoring in all relevant costs, you can get a more accurate picture of your campaign's profitability and make more informed decisions about your budget and bidding strategies.
To help you bake your business objectives into your KPIs, here are some essential formulas:
Overall Costs: Ad Costs + Outsourcing Rates + Salaries + Software Subscriptions
Expected Sales (Lead Gen): Number of Leads * Lead-to-Sale Conversion Rate
Revenue: Expected Sales * Average Order Value * (1 - Refund/Cancellation Rate)
Return on Investment (ROI): (Revenue / Overall Costs) - 1
Estimated Profit: Revenue * Profit Margin - Overall Costs
Profit Over Investment (POI): (Estimated Profit / Overall Costs) - 1
Don't be afraid to ask questions and gather information from different departments within your company. Talk to the finance team to understand profit margins, the sales team to learn about lead conversion rates, and anyone else who can provide insights into relevant costs and metrics. The more information you have, the better equipped you'll be to set KPIs that drive real business results.
By aligning your PPC KPIs with your business objectives, you can ensure that your marketing efforts are contributing to the bottom line. Remember, it's not just about hitting arbitrary targets; it's about driving meaningful growth and achieving long-term success.
Chris Ridley is Head of Paid Media at Evoluted. After nearly 10 years in the hospitality industry learning about customer service, personnel management and the difference between a lager and an IPA, Chris took the leap into digital marketing.
Over the last 5 years, he has come from being a marketing executive in a family-run stockholding company to leading the Paid Media team and promoting positive wellbeing within Evoluted.
Chris lives in Worcestershire with his wife Bex and their cocker spaniel puppy, Reggie. In his free time he enjoys setting PBs at parkruns, playing board games and watching NFL. Chris & Bex are expecting twins in November, and couldn't be more excited.
You can find him on LinkedIn