Marketing KPIs and Metrics

By: EconomyWatch   Date: 30 June 2010

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This section covers some key marketing KPIs (key performance indicators) and metrics, including Cost of Sale (CoS), Reach, Frequency, Engagement, Impression/ Exposure/ OTS, Gross Rating Point (GRP), Target Rating Point (TRP) and Share of Voice (SoV).

Metrics: Cost of Sale

The Question:

How much have my marketing costs been for a sale?

Approach:

Calculate directly attributable costs plus unit share of fixed costs or share of Activity-Based Costing

Commentary:

Cost of Sale can be measured very accurately with online media, direct mail and telemarketing, but is hard to quantify with significant Above The Line activity.

The Formula:

Cost of Sale ($) = Direct Costs ($) + (Fixed Costs ($)* 1/Units Sold)

Cost of Sale (%) = Costs ($) / Revenue Generated By Sale ($)

Metrics: Reach, Rating Point (RP)

The Question:

How much of a market is exposed to a particular medium?

Approach:

Percentage of market that are exposed to the medium

Commentary:

A key measure of the value of an advertising partner. It helps us to understand extent of people who will be exposed to a medium in a stated time period: consumes at least x minutes per week (TV, radio), reads/ visits at least once per month (print, internet) etc

The Formula:

Reach (people) = Relevant Audience of Media

Reach (%) = Relevant Audience of Media/ Total Market

Rating Point (I)= Reach (%)

Metrics: Frequency

The Question:

How many times will my advertising be seen?

Approach:

Number of times a market/ segment/ individual sees an ad

Commentary:

Advertising studies show that there is an optimal number of times to expose someone to an add. Too few and there is no impact, too many and there is no incremental revenue/ awareness gained. Measured by market (ATL) or by individual (DM, online)

The Formula:

Frequency = Number of times ad seen by market, segment or individual

Metrics: Engagement

The Question:

How actively am I engaging with my target audience?

Approach:

Interaction or time spent levels

Commentry:

Its one thing to see an ad and forget about it, its another to read about it in details, tell my friends, play a game, blog about or tweet it.

The Formula:

Engagement= Has no specific agreed measure. Can be: # pageviews per user, time spent on site/ on ad/ playing game, # of downloads, blog comments, re-tweets etc

Metrics: Impressions, Exposure or OTS

The Question:

What is the audience for a media 'insertion'?

Approach:

Potential audience measurement depends on the media

Commentary:

Impressions, exposure and Opportunites-To-See (OTS) are the 'atoms' of media planning. Every ad has a planned number of exposures. (We handle GRPs and TRPs in the next slide - These are used mainly for TV and raio.)

The Formula:

Impressions = Exposures = OTS = Reach (#) * Frequency (#)

Metrics: Gross Rating Points (GRPs)

The Question:

What percentage of my audience is reached by an advertisement?

Approach:

Reach of ads x frequency of ads

Commentary:

A key pre-internet measue to understand how widely an ad should have been viewed by my audience. Measures exposure to audience as a whole, not segments or individuals – hence Gross Ratings Points.

The Formula:

Gross Rating Points (GRPs) = Reach (% of audience) * Frequency (# of exposures)

or

GRPs = Impressions (#) / Defined Population (#)

Metrics: Target Rating Points (TRPs)

The Question:

What percentage of my target segment audience is reached by an advertisement?

Approach:

Reach of ads x frequency of ads x percentage of target audience in gross audience

Commentary:

Take GRPs to a more granular level. A gross media audience will only contain a percentage of a relevant or target audience.

The Formula:

Target Rating Points (TRPs) = Reach (% of audience) * Frequency (# of exposures) / Target Audence (% of Reach)

Metrics: Share of Voice (SoV)

The Question:

What is my share of any particular ad market?

Approach:

Measure our advertising as a share of total advertising

Commentary:

Can be used across entire channels (TV, print etc), on specific media (ChannelNewsAsia, Straits Times, yahoo.com.sg etc), or on specific programs or sections (News Tonight, Entertainment etc). Less effective in multi-media formats; purchase price may not be a good measure of share of exposure, which is the aim of SoV

The Formula:

Share of Voice (SoV, %) = My ad units/ Total ad units


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