Our POV on Search Engine Land's 5 Outdated KPIs
We recently read this article by Ben Vigeron about 5 Outdated marketing KPIs in Marketing. It’s a great read, and so is Ben (and the Blackbird PPC team)
I wanted to share our POV at Pennock on the 5 outdated metrics called out, which include:
Spend
Platform CPA
Click-based CPA
Average CPA/Average ROAS
Lost Impression Share (search ads)
Bad KPI: Spend
100% alignment here, don’t run paid media just to spend. Fire anyone who talks this way!
If you are going for awareness measure some level of engagement (likely not CPM). ARR, thumb-stop rate or hold time would be best.
If you are after consideration you can go after engagement metrics. You cal also go after traffic with CPC or CTR.
And finally for conversions, focus on CAC, ROAS, or CAC to LTV etc.
A core tenet of digital marketing is that the more conversions you get, the more expensive they are, so you’ll have to decide whether your first goal is improving efficiency or driving scale.
2. Bad KPI: Platform CPA
I agree 50% here. If you have an MMM and attribution tool like Rockerbox, Northbeam, or TripleWhale, use that for NC CPA instead of platform CAC. That said, the platform is always the second best. Figure out what sources generate the highest LTV as a third layer of knowledge and collectively this is going to get you to a really health spot.
3. Bad KPI: Click-based CPA
When we think about CPA (or CAC) it’s calculated off of something like first-click, last-click, cookie, or UTM-based. Click based ignores the contributions of impressions-based advertising campaigns, whether it’s a YouTube a, a programmatic ad or a billboard you sponsored on a highway near one of your target geos.
True CPA is based on incrementality, which implements things like the halo effect, brand lift testing, geo lift testing, etc.
As best you can, run these impression based initiatives in test locations so you’re not curtailing entire campaigns while you assess their effects and calculate the incrementality of them.
4. Bad KPI Average CPA/Average ROAS
This is hard because we use “blended ROAS” and “blended CAC” for our first line of understanding for all accounts.
Ben suggests Marginal ROAS and CAC. When you’re using Marginal metrics, you’re really trying to figure out what you paid to acquire marginal returns – which means you’re calculating the return on each conversion, not just assuming you pay the same or get the same for all new customers.
Let’s illustrate this with a simple scenario: say you’re taking an average CPA from Facebook ads, which brought in a mix of expensive and cheaper customers, all worth roughly the same revenue amount.
If you take the average CPA, you might see that you spent $2 to acquire a new customer, whereas marginal CPA might show that you converted a bunch of new customers at $1.50 and a handful at $8.
I think a great media planner is going to set expectations upfront with each monthly plan on what can be expected for each funnel position, so you are kind of in the clear if you still look at blends or averages within your media plans. I also believe looking at MER and ACOS is going to be a game changer, which is also a blend.
So sorry, Ben, I disagree here!
5. Bad KPI: Lost Impression Share (search ads)
I’m aligned that Impression share lost to budget (search) is better
If you are running search campaigns and want to lower spend, there are two main ways to do it.
You drop bids or targets to decrease CPCs.
You lower the campaign’s daily budget, which forces the campaign to turn off for portions of the day.
When you make adjustments to your bids or targeting and experience a dip in impression share, opting for a lower Cost Per Click (CPC) can be a strategic move. This adjustment can unlock more clicks and conversion opportunities without inflating your budget.
I've observed some brands pursuing bidding strategies with aspirations of securing a whopping 90% of available impression share (IS), granting Google permission to charge a premium for this privilege.
In such scenarios, a shift towards manual CPC targets with a more modest aim (even if it means sacrificing some impression share) can swiftly enhance overall performance and efficiency.
Now, let's talk budgets. When you reduce your campaign budget, it may exhaust the daily allocation and temporarily pause the campaign. While this may reduce overall spending and impression share, it maintains the same level of efficiency. Therefore, it's wise to keep your budgets at an adequate level and manage spending through judicious bids and efficiency targets.
Embracing this "scale vs. efficiency" mindset carries profound implications for your campaigns.