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# Online Marketing Metrics: How to compute them

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Ever wanted to compute your conversion rate or cost per acquisition? Don't worry it's not as difficult as it sounds ...

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### Online Marketing Metrics: How to compute them

1. 1. AARHUS UNIVERSITYCOMPUTATION OF INTERNETMARKETING METRICSJacob L. Orquin, Ph.D.Department of Business AdministrationAarhus University ASB AU MAPP
2. 2. AARHUS UNIVERSITYCONVERSION RATE (CR)DefinitionThe conversion rate is the percentage of visitors who comply with one ofthe business goals, i.e. make a transaction, download a whitepaper, signup for a newsletter etc.ComputationCR = conversions / visitorsExample100 conversions / 2000 visitors = 0.05 -> conversion rate is 5% ASB AU MAPP
3. 3. AARHUS UNIVERSITYCLICK THROUGH RATE (CTR)DefinitionThe CTR is the number of people who click on an ad, such as a banner or apaid placement in adwords or another content network.ComputationCTR = visitors / ad viewsExample100 visitors / 4000 ad views = 0.025 -> click through rate is 2.5% ASB AU MAPP
4. 4. AARHUS UNIVERSITYCOST PER CLICK (CPC)DefinitionThe CPC is the price you pay for acquiring one visitor to your website.ComputationCPC = total ad spend / visitorsExample\$500 / 200 visitors = 2.5 -> cost per click is \$2.5 ASB AU MAPP
5. 5. AARHUS UNIVERSITYCOST PER MILLE (CPM)DefinitionCPM is the price you pay for a thousand exposures of a ad, such as abanner advertisement on, for instance, a content website.ComputationCPM is typically negotiated between the content website and theadvertiser but could hypothetically be computed as:CPM = (ad spend / ad views) * 1000Example\$100 / 20.000 ad views * 1000 = 5 -> cost per mille is \$5 ASB AU MAPP
6. 6. AARHUS UNIVERSITYCOST PER ACQUISITION (CPA)DefinitionCPA is the price you pay for acquiring one customer or one conversion. TheCPA is sometimes negotiated betwéen an affiliate partner and theadvertiser.ComputationCPA = ad spend / conversions (alternatively: CPA = CPC / CR)Example\$1000 / 200 conversions = 5 -> cost per acquisition is \$5 ASB AU MAPP
7. 7. AARHUS UNIVERSITYRETURN ON INVESTMENT (ROI)DefinitionThe ROI is the percentage of return on a given investment. If you invest\$100 and get \$200 back that corresponds to a ROI of 100%.ComputationROI = (return – investment) / investmentExample(\$100 - \$80) / \$80 = 0.25 -> return on investment is 25% ASB AU MAPP
8. 8. AARHUS UNIVERSITYCONTACTJacob L Orquin, Ph.D.Department of Business AdministrationAarhus UniversityE-mail: jalo@asb.dkCheck out my company:www.userpilot.dk ASB AU MAPP