Inside Google Marketing: How we measure the bottom-line impact of our advertising campaigns
Here, the x-axis indicates when a metric becomes useful. For example, impressions are available and useful in real time. Some elements of customer lifetime value are also available in real time, but it takes months for them to be useful. Organizing advertising metrics in this way helps to classify which ones to pay attention to and when.
The y-axis above — on a logarithmic scale to sharpen its value — indicates whether a metric is tactical or strategic. Sticking with the same examples, impressions are super tactical and add, at most, pennies of value to any decision made. Customer lifetime value, on the other hand, is super strategic. The insights gleaned from this metric can add hundreds of thousands of dollars of value to any decision made.
Once you’ve classified your marketing metrics in this way, your reports and dashboards will be cleaner, your marketers will have 50% less data to wade through, and your analysts will have 50% more time to spend on carrying out analyses (as opposed to just data puking).
2. Choose KPIs with business objectives in mind
Marketers often use the terms “metrics” and “key performance indicators” interchangeably, but they are entirely different things. As I’ve explained in the past, a KPI is a special kind of metric that helps you understand how you’re doing against a specific business objective.
The reason it’s important to remember this distinction is that, when we don’t, we can end up setting KPIs that don’t actually tell us if a marketing campaign is helping us hit our business goals. Why? Sometimes we’ve chosen a metric because it’s easy to measure, other times we haven’t taken enough time to think about what we’re really trying to achieve.
That’s why my team took all the marketing metrics we track at Google and worked out which ones make the most sense as KPIs for different types of campaigns. We then ranked them in order of effectiveness, with gold being the best of the bunch.