Metrics for Analyzing the Effectiveness of Digital Marketing

Yaroslav Tryboi

The advantage of digital marketing is that the actions of buyers can be tracked at different stages of the Sales Funnel. With the help of metrics and data collection, marketers have learned to calculate the effectiveness of their decisions. Data analysis allowed us to understand the target audience’s actions better and create more effective real-time advertising messages. This article is written for entrepreneurs who are just starting their businesses and want to understand the general state of affairs.

digital marketing analytics kpi

This article will focus on the leading digital marketing tools and basic metrics that allow you to analyze the success of any marketing activity. The main tools that will be discussed in the article: are Google Ads, SEO, SMM, and email marketing.


A sales funnel is a general scheme of how buyers interact with your business. In simple terms, this is the buyer’s route and the roadmap of your business through the eyes of marketing.

The classic sales funnel consists of four stages:

  1. Awareness
  2. Consideration
  3. Conversion
  4. Loyalty

It can be described as follows: a customer sees your ad, visits the site and compares you with competitors, makes a purchase, recommends you, or re-buys your service/product.


What are SEM, SEO, and PPC?

SEM (Search Engine Marketing) is the process of generating traffic to a website. SEM includes search engine optimization (SEO), search engine promotion (content marketing), and PPC advertising (Google Ads).

SEO (Search Engine Optimization) is a set of practices aimed at improving the ranking of a website in search results and increasing the quantity and quality of traffic to a website from search engines.  First of all, due to implementing the technical recommendations of search engines. SEO includes optimization of code, media files, and text content.

PPC (Contextual Advertising) is advertisements in search engines that are shown in accordance with the user’s request.

What is Content Marketing?

Content marketing is a strategic marketing approach in which content is created and distributed to attract customers to a product or service without overtly advertising the product. Content marketing aims to increase awareness of and engagement with a brand.

What is SMM?

SMM (Social Media Marketing) is marketing on social networks. A brand can explore and communicate with its audience through social media in real time. Social networks allow you to attract high-quality traffic to the site and help brands maintain the interest and loyalty of the target audience.


What is Net Promoter Score (NPS)?

Net Promoter Score (NPS) measures customer loyalty and helps predict future brand engagement. The NPS rating is determined using surveys and a rating scale from 1 to 10.

Example. After purchase, you email the customer asking, “How is your purchase from us?” with a scale from 1 to 10.

Thus, you can evaluate the buyer’s experience and demonstrate to him your attentiveness and interest in quality service. If a person replies to an email, they are probably interested in your brand, which means you can continue interacting with them through email marketing.

What is UGC, and why is it important for a brand?

UGC (User Generated Content) is non-paid user-generated content such as reviews, ratings, likes, reposts, and more. With the advent of social media, UGC has become an important yardstick and a new brand asset. Search engines increasingly consider UGC indicators when ranking a site, so SMM is becoming an integral part of any active business.

What is a SWOT audit?

SWOT (strength, weakness, opportunity, threat) is an internal brand audit to develop an email marketing strategy. The audit includes brand strengths, weaknesses, opportunities, and threats.

What is a PESTLE audit?

A PESTLE audit examines the external context of a brand to develop an email marketing strategy. PESTLE comprises six areas: political, environmental, social, technological, legal, and economic.

What is a KPI?

KPI (key performance indicators). Usually, it is clear and simple data that can be measured over a certain period.

5 classic performance indicators:

  1. Increasing the reach of the target audience.
  2. The attraction of new clients.
  3. Upgrading UGC user-generated content (reviews, recommendations, likes, reposts, etc.).
  4. Increase in the number of repeat purchases.
  5. Increasing brand awareness and trust.

What are SMART Goals?

SMART Goals help businesses define and measure the success of advertising campaigns related to business goals. It stands for: Specific, Measurable, Achievable, Realistic, and Time-limited goals.

What should a small business do at the start?

A 20% increase in the effectiveness of marketing activities is a great initial goal for a young business that does not have any customer data.


How much will I need to spend on advertising?

Advertising budgets are individual and depend on many factors. The calculation is done considering your goals (SMART goals and KPIs). Tetta Studio recommends that young businesses start with minimal budgets to obtain the first data and build a further strategy based on them. The easiest way to determine the budget for advertising is to take 10-20% of the revenue.

Experienced companies calculate 1/3 of the expected income as a basis. For example, you know that 1 visitor out of 100 purchases $200. You set yourself the goal of making $50,000 in revenue per month. It means that we must attract 25,000 visitors to the site, 250 of which must purchase $200. In this case, we divide 50,000 by 3 and get $16,666. In this case, our optimal advertising budget is $16,700 per month.

How to calculate Gross Profit?

You bought a smartphone for $400

Sold it for $1000

Your net profit: 600$

Gross Profit Formula: (600/1000 = 0,6)*100 = 60%

What is a Conversion Rate?

The conversion rate is the percentage of site visitors who complete the desired action. A typical conversion rate for an e-commerce business is 1-2%. According to statistics, out of 100 site visitors, only 1 makes a purchase.

As traffic and conversions are received on the site, the coefficient is calculated individually according to the formula: the number of conversions is divided by the total number of interactions and multiplied by 100.

For example, out of 1000 visitors, you received 50 orders.

We use the formula: (50 ÷ 1000) * 100 = 5. In this case, the conversion rate is 5%.

How is CTR (Click Through Rate) calculated?

CTR (click-through rate) shows the ratio of the number of clicks on an advertisement to the number of users who saw the advertisement.

CTR is calculated using the formula: total ad clicks / total ad impressions * 100%.

Example: your ad was seen 4000 times, but only 2140 people clicked.

СTR = 2140 / 4000 * 100% = 0.535

How to calculate ROI (Return on Investment)?

To calculate the return on investment and the payback ratio, you need to use the formula:

ROI = (income – investment) / investment × 100%

Example: You spent $100 on Facebook ads + $20 on banner design. As a result, you earned $650. Using the formula, we get: ROI = (650 – 120) / 120 × 100% = 442%

In this case, the payback of the advertising campaign is 442%, and each dollar spent brings $4.42 extra.

How to calculate ROAS (Return on Ad Spend)?

The ROAS formula looks like this:

ROAS = total conversion value/ad spend

Example: the task is to calculate ROAS for 14 days. During this time, $5,500 was spent on advertising, and 340 clicks were received, 115 of which bought the product for $100.

Total conversion value: $11,500 ($100×115)

ROAS = 11 500 / 5 500 = 2,09 или 209%

Based on the formula, in 14 days, the investment in advertising paid off by 209%, and each dollar spent on advertising brought in an additional $2.09.

How are efficiency calculations done?

Any modern e-commerce platform or website can export the collected data in a spreadsheet format. Microsoft Excel or Google Sheets is the easiest way to measure metrics.

When attracting customers using social networks, you can record the results of advertising campaigns in the publication calendar, calculate their effectiveness, and visualize the data using graphs.

Collecting and analyzing data allows you to optimize your marketing tools and spend your advertising budgets more efficiently.