There are several key formulas and metrics used in digital marketing to measure performance and evaluate return on investment (ROI). Here are some of the most commonly used formulas:
Cost per click (CPC) = Total cost of clicks / Number of clicks: This formula calculates the cost of each click on an ad.
Click-through rate (CTR) = Number of clicks / Number of impressions: This formula measures the percentage of people who clicked on an ad after seeing it.
Cost per acquisition (CPA) = Total cost of campaign / Number of conversions: This formula calculates the cost of acquiring one customer through a digital marketing campaign.
Return on ad spend (ROAS) = Revenue generated from campaign / Cost of campaign: This formula measures the revenue generated from a campaign compared to the cost of running the campaign.
Conversion rate (CR) = Number of conversions / Number of clicks: This formula measures the percentage of people who completed a desired action, such as making a purchase or filling out a form, after clicking on an ad.
Customer lifetime value (CLV) = (Average order value x Number of purchases per year x Average customer lifespan): This formula calculates the total value a customer will bring to a business over their lifetime.
Net Promoter Score (NPS) = % Promoters - % Detractors: This formula measures customer satisfaction and loyalty by subtracting the percentage of detractors (customers who are unhappy and may speak negatively about the business) from the percentage of promoters (customers who are satisfied and may refer others to the business).
By using these formulas, digital marketers can better understand the effectiveness of their campaigns and make data-driven decisions to improve their results
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