CTR vs CPA: How to Determine The Right Success Metric for Your Campaigns
When setting up a new marketing campaign on any channel, one of the first items that needs to be identified is the KPI you will be measuring success against. These metrics will vary based on a variety of factors, including the goal of the campaign, the channels you are using, and even devices targeted.
Example Key Performance Indicator (KPI)
For example, top of the funnel channels such as Digital Out of Home (DOOH) and Audio are focused more on building brand awareness and may not have an obvious opportunity for immediate engagement when compared to something like display. In that case, the KPI for an audio campaign might be measured in terms of unique reach or completion rate for audio, or even foot traffic attribution for DOOH. KPIs for video and CTV campaigns, on the other hand, would be more focused on viewability, impressions, and even video completion rates (VCR).
Video: Impressions, CTR, Video Completion Rate (VCR)
CTV: Viewability, Brand Lift, Impressions, Video Completion Rate (VCR)
Audio: Unique Reach, CTR, Completion Rate
Digital Out of Home (DOOH): Unique Reach, Foot Traffic Attribution
In-Email Display: Impressions, CTR
Click Through Rate (CTR)
Click through rate, or CTR, has been considered the performance benchmark for digital advertising campaigns for many years, and yet as you can see from the list above, it is just one measure of campaign success.
From industry to industry, and even campaign to campaign, there is debate regarding what constitutes a “good” CTR. But CTR is not always the best success metric for advertising campaigns.
CTR specifically measures how many people clicked on a particular ad. If you are only focused on people clicking on an ad, you aren’t actually judging performance beyond the click. This may be a better judge of how attractive or effective your banner ads are, as opposed to actual ROI for your advertising campaign.
If a consumer clicks on an ad but doesn’t convert, do you still care about that interaction? At the same time, if no one is clicking, it might be time to take a closer look or get more innovative with your creative assets.
Cost Per Action (CPA)
An alternative to CTR is CPA, or cost per action, also known as cost per acquisition, which is a metric that measures the cost of acquiring a new lead or customer. Rather than focusing on how many clicks you have, CPA focuses on actual conversions. If you are interested in ROI or ROAS (return on ad spend), and how your marketing efforts are impacting the bottom line, CPA can be a better way to track your campaign performance than CTR.
Calculating CTR vs CPA
Calculating CTR: The click-through rate is the number of clicks divided by the number of impressions, and is expressed as a percentage.
For example, if your campaign had 100,000 impressions and generated 2,000 clicks, your CTR is 2000 / 100,000 = 0.2 = 2%. Your CTR is 2%.
Calculating CPA: This is the amount that an advertiser has paid to reach its objective, which could be leads, sales, downloads, etc. It is calculated by dividing the total cost spent on your media by the number of conversions completed.
So, for example, If you spent $10,000 on online media and from that completed 1,000 sales or conversions, your CPA is $10,000 / 1,000 = $10.
When to Use CTR vs CPA
Although both CTR and CPA help advertisers measure the success of their campaigns, it’s important to remember that they are used to measure different aspects of those campaigns. CTR is generally used to understand how well a brand awareness campaign is performing in terms of driving clicks. If you want to know how well people are responding to your creative, this is the best metric to measure. Display ads that are interesting and eye-catching will likely have a higher CTR because consumers might be interested in clicking to learn more.
CPA takes things a step further—not only are you aiming to get consumers to click on your ad with this KPI, but you are tracking how many of them convert them into customers. When advertisers compare CPA for campaigns, they are ultimately looking to drive leads, sales, and eventually brand loyalists.
If you’re not sure what your campaign goals are to start, you can start out by first utilizing CTR to understand how well your creative is performing before aiming to push consumers further down the funnel by measuring CPA.
Have additional questions about how you can use either of these KPI’s to determine the success of your campaigns? Contact us to connect with one of our strategy experts!
Get the Guide: 5 Steps to Prepare for the Loss of Third-Party Cookies
In preparation for what’s to come, we’ve created a guide with 5 ways to plan your programmatic advertising strategy without the use of third-party cookies.