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Why are more campaign managers not measuring creative or ad success based on profit per impression? Paid media campaign managers are setting up AB and multivariate tests, and only looking at limited metrics when making decisions on performance.

The most commonly used metrics for choosing a winning creative are… 

• CTR (click through rates)
• CPM (cost per thousand impressions)
• CPC (cost per click)
• CoS / CPL / CPA (cost of sale, lead or acquisition depending on business type)
• Conversion rate
• ROAS (return on ad spend for eCommerce businesses)

Each of these metrics has flaws. Engagement metrics such as CTR don’t account for cost and revenue or leads for lead gen campaigns). Cost metrics such as CPM and CPC don’t have revenue or engagement rates factored in. Cost of sale /  lead, conversion rate and ROAS metrics don’t account for the volume of impressions and engagement metrics.

When we think about the process involved in an online transaction for a paid media ad, all of these things are important. From the perspective of timing; impressions and engagement are the most relevant metrics because they get measured at the point at which the ad is on-screen. However, revenue-orientated metrics are also important, because even though they are likely to be more influenced by third-factors such as landing page content, UX and checkout experience, they are directly linked in to the goal.

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Therefore a successful testing strategy could combine metrics from impression, through to click, through to sale. Anything else is flawed.

It would be possible to look all multiple metrics, but this throws up further problems; for instance you would still need to prioritise one to choose on a winning ad variant.

Profit per impression, or to make things easier PPM (profit per 1,000 impressions) factors in all of the metrics listed above, to give a clear definitive outcome to testing.

You should give it a go when setting up and executing your next paid media creative test plan. The formula is:

In order to use this for lead generation paid media campaigns, you would need to apply a value to your leads (either a flat value, or based on the lead type where you offer multiple services / products).