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Computation Retail Chao Q

The document outlines key digital marketing metrics including Click-through Rate (CTR), Cost per Click (CPC), Cost Per Action (CPA), Conversion Rate, Percentage of Customers From Digital Marketing, Return on Investment (ROI), Customer Acquisition Cost (CAC), Customer Lifetime Value (CLV), and Churn Rate. Each metric is defined with a formula and an example calculation to illustrate its application. These metrics are essential for evaluating the effectiveness and profitability of online advertising strategies.

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Gem O'Neil BaLsa
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13 views3 pages

Computation Retail Chao Q

The document outlines key digital marketing metrics including Click-through Rate (CTR), Cost per Click (CPC), Cost Per Action (CPA), Conversion Rate, Percentage of Customers From Digital Marketing, Return on Investment (ROI), Customer Acquisition Cost (CAC), Customer Lifetime Value (CLV), and Churn Rate. Each metric is defined with a formula and an example calculation to illustrate its application. These metrics are essential for evaluating the effectiveness and profitability of online advertising strategies.

Uploaded by

Gem O'Neil BaLsa
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Click-through rate (CTR) - CTR tells us how much impact the ad itself has had on prospects.

Formula: (Clicks ÷ Impressions) × 100

Example: If 1,000 people see an online ad and 50 click to learn more about the product.
The CTR for this online ad would be?

Solution: (50÷ 1000) × 100 = 5%

Cost per click (CPC) - is the amount charged by digital advertising platforms

Formula: Total money spent ÷ Number of clicks

Example: If a business spends $100 and gets 50 clicks. What is the cost per click?

Solution: $100 ÷ 50 = $2

Cost Per Action (CPA) - This metric is important when it comes to finding a model that
allows a brand to pay for certain actions only.

Formula: Total cost ÷ Number of actions

Example: If 10 people buy something from an ad that cost $200. How much is the CPA?

Solution: $200 ÷ 10 = $20

Conversion Rate - It tells you how many of the leads generated by your advertising or digital
marketing strategy actually became current customers.

Formula: (Customers ÷ Leads) × 100

Example: If 100 people showed interest and 10 bought something. What is the conversion
rate?

Solution: 10 ÷ 100 × 100 = 10%

Percentage of Customers From Digital Marketing - This ratio tells you the percentage of
customers that have been generated by your online advertising or digital marketing
activities.
Formula: (Digital Customers ÷ Total Customers) × 100

Example: In one month, a company gained 120 customers, and 75 came from online
marketing. What percentage of customers came from digital marketing?

Solution: (75 ÷ 120) × 100 = 62.5%

Return on Investment (ROI) - is an important metrics when we want to know how effective
an online advertising or digital marketing strategy is and if the efforts were profitable.

Formula: (Profit – Cost) ÷ Cost

Example: A company earned P4,500 in profit from a campaign that cost P900. What is the
ROI?

Solution: (P4,500 – P900) ÷ P900 = P3,600 ÷ P900 = P4

Customer Acquisition Cost (CAC) - is a metrics that tells us how much it costs you to
acquire a new customer.

Formula: Total marketing cost ÷ Number of new customers

Example: A business spent P3,000 on digital marketing and gained 120 new customers.
What is the CAC?

Solution: P3,000 ÷ 120 = P25 per customer

Customer Lifetime Value (CLV) - is the total amount of value a client generates during the
time he or she remains a customer.

Formula: Monthly Spend × Number of Months

Example: Each customer spends P50 per month, and stays with the company for 18
months. What is the CLV?

Solution: P50 × 18 = P900 per customer

Churn Rate - This is the metric that tells you how many customers cancelled their
payments or orderings
Formula: (Lost Customers ÷ Starting Customers) × 100

Example: At the beginning of the month, a subscription service had 500 customers. By the
end, 25 had cancelled. What is the churn rate?

Solution: (25 ÷ 500) × 100 = 5%

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