Advertising KPIs
What story do your numbers tell? Are you measuring what matters or optimizing proxies that have lost their meaning?
Are you acquiring customers who stay, or just buying clicks that bounce?
Purpose
Advertising KPIs translate marketing activity into business language. Without them, you're spending money in the dark.
- KPIs connect spend to outcomes
- KPIs reveal inefficiencies before they drain budgets
- KPIs enable apples-to-apples comparison across channels
- KPIs justify (or kill) campaigns with data, not opinions
- KPIs align marketing and finance on what "success" means
The Hierarchy of Advertising Metrics
Core Traffic Metrics
CPM (Cost Per Thousand Impressions)
What it measures: The price paid for every 1,000 ad impressions.
Formula: (Total Ad Spend / Impressions) × 1,000
When it matters: Brand awareness campaigns where reach is the goal, not immediate action.
| Industry | Average CPM (2025) |
|---|---|
| Online Marketplaces | $2.71 |
| E-commerce | $11-17 |
| Finance & Insurance | $20-32 |
| SaaS / B2B | $28-42 |
| Healthcare | $36.82 |
Benchmark: Google Ads average is $11.12 across industries.
CPC (Cost Per Click)
What it measures: The actual expense incurred each time a user clicks on a paid ad.
Formula: Total Ad Spend / Number of Clicks
When it matters: Direct response campaigns where you're paying for traffic, not just eyeballs.
| Industry | Average CPC (2025) | YoY Change |
|---|---|---|
| Online Marketplaces | $0.14 | - |
| E-commerce | $0.80-1.40 | +12.88% |
| Finance & Insurance | $1.60-3.10 | +8% |
| SaaS / B2B | $2.40-5.20 | +15% |
| Software | $3.88 | - |
| Attorneys & Legal | $8.58 | - |
| Beauty & Personal Care | - | +60.11% |
Warning: CPC has increased 12.88% year-over-year across Google Ads. Costs are rising—efficiency matters more than ever.
CTR (Click-Through Rate)
What it measures: The percentage of people who clicked on an ad compared to total impressions.
Formula: (Clicks / Impressions) × 100
When it matters: Indicates ad relevance and creative appeal. High CTR = messaging resonates.
| Industry | Average CTR (2025) |
|---|---|
| Arts & Entertainment | 13.10% |
| Animals & Pets | 10.36% |
| Travel | 9.76% |
| E-commerce | 1.6-2.1% |
| Finance & Insurance | 0.9-1.5% |
| SaaS / B2B | 0.8-1.3% |
| Attorneys & Legal | 5.97% |
Benchmark: Google Ads average is 6.66% in 2025.
Pro tip: Vertical video creatives see 10-18% higher CTR across most industries.
Conversion Metrics
CVR (Conversion Rate)
What it measures: The percentage of visitors who complete a desired action.
Formula: (Conversions / Total Visitors) × 100
When it matters: The ultimate measure of landing page and funnel effectiveness.
| Industry | Average CVR (2025) |
|---|---|
| Animals & Pets | 13.07% |
| Physicians & Surgeons | 11.08% |
| Automotive | 8.73% |
| Finance & Insurance | 5-9% |
| Apparel & Fashion | 3.99% |
Benchmark: Google Ads average is 7.52% in 2025.
Leverage point: Going (travel company) changed 3 words on their CTA button → 104% increase in conversion rate. Small changes, massive impact.
CPA (Cost Per Acquisition)
What it measures: Average cost to acquire one customer or lead.
Formula: Total Ad Spend / Number of Acquisitions
Why it matters: Combines traffic cost AND conversion efficiency into one metric.
| Business Model | Average CPA (2025) |
|---|---|
| E-commerce | $22-38 |
| Finance & Insurance | $40-75 |
| SaaS / B2B Lead | $45-95 |
| Attorneys & Legal (CPL) | $131.63 |
| B2B Average | ~$200 |
The two levers: CPA = CPC × (1/CVR). To lower CPA, either reduce what you pay per click OR improve conversion rate.
CPL (Cost Per Lead)
What it measures: Cost to generate one qualified lead.
Formula: Total Ad Spend / Number of Leads
| Industry | Average CPL (2025) | YoY Change |
|---|---|---|
| All Industries | $70.11 | +5.13% |
| Real Estate | $44.70 | +38.57% |
| Restaurants & Food | $24.80 | +21.96% |
| Arts & Entertainment | $37.57 | +39.52% |
| Attorneys & Legal | $131.63 | - |
Warning: Cost per lead rose 5.13% from $66.69 in 2024 to $70.11 in 2025.
Revenue Metrics
ROAS (Return On Ad Spend)
What it measures: Gross revenue generated for every dollar spent on advertising.
Formula: Revenue Generated / Ad Spend
When it matters: The primary measure of campaign profitability.
| Business Model | Typical ROAS |
|---|---|
| E-commerce | 3.2x - 4.1x |
| Brand campaigns | 2.0x - 3.0x |
| High-margin products | 5.0x+ |
Interpretation:
- ROAS 4:1 = $4 revenue for every $1 spent
- Below 1:1 = losing money
- Above 5:1 = possible underinvestment (leaving growth on the table)
Caution: ROAS captures attributed revenue only. Brand-building work that influences long-term value won't show up here.
LTV:CAC Ratio (Lifetime Value to Customer Acquisition Cost)
What it measures: The relationship between what a customer is worth and what it costs to acquire them.
Formula: Customer Lifetime Value / Customer Acquisition Cost
| Ratio | Interpretation |
|---|---|
| < 1:1 | Burning money—spending more than customers are worth |
| 1:1 - 3:1 | Danger zone—thin margins, high risk |
| 3:1 - 5:1 | Healthy—sustainable growth |
| > 5:1 | May be under-investing in acquisition |
The retention multiplier: Improving retention by 5% can increase profits by 25-95%.
Channel matters: Omnichannel customers show 30% higher LTV than single-channel customers.
CAC Payback Period
What it measures: Time required to recover the customer acquisition investment.
Formula: CAC / (Monthly Revenue per Customer × Gross Margin)
| Business Model | Healthy Payback |
|---|---|
| E-commerce | 1-3 months |
| SaaS | 8-12 months |
| Enterprise B2B | 12-18 months |
Rule: If payback exceeds 18 months, your cash flow will strangle growth.
Channel Benchmarks
Email Marketing
| Metric | Benchmark (2025) |
|---|---|
| Open Rate | 42.35% (distorted by Apple Mail Privacy) |
| Click-to-Open Rate | 5.3% (true engagement metric) |
| Welcome Email CVR | 2.84% |
| Back-in-Stock Email CVR | 5.84% |
| ROI | $36-40 per $1 spent |
Email remains the highest-ROI channel for most businesses.
Social Media
| Platform | Highest Engagement Rate | Optimal Frequency |
|---|---|---|
| 3.56% | 2 posts/week | |
| 2.12% | 2 posts/week | |
| Growing +28% YoY | 3-5 posts/week | |
| TikTok | Highest follower growth | Daily |
Trend: 54% of marketing managers now prioritize engagement over vanity metrics like followers.
Search (Google Ads)
| Metric | 2025 Average |
|---|---|
| CTR | 6.66% |
| CPC | +12.88% YoY |
| CVR | 7.52% |
| Quality Score Impact | Higher score = 50%+ CPC reduction |
First-party data advantage: Companies using first-party data kept CPC growth below 7% while market average exceeded 12%.
Retargeting
- 97% of website visitors leave without converting
- Retargeting campaigns deliver higher CVR at lower CPC than prospecting
- Segment by behavior: cart abandoners ≠ homepage bouncers
The Measurement Framework
What to Track at Each Stage
| Stage | Primary Metrics | Secondary Metrics |
|---|---|---|
| Awareness | CPM, Reach, Brand Lift | Share of Voice, Ad Recall |
| Consideration | CTR, Engagement Rate, Time on Site | Video Completion Rate, Content Downloads |
| Conversion | CVR, CPA, CPL | Form Completion Rate, Add-to-Cart Rate |
| Retention | LTV, Repeat Purchase Rate, NPS | Churn Rate, Email Engagement |
| Advocacy | Referral Rate, UGC Volume | Reviews, Social Mentions |
Attribution Reality Check
Single-touch attribution lies. Most customer journeys involve multiple touchpoints.
| Model | What It Captures | Limitation |
|---|---|---|
| First-touch | Top-of-funnel effectiveness | Ignores everything after awareness |
| Last-touch | What closes deals | Ignores all nurturing |
| Linear | Equal credit across touchpoints | Overweights low-value touches |
| Time-decay | Recent touches matter more | May undervalue brand building |
| W-shaped | First, middle, last touchpoints | Requires sophisticated tooling |
Best practice: Use multiple models. Marketing Mix Modeling for strategy, incrementality testing for causal proof, multi-touch for daily optimization.
Warning Signs
🚨 KPIs that indicate trouble:
- CTR rising but CVR falling → Wrong audience or misleading creative
- CPC rising faster than revenue → Competitive pressure or quality score decay
- ROAS strong but LTV declining → Acquiring the wrong customers
- High reach, low engagement → Wasted impressions
- CPL dropping but pipeline flat → Lead quality problem
The Fraud Tax
Invalid traffic drains budgets silently:
| Channel | Invalid Traffic Rate (2025) |
|---|---|
| Desktop Web | 19% of clicks |
| Mobile Web | 9% of clicks |
| Mobile App | 22-28% of clicks |
| CTV | 18% of traffic |
Translation: One in five clicks may not be human.
Review Checklist
- Do metrics ladder up to revenue, not vanity?
- Is attribution model appropriate for sales cycle length?
- Are you comparing against relevant industry benchmarks?
- Do you have first-party data strategy for privacy changes?
- Are you measuring incrementality, not just correlation?
- Is fraud detection part of your measurement stack?
- Do finance and marketing agree on what success means?
Links
What is the most important metric you're not tracking?