What are KPI
he term KPI is an acronym that stands for Key Performance Indicator. In other words, these are the key indicators relating to the performance of a campaign. KPIs are therefore metrics that make it possible to measure the performance of an activity and are fundamental for the creation of analyses and reports. In fact, these indicators correspond to the numbers that deserve to be taken into account and through which it is possible to really understand whether a campaign is working or not. KPIs are therefore a very important tool, especially in sectors that need constant performance evaluation. Of course, these indicators differ according to the sector in which they are applied, but above all according to the objectives of the campaign itself.
KPIs in traditional marketing
Marketing reporting, for example, makes use of numerous KPIs, indicators that are very different from each other and yet all fundamental to assessing the actual success of a campaign.
Particularly in the case of a TV campaign, which falls under traditional marketing activities, the most important metric is the Gross Rating Point (GRP). In practice, this is the figure obtained by multiplying the relative coverage (or reach) (i.e. measured in relation to the target audience) by the frequency of the passages made. For example, if the target of a campaign is 5 million people and a TV broadcast reaches 1 million people, the relative coverage will be 20%.
If there are 3 advertising passes within the broadcast, the total number of impressions would be 3 million, so the frequency is 3. The total GRP is obtained by multiplying 20 by 3 and thus corresponds to 60 GRPs. To arrive at these metrics, it is necessary to rely on the statistics of the audience reached. In Italy, in particular, this data is provided by companies such as Auditel, Audiradio and Nielsen.
KPIs in digital marketing
Much more complex and articulated is the reality of digital marketing, an area in which metrics, and therefore KPIs, play a crucial role. In fact, this sector offers more accurate and precise measurement tools than those of traditional marketing and it is therefore possible to create much more realistic analyses and reports. This is also the strength of online advertising and is driving more and more companies to invest in this sector. The ability to effectively measure each campaign enables greater cost optimisation. Of course, here too, the right KPIs must be taken into account, which differ according to the type of campaign and, above all, the business objectives.
The CTR, for example, is one of the most important KPIs in digital marketing and refers to the click-through rate of a website or portal. Another key figure for online campaigns is the CPM, or cost per impression. This figure corresponds to the cost needed to obtain a certain amount of views. Finally, in the case of campaigns that aim to acquire new contacts or leads, another KPI to bear in mind is the CPL (Cost per Lead).