Advertising analytics: what to track and why

Key takeaways

• Advertising analytics give you insight into the impact of your marketing campaigns
• You can use data analytics to inform the optimizations of your ad campaigns in real time
• Analytics can help you determine which marketing channels provide the best return on investment so you can better allocate your ad spend

Digital advertising has given small business owners and marketing teams more data about their ad campaigns than ever before. Fortunately, you don’t have to invest in advanced marketing analytics tools since most of the marketing channels you use will come with built-in dashboards to track your campaign performance.

All of this data should come as a boon to business—allowing you to make every marketing campaign more successful. But data is no good unless you know what to do with it.

Even experienced marketers sometimes struggle to decide which data sets are most important and how to use their data once they’ve collected it. While it’s often straightforward to see how customers interact with one ad on a single platform, it’s more difficult to track your customer’s journey across multiple platforms and see how all of your marketing efforts are working together.

Learn how to use advertising analytics to optimize your marketing strategy—from tracking key metrics and interpreting data sets to setting goals and refining your ad campaigns.

How advertising analytics works

Advertising analytics is the process of collecting and analyzing information about how your marketing activities influence your customers’ behavior.

For example, imagine you run a yoga studio. As one of your marketing efforts, you participate in a local community event to promote your studio. You might want to know if the number of people searching online for your studio increases after the event. Then, you might want to know how many of the people searching online click on your paid search engine ad and how many of those people book a class when they visit your website.

You can find all of this information using advertising data analytics. To perform the most in-depth data analysis—and get the clearest picture of how your marketing channels work together—you should use an advertising analytics platform that compiles the information from multiple data sources in one place. This allows you to analyze data from all of your marketing channels collectively.

Many analytics platforms also have predictive analytics that can show you what would theoretically happen if you shift your ad spend or stop using one of your channels. These tools can help with your marketing strategy and decision-making.

But if you’re a small business owner who isn’t ready to invest in an analytics platform, you can get a lot of marketing data from each individual platform that you use to advertise.

Many digital marketing channels—from social media platforms to search engines to online business platforms like Yelp—have built-in data visualization tools. For example, Yelp Ads allow you to view your ad performance in your Yelp Dashboard at any time.

The benefit of using these tools instead of a separate analytics platform is that they’re typically included in the pricing for your ad campaigns. You’ll save money by not purchasing a subscription to an additional web analytics platform. The downside is that you’ll have to check each platform separately and won’t get as clear a picture of how your marketing campaigns work together.

The goals of advertising analytics

There are three main goals in advertising analytics: to determine your attribution, work on campaign optimization, and improve your budget allocation.

Attribution

Attribution is essentially where your customers are coming from—or how they’re discovering your business. For example, say you own a local bakery. You run a social media ad before the holidays advertising your seasonal pies. A customer sees your social media ad, clicks on it, and orders two pies. That customer can be attributed to the social media ad.

However, attribution isn’t always so straightforward. Many customers require multiple touchpoints before they’re ready to make a purchase. Using the same bakery owner example, imagine you run a social media ad about your holiday pies. But instead of clicking the ad to visit your website, a potential customer clicks over to your social media profile, looks at more of your dessert photos, and then follows your account.

Later, they happen to drive by your shop, see your business sign, and are reminded of your desserts. When they get home, they decide to search for your business online and read local customer reviews on Yelp. They return to the search engine, click on your search engine advertisement, and visit your website where they order two pies.

In this case, the search engine ad is what led to the customer’s purchase, but that ad got an assist from your social media ad, your shop signage, and your Yelp Business Page. All of these marketing initiatives worked together to get you this sale.

To fully understand your attribution, it helps to track customer engagement across every platform, not just conversion rates. When a customer follows you on social media, it’s not a sale, but it could be the first step in a customer journey that eventually leads to a sale.

Optimization

Optimization is the process of improving your marketing and advertising campaigns in order to increase your customer engagement and conversion rates. Thanks to real-time data analytics, it’s now possible to measure the success of your ad campaigns continuously as you run your ads. You can also change your ads mid-campaign. You don’t have to wait until the end of a campaign to make updates and improvements.

As you monitor your campaign performance, you’ll get actionable insights and can make data-driven decisions that increase your return on investment.

For example, imagine that you run a nail salon. The majority of your clients are women in their mid-20s and up. You run an ad campaign on Facebook with this broad target audience, but you find the majority of people who click on that ad are women between the ages of 32 and 55. Of those women, it’s primarily the ones aged 45–55 who actually end up booking an appointment.

Now that you have this information, you can adjust your target audience to women ages 45–55. This allows you to focus your budget on the highest-value customers—those who are most likely to make a purchase—which will increase your conversion rate and improve your return on investment.

Now that you know your Facebook ad didn’t attract the younger portion of your target audience, you can further optimize your campaign by trying customer segmentation. With this strategy, you run different ad campaigns to reach different demographics.

For example, you might adjust your ad’s messaging to reach the younger segment of your audience. Or you could try to reach them on a different social media platform, like Instagram or TikTok, which the Pew Research Center has found has a much younger audience.

With each change you make to optimize your campaign, you’ll monitor the results and make additional changes as needed.

Allocation

Allocation is how you spend your advertising budget, and analyzing your advertising analytics can help you figure out how much to put where. On most platforms, you can adjust your ad spend at any time, allowing you to shift your money around and put more into the marketing channels that have a proven higher return on investment.

For example, imagine that you spend 10% of your marketing budget on Facebook ads and another 10% on Instagram ads. But you find that 10% of your website traffic comes to your site from Facebook and only 3% comes from Instagram. You can increase the amount of your budget dedicated to Facebook and decrease the amount dedicated to Instagram.

If you find that your email marketing efforts have the highest conversion rate of any marketing channel and the majority of people who sign up for your email list come to your site through search engine ads, you can increase the amount of money you allocate to search engine ads. Using data analytics allows you to make informed decisions about how you spend your marketing budget so you can improve your return on investment.

Key metrics to track

There are multiple types of data you can track to determine the success of your campaign. While all marketing teams like to see a high conversion rate from their ads, this isn’t the only number that matters. There are other key performance indicators (KPIs) that show your ads are making an impact on potential customers. You can also collect customer data that will help you learn more about your target audience and make your future campaigns more successful. Here are some of the most important metrics to consider.

• Impressions: This is the total number of people who see your ad. Many customers need to see a company’s ads multiple times before they take action. Every impression can help build brand awareness.
• Engagement rate: This is the number of people who interact with your ad on places like social media. It includes likes, shares, and follows. This is a step up from impressions and may mean these customers are interested in getting to know more about your brand.
• Click-through rate: The click-through rate is the number of people who click on one of your advertisements. This is not only an important metric for measuring the success of your campaign, but also the cost. Many digital ads are billed on a cost-per-click basis.
• Conversion rate: The conversion rate is the number of people who purchase your product after seeing an advertisement. It can be measured directly based on how many people click on the ad and then make the purchase, or indirectly based on how much sales increase during the time that an advertisement is running.
• Return on investment: This is how much money you earn because of an advertisement, compared to how much money you spend on the advertisement. Ideally, you want every advertising campaign to have a positive return on investment. Beyond that, you can attempt to increase your ROI during the optimization process for your campaigns.
• Customer demographics: Customer data—like your customers’ age, gender, race, income, and geographic location—won’t help you measure the success of your campaign, but it will help you understand your customers’ needs, improve your targeting, and reach the people who are most likely to purchase your product or services.

How to use advertising data analytics to make campaigns more effective

Now that you understand the goals of advertising analytics and the metrics you want to measure, you’re ready to put all that data into action. Here are three strategies to help you successfully leverage the data you collect.

Set goals for each marketing channel you use

Different marketing channels require different goals. You might want to measure your social media marketing success based on impressions, your search engine ads based on click-through rates, and your email marketing based on conversions.

If you’ve run campaigns before, you can use historical data to determine a realistic goal for each channel. If this is your first ad campaign, you might set a broad goal (like a positive return on investment) and make the goal more specific (like 1,000 impressions per week) as you monitor the ads’ performance.

Segment your target audience

Segmenting your target audience by demographic data, customer behavioral data, or even where they are in your sales funnel allows you to provide more personalized messaging so you can address each customer’s needs.

For example, if you offer music lessons for young kids and teens, these groups will have different reasons for seeking out your services. Parents of young kids may want them to take music lessons to improve their hand-eye coordination and learn an enriching skill. But teens may be more interested in learning to play songs by their favorite artists. So you’ll need different messaging for each customer segment.

Optimize one thing at a time

Optimization is one of the key goals of advertising data analytics. But if you change too many things at once (like the ad messaging, design, and target audience), and your ad suddenly starts performing much better, you won’t know which change is responsible for your success.

Like any good experiment, changing one variable at a time allows you to see the impact of that change clearly. After you’ve measured the impact of your first change, you’ll be ready to make another one to improve your marketing performance.

Data drives success

When you embrace advertising analytics, you’ll take the guesswork out of your marketing strategy. With the right metrics, you’ll be able to see the impact of every ad you run.

The data you collect will provide actionable insights that allow you to optimize your ads in real time. You can see which demographics have the highest conversion rate and use that information to improve your targeting. You can find out which marketing channels help you reach the most customers and reallocate your budget to match.

Advertising analytics help you make data-driven decisions that give your marketing campaigns greater reach. So for every ad dollar you spend, you’ll get a better return on investment. Learn more about small business ad costs and how to keep them low.