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What are the Most Important Metrics to Know Digital Advertising Profit or Loss? (Image: Ruang Tumbuh)
What are the Most Important Metrics to Know Digital Advertising Profit or Loss? (Image: Ruang Tumbuh)
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What are the Most Important Metrics to Know Digital Advertising Profit or Loss?

Don't just look at the number of clicks or the number of impressions when assessing digital advertising. The more important metrics are how much it costs to acquire a customer and how much revenue is generated from that customer.

Some numbers to pay attention to include cost per click, conversion rate, cost per customer or Customer Acquisition Cost (CAC), average transaction value, and Return on Ad Spend (ROAS). For example, an advertisement generates sales of IDR 10 million with advertising costs of IDR 2 million, then the ROAS is 5x. But this figure must still be compared with the profit margin so that you don't mistakenly conclude that advertising is definitely profitable.

Therefore, it is best not to judge ads based on just one metric. Combine advertising costs, number of customers acquired, transaction value, margin and ultimately profit. Advertisements that generate a lot of sales are not necessarily good if the cost of acquiring customers is too high.

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