If you’re in the automotive industry, it’s highly likely that you use attribution metrics to measure and generate insights on customer journeys. Understanding how customers interact with your online and offline marketing channels is essential for optimizing ad campaigns, adjusting pricing strategies, and targeted messaging.
But when it comes down to the nitty-gritty of what these types of metrics actually mean – well, that can be a bit more complicated. In this blog post, we’re breaking down the basics of what five common attribution metrics are as well as their underlying meaning so dealerships and marketers alike can have easy access to a high-level understanding of these key topics.
What is Attribution and Why Do We Use It?
In a nutshell, attribution is giving credit or recognition to the original source of information related to marketing. Attribution helps marketers understand the effectiveness of their campaigns and helps to track customer interactions across multiple platforms before making a purchase.
By understanding how customers interact with ads and content, it allows you to make more informed decisions about marketing strategy. Think of it like an eye in the sky that’s watching a customer invisibly. When they engage with any of your marketing material, it sees it and records it, then looks for patterns.
Everyone has a certain set of metrics they want to track, and it’s usually data that leads to a sale. Here are five areas that are common in automotive marketing, and an explanation of how they’re used.
Engagement Rate
Engagement rate is a metric used by automotive marketing departments to measure the level of engagement people have with online content. It shows how well your content is resonating with your audience, and it can provide useful insights on how to reach your target demographic more effectively.
To calculate engagement rate, you need to divide the number of engagements – likes, comments, and shares, for example – by the total reach, or people who saw the post. That figure then needs to be multiplied by 100 to get the percent engagement rate. Fortunately, the engagement rate is usually calculated for you by the source, so you don’t have to do the math.
Understanding and tracking this metric can help you determine which tactics work best and show return on investment.
Think of it like this. Scrolling through their Facebook feed, shoppers gloss over all the mindless posts from their acquaintances, as well as ads for clothing, shoes, real estate, and services. But when they see your dealership ad, they pause for a moment, realizing that it’s either interesting or relevant to their needs. When they perform an action – any action at all really – it’s considered engagement.
Conversion Rate
The conversion rate is one of the most helpful and informative metrics to measure the success of any digital marketing initiative, but it’s also one of the most misused. It’s computed by dividing the total number of conversions – completed purchases, newsletter sign-ups, or any other action you determine to call a conversion – by the total amount of visitors or leads that were initially acquired.
In lay terms, it’s a number that lets you know how effective your efforts were at turning an initial inquiry into a user-complete action, like a purchase or registration. It’s as useful for appointment-setting in the service department as it is for new or used vehicle inquiries.
Understanding this key metric helps marketers make better decisions because it gives pertinent data about effort versus reward. It’s also valuable because it guides improvement actions toward areas where enhancement yields measurable results.
But for conversion rates, there can be issues if the criteria you set isn’t of good value. For instance, tracking users with more than one page visit can skew conversion rates if they don’t spend any time on the pages, and they aren’t actually on your site for anything worthwhile.
Click-Through Rate (CTR)
Click-Through Rate, commonly referred to as CTR, is a cornerstone metric used in digital marketing. It shows how often people are clicking through from an ad or link to a targeted landing page.
To calculate CTR, you take the number of clicks divided by the number of impressions (times someone’s seen the ad) and multiply that figure by 100. Its importance lies in the insight it provides into engagement. If your CTR is low, it could suggest your content isn’t resonating with your audience or that one campaign is significantly better than another.
Knowing these metrics will help you make better decisions about where to spend money to improve returns and understand which campaigns work best for different target audiences.
Cost Per Action (CPA)
Cost Per Action (CPA) measures how much it costs you to acquire a desired action such as vehicle purchases, service customers, or conversions for parts sales from your website. You can find out CPA in multiple ways, such as tracking cost into each of your channels within Google Analytics or by adding tracking parameters to your campaigns.
Understandably the lower the CPA, the better – so you can rest assured knowing that optimizing for this metric could improve your performance significantly. For car dealerships, the average CPA on a new car sale can be between $500 and $750 in many cases, so it’s obviously a good metric to monitor.
Return on Investment (ROI)
Return on investment (ROI) is often seen as the be-all-end-all when it comes to measuring your success in marketing. It’s a way of tracking your profits – or losses – suggesting the overall performance of your business over the stretch you’re measuring.
Boiled down, it’s how much money you made compared to the money you invested in your marketing tactics, and it better come out on the positive side.
To maximize your ROI, consider all the costs associated with marketing tactics and include them in your calculations. Divvy up resources among different strategies to ensure you have the highest return possible.
Keeping an eye on ROI can be tedious work but it makes all the difference in growing a successful brand.
It All Matters
To sum up, understanding the different types of attribution metrics and being aware of how you can use them to measure your campaign’s success is key in today’s digital world. It will help you make decisions on optimizing performance and how you invest your marketing dollars, all while assessing what areas need improvement.
When it comes to attribution, it’s important to remember that each metric provides valuable insight, so implementing data-driven decision-making that incorporates multiple points of view is crucial. From engagement rate to ROI, a dive into your marketing activity can reveal deeper insights into customer interactions.
While the data can be exciting to analytics and attribution pros (like us!), management and marketing teams at your dealership can often be more productive in other ways. So why not have Attributely take care of interpreting your attribution so you can focus on what’s most important?
To get started with optimizing your campaigns using attribution metrics in the most efficient ways, contact us today for a product demo!
