The Connection Between Sales and Ad KPIs

Online advertising has become an essential tool for artists to reach their target audience, gain new fans, and drive sales. Artists and labels invest significant resources in developing great music and eye-catching content, and once the product is finished, tools like b00st.com or another trusted advertising partner is tapped to deliver clicks, optimize click-through rates, and b00st conversions.

While advertising key performance indicators (KPIs) such as cost per click (CPC), and click-through rate (CTR) provide valuable insights into campaign effectiveness, their value can only be understood when viewed in the context of sales numbers. At the end of the day, pretty or strong advertising KPIs do not mean anything unless you know the sales picture. In this blog post, we'll delve into the importance of understanding sales numbers before evaluating advertising KPIs.

Understanding the Sales Picture

Sales numbers, such streams per day, tickets sold, and even follower growth over time, serve as a fundamental measure of an artist’s success. They provide a tangible reflection of customer demand and the effectiveness of marketing efforts. By analyzing sales figures, artists and their teams gain crucial insights into their target audience, market trends, and overall performance.

For most almost all advertising campaigns online, the following three KPIs are crucial:

1. Conversion Rate: Advertising campaigns are designed to drive conversions and generate revenue. It is essential to track the number of sales resulting from the ads. A high conversion rate may indicate that the advertising efforts are effective, leading to increased revenue. Conversely, low sales despite positive KPIs can signify issues with product quality, pricing, or other aspects that hinder conversions.
2. Customer Acquisition Cost (CAC): CAC is a critical metric that calculates the cost associated with acquiring a new customer. Knowing the sales numbers is vital to accurately calculate CAC and evaluate the profitability of advertising campaigns. It allows businesses to determine if their marketing spend is yielding a positive return on investment (ROI).
3. Customer Lifetime Value (CLV): Sales figures provide valuable insights into the long-term value of customers. By understanding the CLV, artists and their teams can determine the maximum amount they can spend on advertising to acquire and retain customers profitably. Without sales data, the estimation of CLV becomes inaccurate, potentially leading to misaligned marketing strategies.

The Lack of Transparency in Music

Tracking and retargeting has become an indispensable tool for online advertisers seeking to optimize their strategies and reach their target audience more effectively. However, it is crucial to recognize that tracking capabilities are contingent upon the platforms and channels utilized. In the realm of online marketing, tracking only works on platforms that permit it. While some platforms offer comprehensive tracking mechanisms, enabling businesses to gather valuable insights into user behavior, engagement, and conversion rates, others may have limitations or even outright restrictions on tracking.

It is disheartening to acknowledge that many platforms within the music industry have adopted closed-door policies when it comes to tracking. As we step into 2023, none of the major digital service providers (DSPs) permit marketers to track key metrics such as the duration of fan engagement, specifically determining whether a listener has surpassed the 31-second mark, which counts as one stream, or fallen short at 29 seconds, indicating no streams. This lack of transparency hinders artists and marketers from gaining a comprehensive understanding of their audience's preferences and behaviors.

The Solution

Despite the challenges and complexities involved, the majority of digital service providers (DSPs) and points of sale, including popular platforms like Spotify, Apple, YouTube, Ticketmaster, and local merchandise providers, do offer the option to share sales details with artists and their teams. This valuable information can be accessed through various means, ranging from sophisticated artist dashboards to more traditional formats such as spreadsheets. The ability to overlay the sales data with advertising campaigns is crucial for artists and their teams to determine the true effectiveness of their ad buy. By examining the correlation between sales and marketing efforts, they can gain insights into which advertising strategies are driving the most conversions and impacting their bottom line.

In Summary

Online advertising has become an integral part of modern business strategies, but it is crucial to remember that pretty advertising KPIs do not mean anything unless you know the sales picture. Sales numbers provide the necessary context to evaluate the true effectiveness and profitability of advertising campaigns. By understanding the connection between sales figures and advertising KPIs, businesses can make informed decisions, optimize their marketing strategies, and ultimately drive tangible results. Remember, the ultimate goal of advertising is not just to have impressive metrics, but to generate sales and contribute to the overall success of the business.

Stay classy 😎