As a business seeking to sell your products or services to as many people as possible in the digital age, you’ve probably engaged a digital agency to aid you in your online marketing and advertising efforts. As digital ad revenue continues to grow year by year, and especially with the Covid-19 pandemic leading to people spending even more time online than ever before, digital marketing has proven to be absolutely essential in the lead-to-sale process, with its potential to generate vast numbers of leads ready to be converted into sales.

The problem arises, however, when you don’t know whether the agency that you’ve appointed (at a significant expense, no less) is actually doing a sufficient job at generating the right leads and increasing sales revenue. You might have noticed that your sales numbers have not increased since the recent campaign was launched, but is that because the agency failed to deliver, or could it have been something else altogether? To find out, you need to perform an audit of the digital agency.

In this article, we’ll look at:

What a digital agency audit is and why it’s important
A list of key metrics to review in your audit
Why commonly used metrics sometimes fail to convey true value
The single most important metric at the heart of any effective digital agency audit
How to pinpoint the ads that give you the best returns

What is a digital agency audit and why do you need to do it?

A regular audit of your digital agency has a crucial role to play in your marketing efforts. Its main goal is to assess the agency’s performance in delivering marketing and advertising campaigns, by looking at various metrics that represent the ways in which internet users interact with your ads and other digital marketing collateral. A proper digital agency audit helps you to pinpoint exactly what the agency has done that is and is not working, and in precisely which areas they might be having trouble—whether it’s driving traffic, making impressions, driving engagement, growing your following and so on.

Without this audit, you’ll find yourself lost in the dark, without a clue as to whether you’ve made the right choice in recruiting the right digital agency—and also, as to what can be done to improve your marketing and advertising campaigns in the pursuit of more sales.

You won’t be able to see right from wrong without a digital agency audit.

Common metrics used in digital marketing audits

You probably have a few go-to metrics that you look at when assessing the performance of your ads and campaigns. In fact, many of the advertising platforms and marketing tools that you use to manage and distribute these ads, such as Facebook Business Manager, Google Ads and Google Analytics, all automatically generate and display several key metrics on your dashboard, where you can conveniently access them. Such metrics include:

Impressions - The number of times an ad has been displayed on users’ screens within a publisher’s network. This can give you an insight into how well your ads have been delivered and targeted to users.
Engagement rate - A general term, especially used as a social media metric, that includes several user actions including likes, shares, comments and clicks. Engagement in general refers to active interaction between the user and your brand’s communications.
Click-through rate - An engagement metric that tells you how many users have clicked on an ad. Click-through rates, measured along with bounce rates (the percentage of users who left the destination page immediately after clicking on the link), can tell you how much interest the ad has generated.
Sign-ups/leads - If your ad is linked directly to a call-to-action to sign up for an offer or to submit an inquiry, you can measure the number of leads, or explicit registration of interest, generated by the ad. This, and other ad conversion metrics, is generally considered to be a strong indicator of an ad’s impact.
Cost per impression, cost per click & cost per lead - The money your business pays for each specific user interaction, calculated by dividing the total cost of the campaign by the number of your chosen unit. For example, if you spent $1,000 on a campaign that generated 500 impressions, then your cost per impression would be $2.

These are some of the most common metrics used to assess digital campaign performance, and agencies usually boast high numbers of these to promote themselves and secure credibility. Indeed, they are all good metrics that fulfil the criteria of S.M.A.R.T. goals, a highly acclaimed and widely used system for defining marketing objectives. However, while these metrics are indeed all useful to include in your digital agency audit, you might still find that they don’t always correspond to an increase in actual sales revenue.

Choose metrics that are S.M.A.R.T., but bear in mind that none are self-sufficient.

Impressions, engagement & leads don’t tell you the whole story

Because of your experience, and perhaps a bit of common sense, it might not actually surprise you that displaying an ad to a large audience does not necessarily equate to higher sales conversions. For one, we all know how easy it is to scroll past an ad without interacting with it, or even thinking about it, at all. Done right, impressions may increase the chances that an ad connects with the right people, but it might not be a consequential factor in conversion if it’s not executed with a proper strategy and in the right context.

Now, even if the ad did catch a viewer’s attention, it might not be for the right reasons. If, for example, the ad is visually attractive but does not clearly convey the product or brand, the viewer might be inclined to click on it to find out what it’s all about, but only to find that they’re not interested in what’s on offer. Or perhaps they are interested in the product, but do not see the unique value of your brand and company, and end up searching for a similar product by a competitor offering it at a lower price. In such cases, click-through rates may just be meaningless.

Lastly, even leads may not reflect genuine interest, if they were submitted for reasons other than intent of purchase. Sometimes, to encourage users to engage with the brand, marketing planners use incentives that they think would be appealing to the largest number of people—such as free gifts and exclusive information—even if they don’t exactly increase the likelihood of a sale.

All in all, impressions, engagement and leads can in fact serve as good measures of a campaign’s effectiveness, but in the unacknowledged presence of certain confounding variables, they can be seriously misinterpreted and lose their value. Let’s look at a couple of these scenarios:

1. When measures become targets

There is a common, problematic phenomenon that occurs when a good measure of performance gets selected to be an objective to strive for: It becomes vulnerable to manipulation, rather than being a mere organic outcome of a good action. It’s an example of Goodhart’s Law, which states that “when a measure becomes a target, it ceases to be a good measure.”

In the case of ad performance, metrics like impressions, engagement and leads are good measures if they are simply organic outcomes of good delivery, targeting, communication, branding and so on—but if they are manipulated through other means just for the sake of hitting targets and having high numbers to show, then they will cease to be good, reliable measures of those desired actions.

So, if you see high numbers of such metrics without corresponding sales numbers, it might be the case that the digital agency’s credibility and expertise are built on prioritising vanity metrics over conversion effectiveness—which is probably not a situation you want.

“When a measure becomes a target, it ceases to be a good measure.”

On the flip side, sometimes we see different situations, such as where an ad doesn’t seem to receive much engagement despite still generating some leads. This leads us to ask:

2. Are you targeting the right audience?

Low engagement rates on your ads might lead you to instinctively conclude that the agency’s creative products have failed to grab audiences. However, there’s another common reason (that tends to go unnoticed) for low engagement rates, and that is that the ads have been reaching the wrong audiences.

No matter how good, creative or attractive an ad is, most people will not react to it if the product is not relevant to them. For example, if you were selling retirement homes marketed to senior citizens, running your ad on Facebook to a general, unsegmented audience might not attract the attention of your target audience. If you had 1 million impressions, but only a minuscule portion of that led to engagement, it might seem at first like the ad has not worked, but it could very well be that the ad is perfectly adequate but has not been delivered to the right audience. By creating custom audiences and comparing individual metrics across the segmented groups, you can see whether the campaign is showing underwhelming numbers because it is ineffective all across the board, or whether it is appealing only to a very particular group of viewers.

Custom audiences are also very useful for generating more meaningful insights for your digital agency audit. By segmenting audiences based on specific parameters like demographics, you can evaluate campaigns at a higher level, assessing the agency’s ability to create hyper-targeted communications to connect to the right people. Plus, sharing these insights with your agency can vastly help them better understand your target market and improve communications in the future.

The ultimate metric that drives all metrics

Now that we’ve looked at some useful but fallible common marketing metrics to include in your digital agency audit, let’s turn to a metric that best represents the main objective that lies (or at least, should lie) at the heart of your lead-to-sale marketing campaigns: Sales.

Yes, we know, it’s no breakthrough—most businesses look at their sales numbers all the time, within or without the context of a marketing campaign. You probably do, too. Indeed, low or unchanging sales numbers is usually the primary indicator that something is wrong with your ad campaigns. Afterall, increasing sales is almost always the main objective.

However, most people just look at sales numbers before and after a campaign, and judge the success of the campaign based solely on the change (or lack thereof) in sales over this period. The problem with this is the lack of attribution. If your sales revenue decreases after a campaign, it doesn’t tell you what caused it to. Did the agency underperform, or is there a weakness in your contact strategy? Was it even the campaign that made a difference, or was it an unplanned, unidentified confounding factor? And if it were indeed a result of the campaign, which ads were the most and least effective of all the ones you ran? Typically, for the sake of time and cost efficiency, you would run multiple ads with different creatives on different platforms at the same time—so how can you tell which ads gave you the highest sales for the lowest costs?

Pinpointing the ads that generate the highest sales

To identify which ads give you the best returns, you need to trace your entire lead-to-sale journey of every individual ad from beginning to end, so that you can determine the exact amount of sales generated by any specific ad. A lead management system like SalesCandy can do just that, providing you with accurate and transparent data that helps reveal the specific ads that yield the best results—not by the number of impressions, engagement, or leads, but by the number of wins. All done automatically, without the need for manual intervention.

With the ability to easily and accurately extract this valuable data, you’ll be able to determine with utmost precision the acquisition rate of your ads—which you can then use to evaluate the conversion performance of your digital agency. SalesCandy data, which analyses over 1 million leads, shows that on average, conversion rates are between 3-5% for Google ads, and 1-3% for Facebook ads, based on data from some of our largest customers over the last 5 years. We also track data from various other lead sources, and further segment it by vertical, providing more industry-specific insights exclusive to our subscribed customers.

A healthy lead-to-sale conversion rate is 3-5% for Google ads & 1-3% for Facebook ads.

So, you can probably see how being able to attribute sales to specific ads can really shed a bright light on your ad performance, giving you rich info and insights on conversion and cost per conversion—which would in turn enable you to confidently audit your digital agency and conduct future marketing campaigns with great success.

Learn more about how the SalesCandy lead management system can trace your lead-to-sale journey and transform your digital conversion campaigns with a free demo today.

How to evaluate the performance of your digital agency