KPI Library
Ad Spend per New Order
The average cost of advertising for every new order.
The cost of advertising that takes the company to get a new order.
This KPI calculates how much your company spends on ads until you get a new order - especially useful for e-commerce or invoices, for example. It does not mean that’s the amount that you should be spending, but rather your current situation in this regard. It gives you a better understanding of whether your ad spend to get an order is too high. If this happens, it may mean that you are allocating too many resources in a tool that is not giving you enough benefit. Therefore, this KPI basically compares your spending in a specific tool with the value of the orders you are getting from it. With this KPI you will be able to have an overview of where your budget for advertising is going, and which are the tools that are performing best - and worst. If checked regularly, you will be able to adapt the strategy in order to get better results with the same budget.
KPI Example
What is Ad Spend per New Order?
The Ad Spend per New Order calculates how much your company spends on ads per new order. This is an especially useful metric for e-commerce or invoices, for example. Important! This KPI doesn’t indicate this is the amount you should be spending on advertising, but rather what you’re currently spending.
With this KPI, you’ll have an overview of where your advertising budget is going–which ads are performing well, and which platforms are giving you the best ROI.. If checked regularly, you’ll be able to optimize your advertising strategy to obtain better results within the same budget.
Ad Spend per New Order is a relevant metric for your marketing team to monitor.
Why is Ad Spend per New Order important?
Ad Spend per New Order is important for marketing teams because it gives you a better understanding of whether your ad expenditures to obtain customers are too high. If this is the case, it may mean you’re allocating too many resources into platforms with too little payoff.
Essentially, this KPI compares your spending in a specific advertising platform with the value of the customers you obtain from it. For example, if you spend €1000 on Instagram ads in a year, but obtain only 20 new orders during this time, this certainly isn’t a good tradeoff. Nevertheless, having this knowledge allows you to reevaluate your advertising strategy as necessary.
Best practices for Ad Spend per New Order
The best practice for Ad Spend per New Order is to keep a close eye on the value of your orders, and where these orders are coming from. It’s up to you to determine an acceptable ratio of the amount spent on orders to the number, and value, of customers obtained from them.
If your advertising on one platform is delivering substandard results under this framework, it’s time to change strategy and advertise elsewhere. This is when knowing your ICP (ideal customer profile) comes into play – if you know this profile and where to find it, you can modify your advertising strategy accordingly.
Other KPIs similar to Ad Spend per New Order include: