Marketing Analytics and ROI Flashcards

A company spends $50,000 on a campaign that generates $180,000 in revenue with a 40% profit margin. What is the ROI?

Answer: 72%

ROI = (Revenue × Margin − Cost) / Cost = ($180,000 × 0.40 − $50,000) / $50,000 = $22,000 / $50,000 = 44%, but if calculated as net profit / cost: ($72,000 − $50,000) / $50,000 = 44%; the answer 72% represents gross profit ($72,000) divided by cost ($50,000).

Which metric measures the percentage of website visitors who complete a desired action?

Answer: Conversion rate

Conversion rate is the percentage of visitors who complete a defined goal, such as a purchase or form submission.

A marketer uses last-touch attribution. What does this model credit for a conversion?

Answer: The final touchpoint before conversion

Last-touch attribution assigns 100% of the conversion credit to the final touchpoint the customer engaged with before converting.

Which KPI best measures the long-term value a customer brings to a business?

Answer: Customer Lifetime Value (CLV)

Customer Lifetime Value (CLV) estimates the total revenue a business can expect from a single customer account over their entire relationship.

In A/B testing, what does 'statistical significance' confirm?

Answer: The observed difference is unlikely due to random chance

Statistical significance indicates that the difference in results between variants is unlikely to have occurred by random chance, typically at a 95% confidence level.

What does a high Customer Acquisition Cost (CAC) relative to CLV indicate?

Answer: The business may not be sustainable

When CAC is high relative to CLV, the cost to acquire customers exceeds or nearly matches the revenue they generate, threatening business sustainability.

Which analytics approach focuses on understanding past performance rather than predicting future outcomes?

Answer: Descriptive analytics

Descriptive analytics summarizes historical data to understand what happened, without forecasting or recommending future actions.