KPI: What is a Key Performance Indicator?

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Date: 
Tuesday, May 28, 2013
Location: 
New York City, N.Y.

KPIs are often seen as a cure to what ails the online ad industry. During AOL's first-quarter earnings call in 2012, CEO Tim Armstrong discussed how he was trying to convince more advertisers to use them:

"The majority of our ad customers are running their display budgets off of KPIs (key performance measures like brand lift)," Armstrong told Adweek. "We need to reconnect brands to KPIs. We've sort of needed to shift from an older display model to a newer display model, and that’s something we’re working through."

Got that? It's time to reconnect with KPIs, man. Dive into that KPI goodness.

What are KPIs, you ask? The acronym stands for "key performance indicators." Like many phrases adopted by the online ad industry, it has a precedent. Every industry has its own KPIs. In retail, for instance, same-store sales are a KPI, while in the auto industry they might be inventory turns or manufacturing cycle times. "In every line of business there's some kind of metric that someone uses to gauge how they're performing and whether to judge success or failure," says Jing Suk, vice president and director of strategy and analysis at Digitas and an adjunct professor at Rutgers Business School.

(Professor Suk earned her MBA from the Executive MBA Program at Rutgers Business School and a bachelor's degree in Computer Science from Rutgers College.)

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TAGS: Alumni Digital Marketing Executive MBA