If you’re running a business today, you certainly know that your success largely depends on your ability to acquire high-value customers at a low cost. If your ability to monetize new customers falls below the cost of getting clicks and sign-ups, your business is in trouble. Closed-loop reporting helps marketers measure and track sales/marketing efficiency to better understand this ratio and improve business performance.

What is Closed-Loop Reporting?

Closed-loop reporting is the process of organizing and presenting data in order to monitor and understand how the investment in paid marketing brings business growth. Closed-loop reporting helps marketers access and link disparate data sources, including multiple ad networks and conversion data, in order to extract meaningful insights and take action at scale.

The closed-loop reporting approach challenges the traditional methods of measuring paid marketing effectiveness with traffic or lead volume, raising the following business questions about deeper-funnel metrics:

• What kind of ROI are we getting on X ad network/campaign?
• Did we get any new customers/pipeline from it?
• How do you know that worked?

This approach supports radical transparency about the return on advertising spend, meaning everyone knows how ad dollars translate into actual business growth; and meaningful KPIs like revenue or customer lifetime value replace vanity metrics.

Marketers that have adopted closed-loop reporting can more easily figure out the best-performing ad, network, and channel and justify the budget increase based on measurable results that improve the bottom line.

Closed-loop reporting consists of three major components, displayed on the graphic below:

Closed-loop reporting connects marketers to the data they need to measure paid marketing effectiveness.

1. Ad Campaigns

Reporting starts with the ad campaigns you’re running on Facebook , Google AdWords , LinkedIn , Bing , Yahoo Gemini , or any other ad network. Consolidating all your cross-network data in one place is the first step to closing the loop in paid marketing attribution.

2. Conversion Data

Conversion data lives in different places, such as spreadsheets, CRM, and other marketing tools. Paid marketers need conversion data to understand if campaigns are bringing actual revenue, not just clicks. Siloed conversion data creates a fuzzy vision of paid marketing performance. Just like driving in the dark with misaligned headlights can be a traffic hazard, optimizing with campaign-level-only data may lead to wasted spend.

3. Return on Investment (ROI)

The link between ad campaigns and conversion data is key to closed-loop reporting and analytics. Once you attribute your conversion data to the original campaign, you can scale campaigns that bring more return on investment, pause the ones that don't perform well, and easily prove the impact of your paid marketing efforts.

7 Benefits of Closed-Loop Reporting

Today, CMOs and agency clients expect paid marketers to report on how each ad dollar translates into value. In response to this trend, data-minded marketers are adopting the closed-loop reporting approach to show measurable impact. Here’re 7 reasons why closed-loop reporting is the logical step for matured PPC teams:

1. It helps teams understand the best-performing networks and campaigns.
   Before you dive into optimizations, it helps to understand which advertising networks and campaigns are the most cost-effective so you can better focus your time and budget.
2. It helps track customer journey metrics from the initial touch to the purchase.
   Using closed-loop reporting, marketers can track everything from clicks to purchase or lead quality, a metric with the most obvious tie to revenue for B2B marketers. A customer journey for B2B marketers includes many touch points, including web actions, emails, events, calls, and coffee meetings (or steak dinners). Closed-loop reporting helps understand the impact of paid marketing on metrics from opportunities to closed-won revenue.
3. It enables the bird’s-eye view of the impact of marketing spend, potentially lowering cost per acquisition.
   Reports are helpful if you actually understand what the data is telling you. Closed-loop reporting means all your paid marketing data is organized in a logical, easy-to-read way, with the level of granularity as detailed or high-level as you like, so you can easier optimize for cost per customer acquisition across all channels.
4. It helps marketers to allocate marketing budget in the most effective way.
   How you allocate your marketing budget has a direct impact on the company’s growth trajectory. Clarity about the ROI of each channel takes the guesswork out of planning your paid marketing spend.
   
5. PPC teams will gain more credibility and trust within the company by reporting on the most meaningful metrics.
   The closed-loop reporting approach builds the culture of transparency across departments. With the data on how each marketing campaign generates leads and sales in relation to the cost of the campaign, paid marketers can share the results of their work with anyone in the organization, PPCer or not.
   
6. It uncovers trends and data to set better goals.
   Easy access to granular paid marketing data helps uncover trends and opportunities for optimizations, as well as help set better goals based on past performance.
   
7. It simplifies access to insights needed to maximize the return on investment and justify ad spend to senior management and clients.
   Closed-loop reporting helps paid marketers create PPC reports for senior-level marketing executives, CMOs, and investors who focus on the bigger picture. When you can simply explain the dollars in/dollars out ratio of your campaigns, it’s easier to ask for a budget increase.

Measure the Impact of Each Advertising Dollar

Closed-loop reporting gives paid marketers the ability to quickly visualize, analyze, report, and optimize their ad performance. With this approach, marketers don’t stop at counting clicks and leads -- they can measure and optimize performance based on the full-funnel impact of each campaign, across all networks.

The closed-loop reporting approach begins with consolidating all ad network data in one place. Then, marketers can bring in offline conversions from all their tools and platforms, such as CRM data or spreadsheets. By connecting campaigns with conversion data, marketers can understand the ROI of each ad campaign and easily calculate the revenue broken down by each lead source. That means, they can track dollars in and dollars out for each paid search and paid social channel, essentially closing the loop between campaigns and business growth.