Lesson 1 of 16 · Level 1: Beginner
What Is Digital Marketing? The Funnel, Channels and Key Metrics
- ⏱ 12 min read
- ❓ 4 review questions
- ✍️ Exercise with solution
- 📥 Downloadable template
In this lesson
- What digital marketing is and how it differs from traditional marketing.
- How the marketing funnel works and what each stage needs from you.
- The difference between owned, paid and earned media, and the main channels.
- The six core metrics (CTR, CPC, conversion rate, CPA, CAC and ROAS) with a worked example.
- How to run a quick digital audit of a real business.
Download it now: you'll fill it in as you go through the course.
- digital-marketing-template.xlsx · Campaign Metrics, Funnel, Unit Economics, Order Profit, UTM Builder, Content Calendar and Weekly Dashboard
Almost every purchase now starts on a screen. Someone googles "best coffee beans for French press," watches a TikTok, reads reviews on Google Maps or asks a question in an Instagram DM before deciding. Digital marketing is the set of techniques that puts your business in front of people at those moments, attracts the right ones and turns them into customers. In this course you'll learn it step by step, from the fundamentals to paid ads, analytics and a full plan with a budget.
Throughout the course we'll follow Aurora Coffee Co., a fictional specialty coffee roaster in Denver, Colorado. It sells bags of coffee on its website and Instagram, and it runs a small café in the RiNo neighborhood. Everything you see applies just as well to a law office, a yoga studio, a plumbing company or an online store.
What digital marketing is
Marketing is the process of understanding what people need, creating an offer that solves it and communicating that offer so they choose you. Digital marketing does the same thing through digital channels: search engines, social media, email, websites, messaging apps, podcasts and video platforms.
| Traditional marketing | Digital marketing | |
|---|---|---|
| Measurement | Hard to know how many sales a radio spot or billboard brought in | You track clicks, visits, leads and sales for each action |
| Targeting | Broad: everyone who reads the paper or drives past | Precise: by interests, location, age, searches or past visits |
| Minimum budget | High (print runs, airtime, production) | Start small and scale what works |
| Interaction | One-way | Two-way: comments, DMs, reviews, replies |
| Speed | Weeks to change a campaign | Changes in minutes |
The big advantage is measurement. You can see what works, stop paying for what doesn't and double down on what does. That's why digital marketing is half creativity and half analysis, and why this course puts numbers next to every idea. Most businesses still mix both worlds: a Denver café may hand out flyers at a farmers market and put a QR code on them that leads to its online store, so even the offline piece becomes measurable.
The marketing funnel
Almost nobody buys the first time they hear about a brand. The funnel describes the stages a person goes through, from discovering you to buying and coming back:
| Stage | What the person is thinking | What they need from you | Aurora Coffee example |
|---|---|---|---|
| 1. Awareness (top of funnel, TOFU) | "I have a problem or an interest" | Useful or entertaining content that catches their attention | Reel: "3 mistakes that make your home coffee bitter" |
| 2. Consideration (middle, MOFU) | "What are my options?" | Information, comparisons, reasons to trust you | Brew-method guide, customer reviews, roasting video |
| 3. Conversion (bottom, BOFU) | "Should I buy from you?" | A clear offer, an easy checkout, a guarantee | Starter bundle with free shipping and an easy-return promise |
| 4. Loyalty | "Do I buy again? Do I recommend it?" | A great experience, follow-up and rewards | Email on day 25: "Running low on coffee?" |
Each stage has its own channels, messages and metrics. A classic mistake is running only "buy now" ads (conversion) to people who have never heard of you, or only posting entertaining content without ever making a concrete offer. Here is what Aurora's funnel looked like last month:
- People reached 10,000Saw a reel, a post or an ad.
- Website visits 4004% of the people reached.
- Leads 60Joined the email list or sent a DM: 15% of visits.
- Customers 12Bought: 20% of leads.
1. Someone just discovered your brand through a short video. Which message suits them best right now?
They're at the awareness stage. A direct offer works better with people who already know you and are deciding; a review request only makes sense after a purchase.
Owned, paid and earned media
Every channel you use falls into one of three families. Each has a strength and a weakness, so healthy strategies combine all three:
Owned media
Channels you control: your website, blog, email list, social profiles, text-message list.
Strength: free and long-lasting. Weakness: grows slowly.Paid media
You pay to appear: Google Ads, Meta Ads (Facebook and Instagram), TikTok Ads, LinkedIn Ads, paid creators.
Strength: fast and measurable. Weakness: stops when you stop paying.Earned media
Others talk about you: reviews, shares, press mentions, word of mouth, organic Google rankings.
Strength: the most credible. Weakness: you don't control it.Paid media accelerates, owned media accumulates an audience that no algorithm can take away, and earned media builds trust. One rule matters above all: always build an owned asset, especially an email list. If a platform changes its algorithm, raises its ad prices or suspends your account, your list is still yours.
2. Why build an email list even if you have plenty of Instagram followers?
Your followers live on someone else's platform, and only a fraction of them see each post. Your list belongs to you and you can reach it whenever you want, as long as you follow the email rules you'll see in lesson 6.
The channels you'll master in this course
The course is organized in four levels, from fundamentals to specialized strategies:
- Beginner: funnel, buyer persona, content, social media
- Intermediate: SEO, email, landing pages, Google Analytics 4
- Advanced: Google Ads, Meta and TikTok Ads, automation and AI, your marketing plan
- Expert: local SEO, ecommerce, influencers, B2B and LinkedIn
If you want a quick overview of the channels before diving in, read our guide What Is Digital Marketing?, and for search, SEO for Beginners.
The core metrics you need to know
| Metric | What it measures | Formula |
|---|---|---|
| Reach and impressions | How many people saw you, and how many times | Reported by each platform |
| CTR (click-through rate) | What share of viewers clicked | Clicks ÷ impressions |
| CPC (cost per click) | What you pay for each click | Ad spend ÷ clicks |
| Conversion rate | What share did the action you wanted | Conversions ÷ clicks (or ÷ visits) |
| CPA (cost per acquisition) | What each sale or lead cost in ads | Ad spend ÷ conversions |
| CAC (customer acquisition cost) | What it costs to win a new customer, all marketing included | Total marketing spend ÷ new customers |
| ROAS (return on ad spend) | Revenue generated per dollar of ads | Revenue ÷ ad spend |
Let's put them to work. Last month Aurora spent $600 on Instagram ads. The ads got 30,000 impressions and 750 clicks, which led to 30 orders with an average order value of $50, so $1,500 in revenue:
CTR = 750 ÷ 30,000 = 2.5%
CPC = $600 ÷ 750 = $0.80
Conversion rate = 30 ÷ 750 = 4%
CPA = $600 ÷ 30 = $20.00
ROAS = $1,500 ÷ $600 = 2.5 (often written 2.5x)A 2.5x ROAS means $1,500 in sales, not $1,500 in profit. Aurora keeps about 50% of each sale after paying for the coffee, so the campaign produced $750 in gross profit. Subtract the $600 in ads and the real gain is just $150. In lesson 12 you'll calculate the break-even ROAS for your own margin (for Aurora it's 2.0x).
Also beware of vanity metrics. Followers, likes and views look nice, but they don't pay the bills. Use them to check whether your content is interesting, and judge your marketing by leads, sales, cost per customer and repeat customers.
3. You spend $300 on ads and get 15 new customers. What is your cost to acquire each customer?
CAC = spend ÷ new customers = $300 ÷ 15 = $20.
4. An ad gets 45,000 impressions and 900 clicks. What is its CTR?
CTR = clicks ÷ impressions = 900 ÷ 45,000 = 0.02 = 2%.
Common beginner mistakes
Being on every platform at once.
Master the one or two where your customers already spend time.
Running ads before tracking is set up.
Install analytics and conversion tracking first, so you know what each sale costs.
Judging success by likes and followers.
Measure leads, sales, CPA, CAC and repeat purchases.
Depending 100% on one rented platform.
Always grow an owned asset like an email list.
Practice exercise: a digital audit of a business
Pick your own business (or one you know well, like a local gym or bakery) and answer:
- What owned, paid and earned media does it have today?
- What does it do at each stage of the funnel? Is any stage empty?
- What does it measure? Does it know what a new customer costs?
- What's the single biggest opportunity to improve?
See solution: Aurora Coffee's audit
- Owned: website with an online store, Instagram with 3,200 followers, a café in RiNo. No email list. Paid: occasional Instagram ads with no sales tracking. Earned: 45 Google reviews and a mention in a local food blog.
- Funnel: it posts product photos (conversion), but almost nothing educational to attract new people (awareness) and no follow-up after the first order (loyalty).
- Measurement: it only looks at likes. It doesn't know which channel brings in sales or what each order costs.
- Biggest opportunity: start an email list with an incentive (a free brew guide), send a reorder email 25 days after each purchase and track sales by channel. Those three steps cost almost nothing and fix the two empty stages.
Summary
- Digital marketing attracts, converts and retains customers through digital channels, and almost everything can be measured.
- The funnel has four stages (awareness, consideration, conversion and loyalty), and each needs a different message.
- Combine owned, paid and earned media, and always build an asset you own, like an email list.
- CTR, CPC, conversion rate, CPA, CAC and ROAS tell you whether your marketing makes money.
- Revenue isn't profit: compare ROAS and CPA with your margin, not with your sales.
Next lesson: Target Audience, Buyer Personas and Your Value Proposition. You'll define exactly who you're talking to and why they should choose you, the foundation of everything else.
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