Measurement 101 for Web Marketers
Dear Business Builder,
Happy Friday! In today’s issue of In the ‘Net Trenches we’re going to look at the key metrics you should be tracking for every online marketing campaign you undertake.
But, before we start let me tell you a little secret … I’m not a numbers person. I’m a bona fide math-a-phobe. I struggled through nearly every math class in my academic career. Heck I failed college Algebra twice before I barely passed with a C - … and that’s because I think the professor felt sorry for me. As for trigonometry and calculus … well fugehdaboutit!
But, don’t think I’m alone. Many people that have a propensity to the creative arts such as writing and design find math a big mystery. Perhaps our brains are wired differently from the math proficient. But in direct response marketing it’s all about the numbers … just as much as it’s about the creative. And the more you understand the numbers the smarter decisions you’ll make and the more successful you’ll be.
4 Key Metrics for Online Marketing
There are many ways to slice and dice the results from your internet marketing campaigns … from the very basic to the very complex. But at the least, you must (and I repeat must) be able to measure the following 4 key performance indicators. Without them, you’ll have no sense of the success of your campaign and no indication of whether you can afford to repeat your efforts … whether you should try to make improvements and how … or whether you should just pack up your toys and go home.
In a medium where results are instantaneous and real time these measurements are crucial to your long term ability to promote online. So, let’s dive right in:
Impressions: I’m going to use the term impressions rather loosely for today’s example. I’ll define impressions as your list size. It is simply the total number of people that see your ad … whether it’s your banner ad, your Google ad, your paid text link or your e-mail. When dealing with impressions, you’ll need to look at total impressions served and unique impressions served, since a percentage of prospects will see your ads more than once.
Click Through: Your click through rate is the number of people that click through to your landing page from your ad … the total pool of potential prospects. Click through rate is shown as a percentage and is determined by dividing the total number of clicks by the total number of impressions served. Since many prospects will click through to your landing page from your ad more than once, I find it best to calculate the percentage off unique impressions and unique clicks.
Conversion: Conversion is where the rubber meets the road. You’ve turned a prospect into a buyer or a lead – depending on the goals of your campaign. The higher the conversion rate the more successful the campaign … giving you an opportunity for continuous improvement to test and bring it up even further. A low conversion rate often means a trip back to the drawing board … giving you an opportunity to analyze whether your problem is with copy/creative or list selection. Conversion is also shown as a percentage. You can get the conversion percentage by dividing the total number of buyers or leads by the total number of unique click throughs.
ROI: Calculating your return on investment lets you know whether your campaigns are making money or losing money. Depending on the goals of your campaign, either scenario may be an acceptable outcome. In the industry I work in 100% ROI is an acceptable outcome … I’ve made back the money I spent to promote. In the process, I’ve acquired a new customer that will then immediately go on my house file to receive future upsell promotions, thus making my profit on the back end. Other marketers that have longer sales cycles (often B to B and higher priced products) may be fine with losing money on the front end to generate a lead that will then be upsold on the phone or through another offline channel. ROI is shown as a percent and typically calculated by dividing the total revenue generated by the total cost of the campaign. Any number above 100% means you made money and any number below 100% means you lost money.
Test, Test, Test!
Oftentimes a company will try a certain online marketing channel such as Google Ad Words, banner ads or e-mail promotions and have poor results right out of the gate. At that point, business owners can be especially quick to make the decision that the particular channel does not work or can not work for their business. But it’s important to keep testing. By analyzing the numbers above, you can determine where there are weaknesses in your campaigns.
For instance if you find that you have a low click through percentage, then you would immediately look to your ad or traffic driver as the source of weakness. A/B split test several different ad variations to find a winner that ultimately attracts the attention to boost your click through rate. The higher the number of prospects that click through to your landing page, the higher number of overall conversions. (Check my archives to see several issues on how to develop online ads that are guaranteed to get the click.)
On the flip side, if you find that a large percentage of people click through your ads, hit your landing page and don’t buy then you have a conversion problem. Split test different headlines, price points or offers to ultimately bring up your conversion rate to an acceptable level. I’ve found the simplest things can make a dramatic improvement to overall conversion rates. It pays to be a detective to find the best combination of list, copy and layout.
Remember in direct response marketing you can’t have a winner every time. But the beauty is you can make ongoing measurable improvements to your promotions as long as you measure the results of your campaigns each and every time.
Good luck, happy web marketing and have a great weekend!
Until next week,
Julie McManus
Editor, In the ‘Net Trenches
THE TOTAL PACKAGE™
And Web Media Goddess
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