thefunnel

On-line advertising is a tactic in the promotional mix tool box, because it can be measured. It seems easy enough to look up the variables and costs from the publisher’s rate cards, but things can easily be misinterpreted, unless marketers understand some of the more in-depth details of the various on-line metrics and what they’re trying to achieve. Typical metrics include Impressions, Clicks, CPI, CPC and CTR.

What does an impression really mean? Technically speaking, one impression means that the ad was served up once through a browser. That’s all fine, but what if the ad was below the fold, or the user never looked at the ad? A similar challenge also exists for print advertising and here many marketers use something called OTS (opportunity to see), to estimate the number of real impressions. In its simplest form what OTS means is that a reader needs to be exposed a certain number of times to an ad, before it’s counted as one impression. For B-2-B print advertising this means that you have to run the ad 3 – 5 times to reach the reader. For on-line advertising you can estimate the impressions in more detail and with greater accuracy, but only if you know the number of unique visitors and the visitor return frequency for the duration of your campaign. In addition, all impressions are not equal. A web site have many different types of visitors, many of which aren’t in your target market, so unless you can determine exactly when your ad in running (through for example context sensitivity) or the persona your ad is served up for, you need to be more conservative with your calculation of the total number of impressions.  From a cost perspective this means that to reach the intended number, the campaign will cost more, but you’re always better off knowing the true cost, than some artificial number.

A click is one step further in the funnel, and therefore easier to put a value on than an impression. The only problem here is that the CPC for an on-line ad tend to be way more expensive than for email marketing or for a PPC campaign. So why do marketers run on-line ads, although the ROI comparison doesn’t support it? The answer here is that on-line advertising, email marketing, or PPC marketing can’t and shouldn’t directly be compared, because they work in different stages of the funnel. Marketers need to know for their particular audience what promotional tactics work best in what part of the funnel?

Even when being fully aware of all these details it can be difficult to sometimes justify or to explain the return for an on-line ad campaign. Therefore, the campaign always needs to be looked at holistically, to understand the interaction between advertising and other promotional tactics, in particular PR is, and what other benefits it provides. It is also a good practice to run pre and post impact studies, and to do message and concept testing to minimize the risk of wasting any money.

From a global campaign perspective, you also need to measure each country you’re targeting on its own and not compare countries to each other, because the cost of reaching a particular population varies greatly, as does the general quality of for example a click through.

Finally, a few words about awareness, because it’s very common that a marketing plan calls out for increased awareness through the use of advertising. To start with awareness on its own is never a good measure, because it is seldom measurable in a way that you can contribute a change in awareness directly to a specific tactic. In addition it doesn’t tell you anything about perception or preference, or what action a customer might take.

Here’s one example how to think about measuring the success of a B-2-B web site. To start with you should first organize your metrics into different high level groups. The typical high level groups would be web acquisition, web engagement, and web conversion. The next step would be to define sub metrics for each group.  For your acquisition metrics should count and track the number of visits, unique visitors, returning visitors for different sources of referrals, such as organic search, paid search, marketing campaigns, and direct traffic. For engagement you should measure, visit depth (or page views), visit time (duration), visit returns, visits per visitor, bounce rate, exit rate, number of comments and content consumption (or form completion). In addition you must also be able to cross reference acquisition sources with the various engagements. For paid search, you might also want to drill even deeper down separating golden key words from, generic ones and the long tail words. This will enable you to scratch the surface in understanding ROI for your search investment. Finally, the web conversions also need to be divided into sub-groups. My suggestion is a four tier approach. Responses are the lowest value conversion events, where the visitor leaves a trace, but there’s no follow-up activity. Generic success events are things you want to count and put a value on. These could be certain page views (for example, example a new product), new names registered to the database, or sign-up for newsletters. The third tier is the selected few, most valuable success events. These could be contact requests, partner referrals, service requests or more valuable page views such as pricing views. And fourth are your key performance indicators such as a request for a quote or sales leads. Similar to web engagements, you should be able to trace the web conversions all the way back to the acquisition source. In addition since we’re talking about a conversion event, that normally requires a web form of some kind, you should also track completion rates or abandonment rates.

And finally you should be able to slice and dice this data based on the business segmentation (your web taxonomy). In addition you should also create a dash-board where you track the trending of all the different conversion percentages rather than the absolute numbers. If you then are also able to correlate this data to your web satisfaction data, measuring things such as overall satisfaction, would recommend, able to find, and a positive search / browsing experience, combined with how much money and effort you’re putting in, you’re much closer to understanding your real performance and business contribution of your web site.

This is the story about a shoe manufacturer who wonders whether a market exists for shoes on a remote island. He first sends an order taker to the island to investigate the market opportunities. The order taker visits the island and reports back.  “The people here don’t wear shoes. There is no market”. 

Unsatisfied with the answer the shoemaker then sends a sales person. The sales person returns and reports.  “People do not wear shoes. There is a tremendous market.” 

Now completely confused the shoemaker sends the marketing person. The marketing person too visits the remote island, returns back and reports out.

“The people here don’t wear shoes. However they have bad feet. I have shown the chief on the island how shoes would help avoid these foot problems. He’s very enthusiastic. He estimates that 70% of his people will buy the shoes at the price of $10 a pair. We probably can sell 5,000 pairs of shoes in the first year, because there’s currently very little competition. Our cost of bringing the shoes to the island and setting up distribution would amount to $6 a pair. We will clear $ 20,000 in the first year, which, given our investment, will give us a rate of return on our investment of 20%, which exceeds our normal ROI of 15%. This is not to mention the high value of our future earnings by entering this market. I recommend that we go ahead.”