How to Measure Internet Marketing ROI
June 17, 2010Tracking Internet Marketing ROI is Important AND Possible. Follow this Four Step Plan and You will Be On Your Way to Measuring Marketing ROI (Online At Least)
QUESTION 1: WHAT IS THE GOAL OF YOUR SITE and INDIVIDUAL PAGES?
Your web site has value-generating goals– something that helps grow your organization.These goals should be in line with larger organizational goals, and may include:
- Generate leads
- Generate interest in a product or service
- Get donations
- Inform/persuade the public
- Get votes
- Provide information
- A visitor views the ‘thank you’ page at the end of an online store checkout process
- A visitor views the ‘thank you’ page after someone completes an information request form
- A visitor views the ‘thank you’ page after someone subscribes to your e-mail list
- A visitor downloads a white paper (with or without getting their email address)
- A visitor views a specific page of your site
- A visitor watches a specific video on your web site
QUESTION 2: WHAT’S THE VALUE OF A GOAL?Now the hard part — what’s it worth to your organization each time you achieve one of your mini-goals? If you’re selling products online, it’s easy: Find out your profit per sale, on a sale-by-sale basis. If you have a sales force, it’s still pretty easy: Figure out how many Internet leads convert to customers, and the average value of those customers. Then multiply the two: For example, if 25% of all Internet leads convert, and on average, each conversion is worth $1,000, the value of a lead is: 0.25 X $1,000 = $250 You can make this more accurate if you also consider the “long term” value of a new customer over say two years. Now that ROI may become much larger. If your only online goal is to get people to see a specific page — say, an article about Internet ROI — it’s a little more difficult. If, for example, 1% of everyone who reads your article online becomes a client, and on average each client pays $1,000 per year, then the value is: .01 X $1,000 = $10/person reading article. Measure how many people read the article and you have an ROI Metric. If you’ve got a newsletter, the same measurement applies: Track how often newsletter subscribers become customers: 10% of all subscribers become customers, and average customer is worth $1,000 Value of one signup is: 0.1 X $1,000 = $100 Even organizations that don’t sell stuff can measure effectiveness. Consider political organizations, where most of their work focuses on getting the word out, persuading the public, etc. For them, you can create a points system: 1 person reading a specific article = 5 points 1 person viewing a specific video = 5 points 1 person signing up for a newsletter = 10 points 1 person joining the organization = 100 points This is pretty arbitrary, but it works as a comparative measure: Campaign one got 30 people to watch a video: 30 X 5 = 150 points Campaign two got 500 people to watch that video: 500 X 5 = 2500 points We may not know, literally, the value of each campaign. But we know their relative effectiveness. Accuracy is important, but measuring trends is vital — as long as you can measure relative effectiveness, you can evaluate advertising effectiveness.
QUESTION 3: HOW MANY TIMES DID YOU ACHIEVE THAT GOAL, AND WHY?
You know what your conversion goal is, from question 1. Now you need to know how often you achieve that goal.To do that, you need at least three out of the four basic metrics:
- Landings on a specific page or file. Measuring of this with a Google Analytics goals is a snap.
- Where your site visitors come from.
- Conversions. Some ad networks, like Google Adwords, provide built-in conversion tracking, so you can tell which ads generate value and which don’t.
- Source of each conversion. Again, use Google analytics to measure this critical metric.