Like the candidates, online marketers understand finite funds must be optimized. For candidates, this may mean asking supporters to pay for buttons, lawn signs, and other promotions. For marketers, it means tracking online advertising effectiveness.
A few years ago, online marketing metrics primarily measured CTRs. We've moved way beyond that now. Or have we? Many fundamental online marketing metrics aren't so broadly used. Paul DeBraccio, CEO of Interevco, estimates roughly 50 percent of the advertisers he talks with these days don't know how well their campaigns are actually doing.
Advertising Effectiveness Checklist
To efficiently reach the best potential customers, assess all the factors influencing your online advertising campaigns. When planning your Q4 2004 sales push and 2005 budget, review your online advertising's true dynamics. Ensure you reach high potential customers by checking the following:
- Offer It should be compelling and unique to draw people in.
- Creative This involves copy, content, design, and overall presentation. Test different treatments on select media to determine which yields the most profitable customers.
- Media Media includes target market, unique visitors, daypart, and advertising options. For each placement consider:
• How does the site reflect on your brand? Consider this broadly.
• Is the context appropriate? If you have constraints regarding where, when, or how an ad is run, discuss them in advance. One advertiser I know was unhappy to discover an ad network ran his ads alongside sex-related content.
• Will it deliver the target customer segment? The key is how you define your customer set:• Is your market so tightly delineated there aren't sufficient prospects to make it viable?• Are prospects high-value targets?
- Format Format includes size, rich media and sound. Attract viewers' attention in a positive way. Rich media can work if it's entertaining and provides the option to close or mute it.
- Landing pages Use unique landing pages customized for each creative and media combination, as well as tailored to your purchase or registration objective. I've seen campaigns with highly targeted ethnic media and creative fail because potential customers were sent to a home page without appropriate content.
- Registration/purchase process Streamline your registration or purchase process to minimize the number of steps and amount of information required. As a marketer, I'm always surprised how hard I must work to use some sites. One direct marketer makes me log on to its site every time I want to browse its online catalog.
- Customer focus Think about customer needs as well as company goals. To receive news alerts, a major information site made me answer about 10 questions, presumably to target its advertising. As a consumer, I wonder: What does answering these questions do for me?
- Competitive activity Track this. Your ad campaign may not yield projected results if competitors change their strategy. I saw this happen in a highly competitive market where the dominant player substantially increased its spend across media. This meant my results would seriously under perform the old forecast.
- Offline effect Companies with multi-channel distribution must understand the offline effect of online advertising (and vice versa). As crossover sales can be difficult to track, companies often undervalue them.
- Impressions Extend impressions by posting your ads on your Web site. Customers can view, interact with, and forward them.
- Basic analysis This measures how effectively your advertising reaches your constituency. After launching a marketing campaign, analyze advertising results. According to Kevin Howard, media director at Avenue A/Razorfish, advertisers must track the "right" economics to maximize lifetime value:
• CTR measures the proportion of people who saw your ad and clicked through to your site. Howard notes:
Advertisers shouldn't concentrate on click-through when evaluating [return on investment]. Click-through rates may help determine how good creative is at eliciting response, but it don't correlate necessarily to actual sales. We've found creative with lower click-through rates often have higher conversion rates because the user has more carefully considered the client's value proposition before clicking. (CTR = clicks/impressions)
• Total advertising cost aggregates media, creative, related advertising targeting and measurement programs, premiums, and other attributable marketing costs. If you only look at media costs, you underestimate the true cost.
• Total advertising cost = [(impressions/1,000) x CPM] + creative cost (including ad creative and landing page) + other relevant marketing costs.
• CPC measures how much it costs to get customers to your site. Some marketers end analysis here. Since CTRs always exceed registrations, these results look better. But they underestimate the true cost per acquisition. (CPC = total advertising cost/click-throughs)
• Conversion rate measures the percent of people who made it to your site and registered or purchased. (Conversion rate = registrations/click-throughs)
• Cost per acquisition (CPA) determines the cost of each registration/purchase. This calculation should be measured for each media buy and in aggregate for the entire campaign. Generally, acquisition costs vary by product category; some may be $10, others may be as high as $200. (CPA = total advertising cost/acquisitions)
Like a good politician, you must continually ask, "Am I getting value for my investment?" Candidates monitor polls continuously and adjust messaging and resource allocations accordingly. Similarly, you should glean every bit of information you can from your advertising effectiveness data to optimize campaign performance.
Start with the basics, such as CPM and CPA, to ensure you have a good handle on your business's marketing dynamics. Other factors to consider include converting one-time buyers into multi-time buyers or ongoing customers; amount of continued and cross purchasing; new customer credit worthiness (less a problem when customers pay via credit card, but they may still generate high returns); and propensity for customer referrals.
You must pull a lot of levers to win your customers' votes in the marketplace.
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