Today I needed a tailor to fix a seam in one of my suits for a wedding we need to attend to tomorrow. Naturally, I turned to Google to see what I can find. I normally don’t click on the first paid ad, or even map listing for that matter. I also tend to steer clear of any Yelp listings as well (that’s just me). Today I clicked on SewChic, a small boutique on my way to other errands I had to run.
So I gave them a call, and they graciously took care of me same-day, and in fact, I was done within ten minutes after walking through the door. The bill? A whopping $5.00. She could have charged me $20.00 for the rush, and I would have been OK with it. But I got to thinking, “gee, a $5 sale barely paid for the click on Adwords, let alone any management fees” – which would inflate the cost per click, if in fact they has someone running their campaigns for them.
But this is the kind of flawed thinking that, in my opinion, can distort the true Google Adwords ROI, or any online advertising for that matter.
What I mean by that is, sure, if you compare the direct impact of the sale associated with the cost of the click, then the ROI in this case doesn’t look all that great. After all, I probably wasn’t their “ideal customer.” But there are other things that could generate revenue off that first click, that are not only likely to be untrackable, but that we’re not even aware of; such as:
- Future Sales/Visits – you have to consider the true lifetime value of a customer to look at ROI correctly. I may have spent $5 today, but next week I may bring in my whole wardrobe and spend $200.
- Social Sharing/Referrals – what if after my positive experience today at SewChic, I call a couple of friends and refer them? Or I post it to Facebook, and one of my friends stops in next week? This goes back to the issue of first click/last click attribution – which should get the credit? I wrote about PPC attribution a while back.
- Direct Hits/SEO – many times when we search, we click on the paid ad, then go back out looking for the main website in the natural listings and then click on that looking for more information. If a sale or lead is generated, then Adwords is given the “assist” in the conversion funnel if you look at Multi-Channel Funnel metrics in Google Analytics, also part of my prior post on attribution.
The moral of the story is to consider how Adwords or other advertising may have “assisted” in other leads or sales for your business, rather than just focusing on direct impact. You may find a pleasant surprise.
As marketers, we would love to know how all of our leads originated. Far too often, PPC gets the boot with poor cost per lead (CPL) figures, and can be mostly blamed on attribution issues. Attribution is simply defined as assigning credit to the source which generated the initial (or final) action. So for example, let’s say you’re running a paid search campaign and you get 100 new visitors to your website. However, only 2 of them make a purchase. Unbeknownst to you, an additional 5 purchases came in over the next 7-10 days, but the source was either “direct” or from some organic search term. In this case, the marketer might attribute 2 sales to PPC, and 5 to SEO, and SEO might win in terms of lower cost per lead. So what’s the solution?
Multi-Channel Analytics & Funnel Analysis
Google recently launched a new feature which attempts to solve this attribution problem, and show improved ROI on AdWords. Of course, Google is always interested in finding ways to show PPC really does work, and in this case, rightly so. But check this out. If you’ve properly tied your AdWords account to your GA account, and setup goals, you will see this Venn diagram. You’ll find it under the Conversions section.
In this small e-commerce website, we can see that 4.65% of the conversions occurred when a visitor clicked on a paid ad, and THEN came in later by typing in the domain name directly. Without this, the marketer may be quick to assume that the 2 sales from the direct path were not in any way influenced by paid search. Now, this is neat. I can also see what my “lag time” is between first click attribution, and the actual point of purchase. Why do you care about this? Well, if you have enough sales happening too far after first click, you may want to try to run a promotion to those visitors who are “on the fence” about your product or service.
First Click Attribution vs. Last Click Attribution
Marketers often debate whether to give the “first click” credit for the sale, or the “last click”. Some might argue that even though the PPC ad created the interest and got the visitor into the funnel, it was the “last click” that finally sold them, and so that should get the credit. This is certainly a valid point, but you have to look at a few more things, such as: a) was there a coupon or discount that may have led to the final decision?; b) was the PPC landing page set up as a lead generation, or a hard sale (i.e. “Buy Now”)?; c) was there a pricing matrix or downloadable whitepaper that may have led to the purchase decision? In other words, did the last click lead to a decision-making point? If so, maybe then you assign the credit to the last click, and measure PPC in terms of “cost per lead” only.