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That’s right – you can’t measure everything online that you might think.  Analyzing click traffic on websites has become much more difficult to get anything close to accurate.

One of the most difficult problems to solve is the issue with giving proper credit to the “original source” of the lead or sale.  Some of the PPC systems refer to this as the “assist” and they pass special tracking cookies to the user that will help indicate in the click stream data future visits from this user.  This typically helps credit PPC campaigns and reduces the cost per acquisition (CPA) for that channel.

This is great, but it is flawed.  This generally assumes that the visitor used one computer, and few of us use one computer.  We usually have an office computer, a home computer (we have 2), plus mobile devices.

Consider this situation (which is probably quite typical):

1.  Husband is searching for vacation spots for his family during his lunch at work.  He does several searches, including hitting a few paid ads.
2.  He runs out of time and has to get back to work, so he emails himself the links to the pages of the sites he liked to his home email account so he can show his wife later that evening.
3.  He gets on email at home and pulls up the pages on his home computer to show his wife and kids what he found.
4.  They continue to do more research and even bookmark a few sites/pages and will revisit in a couple of weeks so they can think about it.
5.  They revisit the site a few weeks later by hitting the saved bookmark and from there, decide to purchase.

Now in this case, it’s going to be virtually impossible for the marketer to track this sale all the way back to the paid search ad because he lost him as soon as he switched computers (if he is even using cookie and campaign tracking in the analytics software).  And if this happens often enough, he will think his paid search campaign is ineffective because it is not driving any sales.

Newsflash: most people don’t buy anything on the first visit!

There is likely going to be multiple interactions, extensive research, bookmarking, etc. before any purchase is made over a several-week (depending on the product) sales cycle.

Secondly, consumers are not going to be as compulsive in a down economy and are going to be looking around for deals, so we can’t possibly expect them to purchase on the first visit from a Google ad.

So what can we do about this?

Well, not too much, unfortunately.  However, if you have an e-commerce site selling any sort of products, you can reduce this phnomenon by simply having a “Favorites” or “Wish List” area of the site where a user can quickly and easily open a free account and save what they like straight on your site. This would eliminate the need to bookmark and email and cookie track everything.  You would have all of the data on your site, and now you could even do session tracking by username and get other interesting information (beware that session tracking has additional privacy issues that you will want to look at closely).

Many of the large sites like Amazon, eBay and others have this feature, but even for small or medium sized business, most of the 3rd party off-the-shelf e-commerce applications (like X-Cart, Magento) have Wish List capabilities.

Happy tracking!

No Comments »Tags: cost per acquisition, Google AdWords, PPC, Web Analytics

Let’s say you have a PPC campaign running with lots of variations in ads, ad groups, messaging, etc. You even have micro and macro conversion goals set up in your PPC campaign and assigned each of them a value. You’ve organized everything in to groups for testing, but you just aren’t completely sure which combination of test variables is working properly.

Here’s how to know which PPC ad group is working:

1. Determine what the value of your conversions are. This can be subjective, so use your judgment based on what the sale is worth.  If a sale is worth $100, maybe a form submission for a lead is worth $10. If you have an e-commerce site, than include the value of a sale, perhaps in net terms.  (We can determine what the max amount we should spend on a lead by looking at how to measure cost per acquisition.)

2. Compare your ad groups side by side, looking particularly at what the ad group cost, total conversions generated, and total conversion value.

3. Divide the total conversion value by the total amount spent on the ad group.  This tells you how much you earned in value for every dollar spent. In the example below, Campaign #1 earned $4.11 for every $1 spent on advertising, while Campaign #2 earned $6.81 for every $1 spent.

We call this the Value-to-Spend Ratio. It helps quickly evaluate your campaign if it has lots of ad groups.

If you have an example where your Value/Spend ratio is less than 1, that means you are earning less than you are spending, so you will need to decide if that ad group should continue or not.

Here are two ad groups shown side by side:

On the surface, Campaign # 1 looks like a better performer.  It had a higher click-through rate, more ad clicks, more conversions and $67 more conversion value.  Even the average CPC between the two campaigns are identical.  But Campaign #2 spent less than half the money to get only 21% less value.

A lot of people might assume Campaign #1 as the winner here, but we disagree because of the Value-to-Spend Ratio.  We like this measurement technique because it is agnostic of the various types of conversions and conversion values.

Try it, and let us know how you made out!

No Comments »Tags: Google AdWords, pay per click, PPC, value-spend ratio

We just finished putting together a comprehensive online ad campaign using Google AdWords for a hospital in Chicago. We needed to create four campaigns centered around “heart attacks”, “heart disease” and other cardiovascular related topics. The set up work was kind of exhaustive as we scrubbed the keywords for searchability, effectiveness, competition, and average cost per click. We also set up a strategy for each landing page, remembering some of the rules about good landing page design. Then we needed to determine what we were going to track in the campaign in order to compute the real return on investment, or ROI. If you use AdWords’ Conversion Optimizer, it will kind of give you an ROI, but in terms of the ad spend, cost of acquisition, conversion values and some other things. However, the ROI extends beyond the campaign since there is activity that drives leads to the client that AdWords can’t track (that I am aware of); in our case with the hospital, consultations scheduled, consultations completed and ultimately, procedures. Well each of these has value that must be calculated as part of your ROI on the campaign. Quite simply, we can define ROI in the following manner:

where the total benefits are all of the conversions and their associated values along the way, and the total costs are what the campaign cost with click expenditures, web design, development, tracking, analysis, account service and more. In the end, we set up 8 different conversions that were cross-utilized in the other ad groups and landing pages, so when you add it all up, there were over 25 points of conversion – all having value to the client.

So we can easily see here under the “Conversion Tracking” menu that so far, only after a day of running the campaign, we have 54 conversions on Zip Code Entry. Well, we have several ads that drive you to a landing page that ask for a zip code before you can use the risk assessment tool, so if I click on each conversion, I get the following:

and now I can see that the Zip Code Entry was most successful on the Cardiac Risk Assessment Calculator conventional ad, run 1 (I talk more about how to set up AdWords campaigns for maximum efficiency and results in another post). Overall, I’m getting an 84.38% conversion rate on this particular metric, which is very good. This says that most people are OK with giving you a zip code in order to use something of perceived value, or to get to the next step in the process. So, during the campaign we will add up all of our conversions, multiply them by their respective values, and divide by campaign cost. This method will show your client much more value of what the campaign is extracting, rather than just looking at click through rates (CTR’s) and ad conversion rates.

How do you calculate ROI for online ad campaigns?

No Comments »Tags: conversion tracking, Google A, Google AdWords, PPC, return on investment