Measuring your Internet Advertising Return on Investment

Web site owners are continually presented with an abundance of internet advertising opportunities. Many of those options can be cost effective and very beneficial, though others will simply see your advertising money sucked into a black hole. The trick is knowing which methods will work for your business and which strategies won’t.

In the past, the ability to choose a good internet marketing campaign was somewhat of a physic ability, though new internet tracking technologies have made this vital task a lot easier.

Before examining what you can gain from such tools, let’s start with some basic terminology.

You may have heard the term ‘referrer’. Referrers are any internet or e-mail source that has sent a person to your web site. So, if a third party web site sends a person to your web site, it is called a ‘referrer’, as it has referred (sent) a person to your web site. (For example, if a person visited the Google search engine to perform a search for ‘fast red cars’ and that person subsequently clicked through from Google to your web site, Google would be attributed as a referrer to your web site.)

Next, many of you will be familiar with web site statistics programs. Basic statistics programs that are available from most web masters have been the traditional measure of the effectiveness of web site marketing. Such programs measure the number of visitors (normally called user sessions), the number of pages viewed and list referrers that referred people to your site in the relevant period.

Although that statistical information can be interesting, it can be also a little misleading and unfortunately does not reflect the most important factor for a commercial web site business the revenue earned.

Without attributing revenue and expenses (ie. calculating your return on investment) to specific advertising campaigns and marketing methods, it is very difficult to determine if a marketing method is a winner and should be continued or whether it is simply costing you money without producing worthwhile results.

This is where sales and marketing tracking tools, sometimes referred to as return on investment tracking tools, can help.

Easy to use sales and advertising tracking tools suitable for use with all web sites are now available in Australia. Some of those tools allow you to track the sales made through your site, or, if you do not sell online, some packages can alternatively track ‘actions’ made through your site. (An action for a non e-commerce site may be an online registration for a service or event, an online request for a quote or a lead generated through a contact form on your site.) I have used the word sales to refer to both sales and actions for this article.

If you are familiar with these tools, you may have noticed that most return on investment tracking tools have traditionally been confined to measuring pay per click advertising. However, some newer tracking tools will measure not only how your ‘customers’ found your site through paid internet advertising, but also the sales generated from all of your internet marketing strategies and referrers.

Examples of revenue generating referrers that some of the tracking tools can track include search engines, industry portals, directories, pay per click search engines, other third party web sites, banner ads, affiliate programs, e-mail newsletters and e-mail campaigns.

Some of you may be thinking “but I know who my referrers are already – I read my basic web statistics program”. Yes, you may have seen web statistics programs regurgitate a list of all of the different referrers that people used to find your site. That information however, does not show which referrers generated revenue for you – that is, which referrers sent people to your web site who subsequently purchased through your web site.

To produce the best return on your marketing investment, you need to know which referrers actually produce sales for you. (ie. refer people to you who subsequently purchase through your web site). This is what the tracking tools can help you to measure.

Good return on investment tracking tools show you exactly which referrers produce sales by allowing you to quickly analyse how many sales a referrer generated for you, the amount of revenue generated by each referring site and the average revenue value of each person that is sent to you from that referrer.

When it comes to paid advertising and pay per click advertising, measuring your return on investment is even more important. By using the tracking tools, you can focus on the pay per click engines and paid advertising that produce your sales and save 100s or 1000s of dollars on engines and campaigns that do not produce results for your site.

When accessing the tracking tools, some criteria to look for that will help you make informed business decisions and calculate your return include accurate information about the:
• number of new visitors to your site
• the referrers that sent people to you who actually purchased from you
• keywords your customers used to find you
• pay per click and other paid internet advertising that produced sales for you (and those that didn’t produce sales)
• e-mail and other internet campaigns that generated sales for you

 

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Sharon Wild writes ecommerce articles for Qld Business Review, she is also Strategy & Marketing Director of e-JAZ.com.au

Sharon Wild
Strategy & Marketing Director of e-JAZ, Sharon has been involved in the e-commerce community for several years. She successfully manages Australia's largest online jewellery store, Gillett's Jewellers.

Sharon can be contacted via email on sharon@e-jaz.com.au