by Jon Ostler, founder of First Rate
MANY YEARS AGO WE realised that one of our company’s key strategic goals was to find ways to convince prospects and clients that they should be moving some of their existing Web site marketing budget away from tactics like banner ads and TV and towards more effective contemporary marketing campaigns like search engine optimisation and search engine advertising.
We quickly found that case studies and industry statistics were not going to do it. Cold, hard facts specific to the company in question were the ticket. We also found that although clients were happy to accept impressions and brand awareness metrics as proof of success for their traditional campaigns, rankings and traffic were not enough to break them away from the “safe” traditional campaigns and move them over to significant search marketing activities.
So, we decided to investigate developing our own analytics to evaluate the return on investment (ROI) of search campaigns.
When we started on our path towards ROI marketing we could not find any software that could effectively measure it, so we developed our own in-house conversion measurement system, as did many other search engine marketing companies.
Over the years, most Web analytic companies have introduced campaign and conversion tracking. Even Google and Overture have entered the market with their own offerings. Google’s recent purchase of Urchin.com demonstrates how closely effective measurement and search marketing are now linked. Other companies with good offerings include WebTrends.com (as used by iProspect) and ClickTracks.com.
With the wide range of tools available, some confusion around conversion and ROI has arisen as, unfortunately, it is not as simple in practice as it appears at first glance. Below I attempt to explain the different types of conversion metrics. By understanding these different ways of looking at conversion, the search engine marketer can provide clients or managers with the complete picture and can take the credit for their highly valuable search engine marketing activities.
This is the simplest form of conversion and reports conversions based on the method used to access the site immediately before conversion took place. This method is quite inaccurate as many conversions are not attributed to any campaign or source, as many visitors bookmark the site or use their history to revisit the site once they have researched other options.
Latent conversion allows for repeat visits to a site using bookmarks, history, or address bar entry and links the conversion back to the last known campaign or source used to access the site by the user in question.
Conversion by Acquisition
This method remembers the campaign or source that was used to first visit a Web site. This first visit could have occurred many months prior to conversion. This is my preferred method of reporting for search marketing as search marketing is primarily an acquisition technique and often people take a few hours, days, or weeks to convert and may revisit the site via other campaigns once aware of the site and brand.
This method reports all the conversions that have taken place for a specific campaign. This approach is similar to latent conversion, but normally measures campaigns in isolation. This lacks some sense, as a single conversion can be claimed by more than one campaign.
In the real world, people are influenced by many factors and marketing tactics before they convert and so there may be a number of contributing factors that result in any conversion. Conversion path analysis attempts to quantify the effect different elements have in a multi-channel campaign. As you might expect, this form of analysis over many conversions can be used to identify trends, but can be quite difficult in practice!
Life Time Value
By linking all future purchases back to a specific campaign or visitor’s acquisition source, it is possible to measure the true value of a new customer. In many cases even with an effective search engine marketing campaign, the first sale to a particular customer may not be profitable. However if that new customer becomes a repeat customer, then the campaign could be very profitable over a 12- to 36-month period.
By measuring and communicating these conversion metrics to Web site stake holders, you should be well positioned to take the credit for successful tactics and campaigns and highlight traditional activities that have quite frankly come to the end of their useful life.