Make Sure Your Metrics Measure Up
How would you measure the effectiveness of your marketing? By how many adventure-seekers were made aware of the trip? How many went to the Web site and signed up? How many paid in advance? How many climbed to the summit and signed up for next year's expedition?
To optimize advertising return on investment you must set specific goals, monitor both customer behavior and attitudes and modify campaigns based on those insights. The first step sounds simple, but it is often overlooked: Identify exactly what you want your advertising to accomplish. If you are a bookseller, are you attempting to drive new visitors to your online bookstore in order to increase overall traffic levels, or do you want to target a select group of prospects who will purchase a particular book right now? If you are a credit card company, is the campaign designed to deliver a specific number of new and approved credit card applications, or build brand awareness for your new line of credit cards? The point is to identify the measurement objectives first.
The key to optimizing advertising ROI is accurate and relevant measurement. When thinking of how to best measure campaign effectiveness, consider this. The optimal advertising "measurement mix" is two parts behavior, one part attitude, and a dash of common sense:
Behavior: Part 1. Optimize reach and frequency. Any given media property reaches a finite audience, and after a while, your ads will reach the same people multiple times. If your ad campaign is a direct response vehicle, put a frequency cap on your advertising based on the optimal number of exposures needed to elicit a response. If you are looking to increase brand awareness, release the frequency cap to four or more. These modifications will help to stretch your ad budget. Of course, we are not reinventing the wheel here. Reach and frequency are not new concepts. The metrics have not changed. But the immediacy and precision of those metrics has.
Behavior: Part 2. Monitor customer response and behavior over time. Determine what response metrics you want to optimize. If you are that credit card company, your objective will be to optimize cost per approved application -- not just attempted applications. While, the book seller will need to minimize cost per new visitor -- which means he must be able to distinguish between new and repeat visitors delivered by the campaign. It is also important to develop a series of metrics that span the entire customer life cycle. You don't want to mistake a problem in advertising for a problem in purchase process.
If you are an Internet retailer looking to understand lifetime value of the campaign, you must track repeat purchases, returns, and cost of service per customer delivered by the campaign over time. If you are an Internet publisher selling sponsorships and advertising inventory, you should look at the total number of ad views (and the value of those ads) consumed by the specific visitors who were delivered by your ad campaign.
One Part Attitude. You need attitudinal research to get at people's thinking. Attitudinal research is key to understanding the branding value of online advertising, as well as the "why" behind the actual response or lack of response to a campaign. The research methodologies used for measuring branding in the offline world can be easily implemented for online advertising, and in some cases, with more accuracy. In fact, it is now possible to see the brand metrics for your campaign in real-time.
Find ways of integrating attitudinal research into each campaign, and develop benchmarks that you want each campaign to achieve. Going back to the credit card company, if branding is a campaign objective, the launch of a new card should start with brand metrics to track whether or not people are learning or hearing about the new card and how they perceive it's competitive positioning.
Research has shown that exposure to online advertising can significantly raise awareness of a brand, on average about 6 percent. In some case studies, it has been as high as 40 percent. The frequency of the exposure will increase the branding value of the campaign: four or more exposures typically doubles the branding value of a campaign.
Eventually, online marketers should be looking to link attitudinal information to the behavioral data gathered from ad servers and log files. This will enable you to garner deeper insights into the drivers behind customer behavior, such as which specific ad banners are most effective at building brand awareness or why a particular group of campaign respondents were impacted by your campaign.
One Dash of Common Sense. Marketers do not need to throw all they know out the window just because the Internet has arrived. Whatever marketing choices you make and no matter where you advertise, make sure you have already made the decision to get the proper measurement points in place and that you have the right tools in place to get your behavioral and attitudinal data. Not only will it show you the full picture, but it should make it easier for you boss to swallow your marketing mix budget next time.