Harnessing Immediacy of the Web to Increase ROI

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Companies will spend more than $15 billion on online advertising in 2003, according to Forrester Research, Cambridge, MA. But until they begin to evaluate the effectiveness of online advertising by more than just click-throughs, most of that money will be wasted.


Companies must begin to capture and analyze real-time, immediate feedback from Web-based campaigns in order to maximize results and demonstrate clear ROI.


Because the Web is unique when compared to any other marketing medium, it can provide immediate feedback about the success of a campaign, elicit action, furnish up-to-the-minute data to calculate return on investment and drive sales. But most importantly, the Web allows the opportunity to refine marketing programs throughout a campaign.


Online media buys, key messages, product offers or banner animations can be altered instantly to increase the return on investment, something that is not possible with print or direct mail.


One useful testing tool is the satellite Web site, a site that sits outside the primary corporate site to track traffic. A number of companies use satellite Web sites to test offers, banners and messages to see which combinations inspire visitors to fill out a form, place an order or download information.


Perkin-Elmer, a maker of high performance DNA testing equipment, for example, implemented an online campaign to introduce a new product. By harnessing the Web's ability to provide immediate feedback on the campaign's media mix, Perkin-Elmer was able to refine continuously its online media schedule and reduce its overall cost-per-response from $220 to $4.15.


The company purchased online banner space in two-week increments on a variety of Web sites specific to the biotech industry. It tested an array of offers, graphics and product messages on each of the Web sites to see which combinations were most effective. By purchasing banner rotation space in short increments, Perkin-Elmer was able to analyze, in real time, the amount of traffic and interest generated by each banner placement. Although short-term buys tended to be more expensive, the company eliminated under-performing Web sites from the mix. Conversely, every two weeks the company was able to purchase additional banner rotations on Web sites that yielded the highest traffic and the lowest cost per response.


To make full use of the extensive information provided by visits to a Web site, it is critical to first establish a set of metrics upon which the program will be measured. Determine whether the campaign will be deemed a success based on the number of leads generated, the number of qualified leads generated, cost per lead, sales, cost per sale or some other criteria. Once the metrics have been established, it's easy to make modifications to ensure goals are met.


Consider an online campaign the Network Interface Card division of 3Com implemented to generate highly qualified leads for its sales force, build a prospect database and reduce the cost per response. Throughout the campaign, 3Com and Times Direct Marketing were able to test multiple banners and various media Web sites to determine which combinations were the most effective at generating qualified leads, gathering information on prospects and turning prospects into customers.


The results of the campaign included building a prospect database with 22,372 new names and the cost per lead was $5.05. If you compare the results of this promotion with any traditional direct mail campaign, the Web's ability to provide real-time feedback was the differentiating success factor. Real-time feedback allowed additional banner rotations to be purchased on Web sites that generated high-quality leads and the offers made to potential customers were refined as the program progressed.


Online marketing campaigns can also be measured against traditional direct marketing campaigns by incorporating the use of direct mail as a benchmark against which such metrics as number of leads generated, cost per lead or cost per sale can be evaluated.


Union Bank of California used both traditional direct mail as well as online banners to test the effectiveness of marketing directly to consumers and to drive demand for a new suite of home banking services. The results of the campaign showed that online banners were twice as effective as direct mail, with a cost-per-application kit request that was 50 percent lower than that of direct mail. The average cost per lead from direct mail was $83.45 as compared to the cost per lead from online banners, which was $39.00.


The critical success factor with any online marketing program is getting the company to take the time to establish the criteria upon which a program will be evaluated. Companies that are flexible enough to experiment with site and banner style combinations and are dedicated to refining offers and messages consistently will increase their return on investment by harnessing and fully using the immediacy and power of the Web.


Chris Peterson is president of Times Direct Marketing Inc., a San Francisco agency focused on print and online direct marketing programs. He can be reached at chris@tdmi.com.
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