Adotas

Where media buyers start online

Featured Author

Author Photo

Gary Angel brings over twenty years of experience in decision support, CRM, and software development, to SEMphonic. Gary co-founded SEMphonic and is president and chief technology officer. He's responsible for leading SEMphonic's development of Web analytics and SEM decision making tools for web marketing professionals. In addition, he helps companies like WebMD, Intuit, American Express and Charles Schwab maximize their web channel marketing through intelligent use of Enterprise Web Analytics

More articles by Gary Angel





Features

Contemplating Conversion: Why the “Measure for Conversion” Mantra Isn’t Simplistic Science

Written on
September 1st 2006
Author
by Gary Angel  |
Feed
   XML Feed

How do you measure the effectiveness of your web marketing efforts? By conversion rates, of course. But it turns out that conversion may only be a part of the story. High conversion rates may mask channel cannibalization. And low conversion rates are sometimes the result of that same cannibalization or just plain confusion about who or what is a prospect.

This problem is especially serious for website analytics — where the traditional measure of site effectiveness (conversions / visitors) is deeply flawed. But similar problems can exist in Search Engine Marketing programs and other online advertising campaigns. Techniques for solving these problems do exist, but you’ll have to think carefully about how you measure your web channel and what you report on.

Conversion as a Mantra
In the bad old days, web site effectiveness was measured by hits. Then by page views. Then by visitors. None of which meant a darn thing when it came to meaningful business results. So it wasn’t all that long before people finally agreed — it’s conversion that matters. You measure your website the way you measure the rest of your business — by its contribution to the bottom line. In no time at all, this became a mantra for good measurement. Are you measuring to conversion? No — that’s bad. Yes — that’s good.

And there is point in denying that measuring to conversion is a vast step forward compared to the earlier paradigms. It is not, unfortunately, quite as simple, straightforward or complete a solution to good measurement as has been thought.

It turns out there are a whole bunch of ways in which measurement to conversion can result in seriously misleading information. I’ve covered some of these in previous articles — especially Organic Cannibalization — where PPC programs “borrow” clicks from organic listings — potentially inflating conversions and understating the true cost per lead or acquisition by a significant amount. You can read more about the phenomena of cannibalization and its implications here on ADOTAS.

Surprisingly, perhaps, not only can different channels cannibalize each other, but the same channel can cannibalize itself. This is quite common in PPC programs (and, to a lesser extent with SEO) — cases where visitors frequently source from different search terms to the same site in one or more sessions. Since campaign tracking in PPC generally gives credit to the last campaign that drove a lead, one PPC campaign can cannibalize another. This is especially common with “brand” terms, and tracking conversion in this way can significantly mis-represent actual conversion performance.

Today, I’m less concerned with the myriad ways that different marketing channels can cannibalize each other and the effects that this can have on conversion and more concerned with understanding the effectiveness of the website itself as a channel.

There are five big problems with measuring the effectiveness of your website by conversion:

• Just as online channels compete and cannibalize, your web channel may compete and contribute with other channels. This can make your website look much better or worse than it otherwise might.

• Few websites are directed only to conversion goals. When you don’t factor out traffic that has other intentions than purchase, you unfairly penalize a website and you may commit a series of optimization mistakes.

• The effectiveness of a web site is heavily influenced by the mix of visitor sources you drive — so measuring effectiveness without regard to source efficiency can radically skew your perception of how well your site is doing.

• Many visitors may show up at a website “ready to convert.” Giving your website credit for these conversions is fine operationally, but it can hide significant problems in the ability of your website to actually convince prospects.

• Many components of your website have too small an impact on a conversion decision to actually measure if changing them has improved your efficiency — but cumulative changes can have a significant effect. So how can you measure these “micro” components in a way that makes sense.



Pages: 1 2 next page »

No Tags
Article Sponsor

More Features

Reader Comments.

Gary,
Love the article, and appreciate the points you are making.

But you seem to be both rejecting and embracing the idea of the “site”. You clearly don’t believe that sitewide conversion is precise enough, but you don’t seem willing to embrace the idea that you should simply stop measuring the site and start measuring campaigns only.

Check out my blog, The Site is Dead. I try to address this issue from multiple angles.

I would also add that conversion rate is a lousy proxy because it does not contemplate lead value. For ecommerce, you really have to measure revenue (hard) and even for publishers and other web properties, you should establish value proxies for critical user events.

Matthew Roche
Offermatica

Posted by Matthew Roche | 11:07 am on September 6, 2006.

Gary: The point you make on why conversion rate is not great but then your proposal is still very fragile based on “behaviour identification” based on page views. This can be wrong for many reasons (think SEO directing people deeper into sites, where they don’t want to be, or wrong clicks becuase of bad navigation and many others).

Occam’s Razor blog by Avinash Kaushik had a very good post on “Stop Obsessing About Conversion Rate” which also proposes a much better metric to replace conversion rate:

http://www.kaushik.net/avinash/2006/07/stop-obsessing-about-conversion-rate.html

That blog also has a post on how to measure conversion rate for maximum impact:

Conversion Rate Basics & Best Practices

http://www.kaushik.net/avinash/2006/07/excellent-analytics-tip5-conversion-rate-basics-best-practices.html

-Peter.

Posted by Peter Cohen | 1:36 am on September 19, 2006.

Leave a Comment

Add a comment


Spotlight

AdMob: Google’s Move Into Mobile Fray Helps UsADOTAS EXCLUSIVE – AdMob offers the biggest mobile advertising marketplace on the planet — and the company was founded just [...] more...

Adotas Partnership