Online Marketing’s Downward Spiral: How to Avoid the Pitfalls of Lower ROI and Volume

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A good online marketer these days monitors ROI by channel and then constantly tunes campaign variables to find the most revenue at the best possible return. But, be careful in how you interpret ROI results — if you execute upon detailed ROI metrics without thinking through purchase decision considerations you’ll remove important steps in the buying process and be left wondering why campaigns performance headed south. Once in this downward spiral, it takes a substantial investment to recover.

THE BUYING PROCESS — MORE THAN ONE CLICK

Shoppers online often visit several sites during their buying cycle. They may be comparing prices, reading reviews, looking for a good shipping deal, or just browsing. Whatever the reason, they usually search more than once before they purchase (DoubleClick and comScore reported 4.7 searches before purchase for apparel, for instance, and 4.9 for computers.) Consumers also click on multiple ads along the way. Each ad and each click is an important step in your customers’ decision making process — a unique yellow brick in the road to a purchase at your site.

What happens if you start removing those bricks by taking down some of your ads? Maybe nothing. Your customers might skip a few steps, follow the road anyway, and buy products from you. Since you pay for each ad placement, this is the best scenario — your revenues stay the same, your costs go down, and your profits go up. What would your competitors do in that situation, though? I know I would try to get your customers to see my ads instead during their buying process. I might not get all of them, but I would be able to deflect a few from buying at your site to buying at mine. Each brick you remove in the customer path provides a new opportunity to lose customers to a competitor.

This leaves you with two competing goals — you want to minimize your cost by eliminating marketing programs that fail to drive new customers, but you don’t want your zeal at removing poor performing ads to make the gaps in the buying process too wide for your customers to navigate.

IT ALL STARTS WITH SOLID ANALYTICS

The first step in ensuring you remove the right ads is measuring the performance of each correctly. This is more difficult to do than it sounds. To measure correctly, you need to keep track of which ads get clicked in each step of the buying process. Do your customers first click on broad search terms like “watch” and then later click on more specific terms like “Invicta Chronograph Watch?” When in the process do they click on a display ad? Should you count a conversion after a click on an ad 5 days out? How about 30 days or 60 days out? Without knowing the answers to these questions, it will be tough to decide which marketing programs to keep live and which to cut.

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