Building Blocks of Analytics


buildingblocks_smallADOTAS – Pop quiz! What do the following three phrases have in common: return on investment (ROI), effective advertising dollars and bang for your buck?

Aside from being every advertiser’s motivation for advertising in the first place, these three phrases mean nothing to your campaigns without analytics.

Analytics is an essential component of measuring all advertising campaigns; otherwise, there would be no way to accurately determine ROI, the effectiveness of your advertising dollars and if you are indeed getting any bang for your buck.

Too many advertisers fall into the habit of placing and renewing advertising without proper evidence of its effectiveness. A perfect example of this is using certain media to advertise simply because your competition has a presence there.

This practice is most common among subscription-type advertising, such as Yellow Pages, newspapers and billboards, which inherently have a minimum basis for tracking. This age-old, follow-the-herd concept is outdated and slowly disappearing, as advertisers become more budget conscious and analytics savvy.

Although advertisers are becoming increasingly aware of the need for analytics, many struggle with determining which data to track and how to measure. According to a study by BusinessWeek in February 2010 (“From Collaboration to Personalization: Unlocking the Potential of Online Marketing Optimization” commissioned by Coremetrics), only 38% of marketers claimed to be confident of tracking the right metrics to measure marketing performance. This means that the rest of them, a staggering 62 percent, are not completely confident in their analytics.

A lack of confidence in your analytics inevitably means that you shouldn’t draw conclusions or make decisions based on the results of your tracking. The lesson to be learned here is that tracking the right metrics is the most important step in developing a useful analytics program.

Let’s explore what makes a good analytics program, starting with which metrics to track. First, define your success metrics. Ask yourself what you want your advertising to do for you. Do you want to generate leads in the form of phone calls, in-store visits or website clicks, or do you simply want to increase sales?

Next, develop a means to figure out if these success metrics are achievable. Ideally, you want to be able to track these metrics by campaign or media. For example, if your goal is to increase phone leads, listing a unique call-tracking line in your print or Internet Yellow Pages ads will tell you exactly how many phone calls are generated as a result.

Tracking leads or sales by campaign is essential to identifying if a campaign is profitable. Let’s say you want to determine ROI for your Google AdWords campaign. You spent $15,000 and had sales of $200,000 throughout the course of the campaign. Without knowing how much of those sales came from your Google customers, you might just assume that your ROI is around 13:1.

An ROI of 13:1 is impressive, but is it accurate? Probably not. Putting tracking methods in place — special offer codes or coupons exclusive to your AdWords campaign — will help form a better idea about how many sales were actually driven by that campaign.

Determining ROI does not stop there, though. To get a true calculation of your ROI, you need to figure out your cost per sale and overall profit margin. Once you calculate profit from the sales generated by your advertising, you can then divide that profit by your ad spend to reach a true ROI.

We have determined that analytics is essential to measuring the success of ad campaigns, but we haven’t determined what kinds of analytics are best for you. Analytics can come in many forms and at many costs. Here are some ideas about getting started with analytics, as well as making progress with more experience and resources.

Beginner Approach

— Make assumptions based on change in sales volume

— In-store or point-of-sale surveys

— Count incoming phone calls

Intermediary Approach

— Run test campaigns (e.g., three months instead of 12 months)

— Call-tracking lines

— Coupons or promotion codes

— Pay-per-click or pay-per-call campaigns

— Unique content specific to traffic source (e.g., a unique price point on a landing page)

Advanced Approach

— Tracking online activity:

  • Unique tracking URLs
  • E-mail lists and website registrations
  • Contact request forms

— Bridging online activity with offline purchases:

  • Call-tracking lines
  • In-store pickup options
  • Customer callback surveys

Taking simple steps, like those mentioned in the Beginner Approach, will undoubtedly help you make more informed decisions about your ad campaigns. As your analytics skills and resources become more advanced, your ability to interpret tracking data (and optimize campaigns accordingly) will advance, as well.

Analytics, in some form, are a must for all advertisers. Start simple, track the right metrics for your advertising goals and, above all, learn from your data and experiences.


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