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FAQs | Marketing

Online Advertising Justification

Q: What metrics have people used to justify an on-line advertising program's success?

  • As an "online ad agency," our company spends a good deal of time figuring out what metrics to apply to online campaigns. While each campaign varies, we typically set goals at the outset for a) awareness and b) direct response.

    Although most people focus on the direct response component, one shouldn't overlook the Web's ability for awareness building for both brand and product. For a young company, this awareness building can be very important. Pointcast ads are one of the better vehicles for awareness building because they're TV-like. Due to their passive nature, they do not encourage high click-throughs, but do serve to build frequency of message.

    Unfortunately, actually measuring "awareness levels" of online ads or the ads' contribution to awareness is a costly undertaking. More easily measured are direct response objectives. These objectives go beyond click-through to:

    • Form completion (lead generation)
    • Requests for information
    • Product trial
    • Sales

    Using these objectives, you can use metrics such as cost per lead, cost per sale, completion rates, and number of leads generated. To determine their effectiveness, these metrics should be compared to off-line programs like cost for direct mail or cost to hold a seminar. While online channels can offer a more cost effective means of acquiring leads you must also examine the quality of those leads. Since a customer has to be more engaged to mail in a form or attend a seminar you may get a higher close rate for those channels. [Patrick Fitzgerald, fitzgerald@cks.com]

  • Cost per sale is the best metric to use, and several people do track it, although it is tough for products that require multiple contacts and/or channels to sell. Cost per click doesn't work if your product sale is multi-faceted. I have yet to see any firm justify an Internet ad campaign on cost per impression since the average radio, TV, and newspaper CPM costs are below the $40+ CPM rates charged for banner ads by the "major" sites of the Internet. [Scott Ferber, sferber@IX.NETCOM.COM]]
  • Measuring the effectiveness of any form of advertising first depends on whether you're seeking branding or direct marketing effects. Most of the advertisers consider Web advertising to be useful for direct marketing only (while Web sites, of course, see it differently). Branding success is very difficult to measure for any specific media. Direct marketing is also hard to measure unless you do it at the click-through level-- then it's trivial. [Terry Steichen, tjs@huskynet.com]
  • Measure Web advertising in the same manner as you would measure any other program, ensuring that you're not setting up different metrics for the Web, only because it's the Web. The Web has important mindshare metrics which are impossible to measure, though some people try (especially in venture capital sessions). If you can't measure it, don't try. Sometimes the value is the mindshare. And very often there is no value in a particular ad campaing. [Jill Harrison, CTP Group]
  • It is basically impossible to develop a Return on Investment (ROI) on banner advertising. The same is true for traditional advertising. What is important is that you look at where your traffic is coming from, and make a determination of whether or not it is worth it to advertise on the Net using banners. If only one percent of your traffic is generated from banner ads, and almost all of it comes from search engines, consider spending your money elsewhere. [Sandor Kiss, kiss@canuck.com]
  • I don't think anyone can justify online promotion credibly. I think the impact of online promotion is significant, but I think the traceable imprint lag time is significantly higher. You just can't accurately assess the numbers right now.

    However, you still need to advertise online even though you probably won't be able to justify the expenditure to senior management. For example, about 40% of all advertising and marketing efforts are undertaken simply to generate "top of mind" awareness, and no one can prove an actional link to top of mind.

    There is a lot of data out there, and we can count clicks and time site presence, and show cross-links, and demonstrate recursiveness in page views and about a million other things, all of them having numbers attached thereto. But we still have no actual way to measure how and why the user was engaged on such a level as to lead to a call to action. Until we can do that, it's all guesswork.

    View online advertising as reinforcement/goodwill media-- kind of like business-to-business support advertising. It's just good PR. Sales resulting therefrom should be seen as gravy. [James E. Mason, jamesmason@iName.com]

  • If the advertising aims to drive traffic to the company Web site, then the question is not whether placing online advertising is critical to your campaign, but how important the Web site is to your company's marketing and business development strategy. If the company's Web site is key to its communication with customers, then there's a good justification for an online campaign which drives traffic to it. If it's not important (e.g. if it generates relatively little new business or few leads for the company, and other marketing vehicles such as trade shows, magazine advertising or direct mail are more important) then the value of driving traffic to the site is correspondingly reduced.

    To calculate the value of an online campaign, you need to know the value to the company of communicating with customers via the Internet. [Paul De Groot, pica@freenet.edmonton.ab.ca]

 

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