Insightful articles, opinion and commentary about mobile and web.

Of the multiple digital touch points that can influence the purchase of your brand, hand on heart, do you really know which five to buy? And do you know how the five you buy will affect the ones that you don’t?

Most marketers are up to their necks in data. Paid search, SEO and social, display, mobile, video and email, each of these channels produces streams and streams of potentially valuable data. Though the potential value of the data can only be realised through accurate interpretation. An accurate read can transform how to invest your digital budget – you’ll know which five touch points work best for your brand. Needless to say, misinterpretation can be expensive.

The more fragmented the digital landscape, the more marketers need to take charge of the ROI. With social, mobile, display and search all competing for budget, being able to demonstrate ROI across all campaigns is fundamentally important. Yet too many marketers lack a comprehensive understanding of how all these different channels impact their customers.

Holistic view
You see it’s not just the last click that needs to be counted in your ROI. It’s about taking a more holistic view of digital marketing spend, and giving credit to all the touch points along the way that helped to deliver the final purchase.

Let me explain. Imagine you’re a uni student and you’re browsing news websites. You see a compelling display ad on the SMH or The Age website: “Buy a Mac for uni and get $100 for apps, music and more”. While you don’t click through straightaway, you do think that as you need a new computer, it might be a good time to explore further. But you’re not ready to make a purchase there and then and you don’t even click through on the display ads. You think about this for a day or two and browse for other deals.

You click through and explore the other deals available and one or two take really your interest. But you don’t make a purchase there and then, you’re going to think about it and see what your friends say. After a day or so and after chatting with friends you decide to purchase the Mac with the $100 for apps deal. You fire up your browser and type “MacBook pro deals” into Google, click on the paid brand search ad and make the purchase on site.

False read
While the paid brand search ad is simply the endpoint before checkout, the ad receives 100% of the credit for the purchase. The display ad that generated your first level of interest does not receive even a modicum of credit. So you can see, as the Marketing Director of Apple, you may easily be led to think that your display ads aren’t working and you need to channel more budget into paid search. It’s a false read.
Internet ad tracking systems that wrongly give 100% credit for a transaction to the last clicked Internet ad misleads advertisers as to where to allocate Internet ad dollars.

The last click problem
The same is true in the B2B world where many different factors affect the buyer journey. So just a prospect clicks on your paid search campaign and then turns into a paying customer, does not mean you can attribute that success to your paid search campaign when your prospect has probably engaged with multiple marketing touch points before making the decision.
It’s known as the “last click” problem. You see this analysis doesn’t take into account any other paid media that drove the sale. With display ads, you’re not giving any credit to the impressions gained if you’re just measuring clicks. So rather than focussing on the last click, you need to fully understand and give credit to the value of the many digital touch points your customers experience on their path to purchase.

All touch points given a fraction of the credit
Attribution modelling helps marketers to measure channel return more effectively. Like a winning relay running team whose members are all given a gold medal rather than just the one who actually sprints over the line, attribution modelling captures all online media sources from the point where sales are first originated all the way to the final transaction. With attribution modelling, you aim to understand the relationship between different customer touch points, and allocate value accordingly.

You also need to think about incremental attribution, and assign weights to different messages. For example, you’d give a display ad less weight than a personalised email. The time the message was received relative to the eventual purchase should also go into the equation. Typically, you would assign a higher weight to a later message than an earlier one.

Messages are classified by the stage they support, and buyers are tracked as they move through the stages of a purchase funnel. Marketers use this structure to compare the effectiveness of different messages in moving buyers from one stage to the next. This lets them estimate the incremental impact on cost and revenue of spending on different messages/media, allowing a meaningful ROI calculation.

When all touch points are given a fraction of the credit, you can then determine a return on investment based on attributed revenue to spend ratio.

Although attribution modelling has been a hot issue for some time, I’m still seeing marketers struggle with the data and rely too heavily on last click analysis. The complex math can be a challenge but with increasing digital channel fragmentation, attribution modelling provides marketers with the only crisp measure that accounts for many digital touch points including social, mobile, display and paid search. It’s all you need to understand the most effective digital touch points for your brand.

This article was first published in B&T on 5 March 2012

By Simon van Wyk

In this month’s podcast marketing consultant Jonathan Salem Baskin discusses the importance of being able to measure behaviour and activity in the sales funnel. He cites the work of strategic marketing consultant James Lenskold as a stand-out example of someone who is applying hard numbers to a largely intangible measure: finding the value of marketing and branding activities.

read more

There is an enormous amount of debate about how ‘value’ is defined and measured on web projects, particularly ROI on content. This thorny issue is still not resolved, so I’m going to point you toward some places where robust debate is going on, and you can make up your own mind.

Online Metrics Insider: This is a subsite of the MediaPost portal that deals with all angles of the web measurement and analytics debate, including content. Recent article titles include “It takes a village to measure social applications,” “Does content matter?” and “Does online metrics need a stimulus package?”

Web Analytics Demystified blog: Eric Petersen has written one of the seminal works on using web analytics in business. His associated blog contains interviews, comments and news of interest in this area.

Real Time Content blog:  This blog is dedicated to personalisation within online video advertising. This link is a compilation of all their articles about measurement of online video content.

American Marketing Association: Summary of a presentation by Jim Sterne, chairman of the Web Analytics Association and author of Web Metrics: Proven Methods for Measuring Web Site Success, on how defining the right metrics leads to online success.

If you have any other sites you want to nominate, please add them below in the comments.

Online brand communities take a lot of work and time to nurture and grow. How do you know they’re providing value for your company? Some recent work in this area includes:

• Online Community ROI (Return on Investment) TCO Analysis (Total Cost of Ownership) – this worksheet helps you work out ROI and TCO for implementing an online community or social network.

• Online Community ROI – A collection of statistics that build a solid case for building online brand communities. Accompanying PowerPoint here.

• Measuring Success in Online Communities – Summary of a presentation on the topic at the recent NewComm Forum.  Accompanying PowerPoint here.

• Measuring the Success of Online Communities: the academic view – a link to articles on this topic in Google Scholar.

• How do you measure success online? – A blog and robust set of comments on the topic on the Econsultancy website.

As discussed in our most recent podcast, the value of online ad networks is a hotly debated topic in the blogosphere.  Some recent work in this area includes:

• A recent report from Northwestern University’s Media Management Center in Chicago, which combines the resources of one of the US’ top MBA programs with its top-ranked journalism school. Online Ad Networks: Disruption – and Opportunity – for Media Businesses is aimed primarily at publishers, but has lots of good general info about the value of online ad networks.

“A thousand online ad impressions could be worth 50 cents – or they could be worth 50 dollars. For a publisher, the difference may well lie in how well you manage your relationship with advertising networks.”

• Former Wired editor and author of  The Search John Batelle asks the question, “What’s this fascination with ad networks? “ He writes:

“How do we truly create value in the media business? Do we sell inventory to the highest bidder via algorithms, automated processes, and platforms? Or do we partner with marketers and creators of media to build brands - both media brands, and consumer marketing brands? …. It seems the future, according to AOL, Yahoo, and Microsoft, is in ad networks.”

Also, here are a couple of places to learn more about the effectiveness of online advertising in general:

• This case study looks at how the retailer Target measured the ROI of online advertising spend impact on offline sales: http://www.microsoft.com/casestudies/casestudy.aspx?casestudyid=4000001057 . Interesting quote from the study:

“Given the strong ROI impact and the favorable cost efficiency of Target’s online campaign, the recommended percentage of online spend should be 10 percent of the total advertising budget.”

• Here’s a good list of studies on measuring Internet advertising effectiveness and organisations working in this area, compiled by the Web Center for Social Research Methods:  http://www.socialresearchmethods.net/Gallery/Cho2/measure1.htm

The old chestnut “Half of my advertising is wasted; the trouble is, I don’t know which half” doesn’t apply to online advertising. While there is as of yet no foolproof formula for measuring online success, the data you can collect from visitors makes it much easier to find patterns and test various methods to determine which ad works best.

Here are a couple of places to go to learn more about how to do this for your business:

• Search Marketing Now (SMN) has produced a webcast that covers the basics of ad tracking. As SMN says, “Any good Internet marketing professional knows that assigning all of the value to the last ad clicked on before the conversion is inherently flawed. Most Internet advertisers, however, lack 1)The tracking technology required to determine the actual team of ads and their sequence that lead to the conversion; and the valuation methodology to properly assess each ad’s true contribution and value to the conversion…. there is no industry-accepted standard or method for assigning relative value to ads in the path. How do we effectively attribute which ad - or group of ads - ultimately led to the final conversion?”

• The Conversation Marketing website states boldly that  “Advertising exists to help you make money. That’s it. There are no moral victories in marketing.” Advising that you need to track the ROI of online advertising “every bit as carefully as other media,” the site outlines four simple questions that enable you to measure the effectiveness of each of your Internet assets: 1) What’s the goal of your web site? 2)What’s that goal worth? What’s the value each time you accomplish that goal? 3) How many times did you achieve that goal? 4) What did it cost to achieve it? Find out more here.

• Measuring the Social – Shifting Towards Online Advertising – Dan Neely, founder and CEO of social media and customer intelligence company Networked Insights, has produced a short video explaining the increasing importance for companies to measure and understand the complete online social situation as it affects online advertising. He says, “The current macro-economic environment will impact both offline and online ad spend….In the recent meetings with the ‘big three’ US auto makers in Washington, General Motors CEO James Wagoner said that GM would be shifting a substantial amount of their $500 million ad budget online…. Although this is smart, it’s only the first step as its not simply about shifting ad dollars online, it’s about doing this efficiently and intelligently - targeting the right people with the right content. Check out Dan Neely’s video here.

It’s a common refrain from nearly everyone I speak to in business: If I can collect so much data via my website, how come I can’t see the ROI on my digital investment? The fact is, you can – it’s just not as straightforward as we’d all like.

Forrester Research has been doing a lot of work in this area. Forrester analyst Charlene Li, co-author of the book Groundswell: Winning in a world transformed by social technologies, has produced a couple of reports showing how companies can apply a three step process to measure return on investment (ROI) for their corporate blog. She writes:

“What’s the best way to measure the effectiveness of a blog? It starts with the goal of the blog. I strongly suggest that companies start with the goal, develop metrics that measure the attainment of that goal, and find ways to assign value to those metrics.

“Just as there isn’t a standard ROI for a Web site, there’s no standard for a blog. It depends on what the goal of the blog is and also how much investment the company (and the blogger) puts into it.”
To answer the argument that companies should set up a corporate blog just because they know it is the best way to start conversations with customers, Li says, “At the core of my bleeding heart pumps the soul of a pragmatist. Sure, I buy into all of the positive, feel good reasons to have a blog. But when your manager asks why the company has a blog versus spending more time and resources on XYZ initiatives, it sure would be helpful to be able to show a spreadsheet of those blogging benefits in dollars and cents.”

An example of the three step process (reproduced from her blog) is below:

For more on measuring return on digital investment and the three other hottest digital media topics today, download the podcast of my interview with Personal Life Media founder Susan Bratton.