Newsletter - 8 Essentials of Measurement
Performance Marketing Newsletter
June 2010
8 Essentials of Measurement
Dear Reader,
Online measurement is a hot topic these days. When Internet marketing first began, we were excited to be able to track every click and page view. After spending our ad budgets on media buys that were based on impressions, marketers could finally measure an action rather than a placement.
Now things are getting complicated as more behavioral data is created in social media, with a growing controversy over attribution and how engagement and conversions should be tracked – if a prospect interacts with multiple messages how do you give relative credit and/or count more than the last action?
This month?s feature article -- the first in a series on these topics -- is a conversation with LSFinteractive?s Vice President, Strategy, Karen Breen Vogel about the importance of measurement and eight fundamentals of an online measurement system.
All the Best,
Daniel Laury
Founder, President and CEO
LSFinteractive
Feature Article: 8 Essentials of Measurement
Measuring online activity has never been easier, or more complicated. The amount of data available to online marketers is staggering. Web analytics track everything from the initial ad view to a click-through to an incredible range of possible engagement and conversion activities.
But without the ability to interpret and correlate this data to business goals, many marketers cannot apply the lessons of this critical information properly. In this conversation, Daniel Laury and Karen Breen Vogel explore the benefits, pitfalls and fundamentals of good measurement.
Daniel: Why is measurement so important?
Karen: Measurement is important for two reasons. First, marketers need to be accountable to the investment they?re making. You need to be able to tell people what you got for the company in return for its investment and this needs to be stated in financial terms not activity terms. No financial executive wants to hear about conversions – there needs to be a financial value placed on everything from the click to the level of engagement to the conversion and beyond if that is not an actual sale.
It's different in every type of business model. Ecommerce can give very specific revenue and profit results. For lead generation, it is a more complex challenge to calculate future revenue or profit value of web interactions. This requires integrating down-stream data over time and utilizing a framework for creating a present value of this pipeline based on scoring these visitors and their interactions based on a number of data points.
Until now, most other parts of business besides marketing have been able to show ROI. Marketing was let off the hook because advertising was hard to track and marketing was seen as a cost center rather than an area that could return profit. Now marketing can be seen as a profit center.
The second reason measurement is important is that if you don't measure you have no idea if you're doing better or worse than the last time period and you don't know how to direct energy to make things better. You are running on hunches and you might make changes for the wrong reasons. Data is a good reason to make changes. You need data to objectively assess how to make things better.
Daniel: If you get it right what are the benefits?
Karen: One of the benefits of measurement is it allows your business to have continuous improvement -- to make marketing better than it was the day before. Measurement is a steering system to a marketer. If you operate without measurement you don't have a steering system.
One way to think of online marketing is as a yield management problem – you invest a certain amount and hope to get a certain amount at the back end. You need to understand how you can improve that yield, either revenue, profits, leads or customers.
Online marketing is a system that you can try to improve every day. You can improve messaging, offers, navigation, forms, etc. Data is one tool you can use to make the system work better every day.
Daniel: What are some of the pitfalls of measurement?
Karen: Marketers need to have a holistic view of measurement. Calculating ROI is critical, but it's one piece of the puzzle – the outcome during one period of time. You need to strive to improve over time and adopt the discipline to test and adapt the overall online marketing system knowing what data is related to what change and outcome.
Another thing to be aware of is that it's easy to misinterpret results without a holistic and experienced view. For example, is it good or bad that people are spending a long time on your site? You can’t tell from one data point alone if the increasing time means they are enthralled with your content or if they are confused by difficult navigation. You have to know various metrics you need to make good decisions and your team needs to be trained and experienced in what and how to look at them.
Daniel: What are key fundamentals of setting up an online measurement program?
Karen: There are eight key elements.
1. Establish ownership of the analytics environment. While IT support is necessary, marketers need to own and drive the process.
2. Develop a process for defining visitor success milestones. Success can be defined as site visitors achieving their goals when they visit. Think about what those goals are and set up measurements to see if they’re being achieved.
3. Create key performance indicators. KPIs will help you determine if the actions visitors are taking match the actions you want them to take and if the system is yielding greater results over time – these are typically efficiency ratios like engaged visitors/all visitors or converted visitors/all visitors
4. Obtain tool capabilities. Having done the prior steps, you now know which tools will be effective for you.
5. Train the users. Make sure everyone who will be using the tools understands how to use them – don’t just train for the implementation, train for ongoing analysis.
6. Enhance analyst capabilities. Data is only as good as the people who are analyzing it. If you don’t have the expertise in-house, you may want to bring in an outside analyst who can help interpret and draw conclusions from the data and train your team.
7. Establishing testing disciplines. Regular testing of messaging, offers, analytical assumptions and data-gathering mechanisms will help assure programs remain on-track.
8. Begin to merge attitudinal data with usability testing, online surveys and focus groups. Behavioral data, i.e. what a visitor did, is only part of the story. The “who” and the “why” or “why not” are the rest of the story.
About Karen Breen Vogel
Karen is a highly regarded and passionate thought leader on the impact of the Internet on marketing, sales and customer relationships. As an executive for LSFinteractive, she helps clients leverage the Internet to achieve results in complex marketing and sales environments. Karen has worked with GE Corporate Financial Services, Siemens Energy and Automation, Dow Chemical, Laird Technologies, LSI, Unica, Caterpillar, and SAGE Healthcare Software. She is a sought-after speaker, appearing at Search Engine Strategy events, MarketingProfs, MarketingSherpa, Ad-Tech, The Conference Board, DMA, and BMA. Karen is the author of several articles and white papers on effectively developing relationships through use of the Internet and teaches at UW Madison in the executive education programs.
