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How to measure ROI for online advertising

Wednesday, 25 August 2010 | By Nina Hendy

Internet advertising has the potential to get your brand in front of a worldwide audience.

 

 

After all, it only takes a click of a mouse and your logo, brand and key messages could be zinging their way into the homes and businesses of millions across the globe.

 

But once you've settled on the right place on the internet to advertise your business, how can you tell if your online marketing efforts are actually working for you?

 

Depending on how much money you're willing to dedicate to measuring your return on investment, there are a range of measurement tools available to businesses. And they deliver incredibly accurate results. So, half the battle is wading your way through the tools on offer and finding one that best suits your needs.

 

Holiday website takeabreak.com.au channels 80% of its marketing budget into online advertising. Joint CEO Penny Parsons admits she favours online marketing because measuring her return on investment in a breeze. For every $1 she spends on marketing, she aims for a $3 return on the investment, she says.

 

Like an increasing number of companies, the website business recently hired an online expert and charged her with the task of managing all search engine marketing, search engine optimisation and social networking for the company.

 

"It's so important for a business to measure how effective their online marketing dollars are because otherwise they've got no way to track what's working and what isn't," Parsons says.

 

It doesn't have to cost a cent

 

So what tools are available to a business wanting to measure how effective its online marketing activity has been? Many in business agree that one of the first ports of call should be Google, which offers a range of products to help measure online return on investment without charging a cent.

 

Kate Conroy, ad words strategist, Google, says Google Insights is publicly available for free and enables small businesses to plan its marketing activity during seasonal events such as Christmas or Easter. The site will create a graph depending on your search results that show exactly when sales peak and trough throughout the year on items like perfume, barbecues or new cars, for example.

 

"This service can tell a business when is the optimum time to spend their marketing budget, which can help you plan your expenditure well in advance," Conroy says.

 

There's also Google Analytics; website tracking software that enables a business to see how long someone came to your website for and what areas of the site they were looking at. Conroy says Google offers the service for free because the information can help businesses improve their site, which improves quality of the web for everyone. The service is easy to use, she says.

 

"A growing number of SMEs are using Google Analytics these days, and website companies will often add Google Analytics as a standard offering for their clients. It seems like a waste not to have this service attached to your website. To me, it's like having a cake but not icing it."

 

If you're prepared to splash a little cash, businesses can also create a Google AdWords account, which enables you to make sure your company website pops up when someone plugs one of your key words into the Google search engine. Businesses pay per click-through to your site and a business can adjust its spend whenever it wants. But given that a growing number of consumers search the web before they hit the stores; this sort of marketing can work out to be a very worthwhile investment.

 

Measuring email marketing

 

There are also tools available to help you measure the effectiveness of your email marketing campaign.

 

Brendan Tickner, marketing analyst for a major automotive insurance company, says email marketing is an effective tool because when set up properly, a business can track exactly which customers click through the email and even how long they remain engaged with the content. Costs for an email marketing campaign range from between .1c and .3c per email, compared to a cost of between $1 and $1.50 for the cost of direct marketing, delivered via snail mail.

 

"And you don't get as many insights with direct marketing. Email marketing is a hugely powerful tool for any business,"

 

Tickner says.

 

Companies like Vision 6 can help a business create and measure an email marketing campaign. Vision 6 has been helping small businesses in this area since 2001 and now has more than 7,000 businesses using its online measurement systems. Vision 6 can track email marketing campaigns and help businesses work out if their marketing is effective.


Vision 6 spokesman Evan Fortune says it has taken awhile for email marketing to be regarded as a valuable marketing tool, but businesses now realise its power.

 

Fortune says an email marketing campaign it ran a couple of years ago for beverage giant Lion Nathan demonstrates the power of email marketing and its ability to prove its effectiveness.

 

Lion Nathan invited 100 people to one of seven parties as part of a new product launch.


"Within 20 minutes, all seven parties were filled. And because so many people were forwarding the email onto their friends, the company's database grew by 22% within days."

 

The Vision 6 results also revealed that 80% of email recipients opened the email.

 

Direct mail would have cost thousands, but all this was achieved at a cost of $3,500, Fortune says.

 

Measuring phone leads to come from the web

 

If the aim is to generate leads from your website via the phone, there is a tool that can measure exactly how many phone calls your website generates.

 

Sydney-based company Jet Interactive founder and director Justin Graham says that in the past, web marketers have made decisions about digital media spend simply by studying the number of clicks or online applications completed. But very few have given any thought to the huge number of phone calls that websites generate and what that means for their business.

 

But Jet Interactive recently launched Jet Call Tracker, which can measure the number of phone calls that originate from website enquiries. The service can provide live call data, demographic segmentation and electronic call distribution maps.

 

"If businesses aren't tracking and analysing phone calls, they don't truly understand the success of their online activity. Call Tracker can measure response rates to advertising campaigns, the geographic distribution of existing customers and the effectiveness of sales channels. It can also optimise marketing campaigns in real time," Graham says.

 

Do your homework

 

But make sure you ask any company offering to measure your online return on investment for case studies and testimonials of what it has managed to achieve for other companies. And make sure you are clear exactly how a provider will gather the information and exactly what information it will make available to you.

 

Graham warns that businesses need to do their homework before committing to a particular tool for measuring the effectiveness of online advertising to make sure it's not paying too much.

 

"Some business intelligence tools can take forever to implement and cost a lot of money to maintain, so do your research before committing to a particular application."