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Closing the Gap on ROI Measurement - Spur Interactive, Steve Interactive

Closing the Gap on ROI Measurement

Measuring engagement and attributing credit are now "must-have" capabilities. This session will provide actionable insights and methodologies into defining what to measure, how to measure, how to calculate value from online engagement and how to build a compelling ROI business case.

* Steve Latham, President, Spur Interactive (@stevelatham)

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Closing the Gap on ROI Measurement - Spur Interactive, Steve Interactive

  1. 1. Closing the Gap on ROI Measurement What to Measure and How to Justify Your Existence <ul><li>Steve Latham, Spur Interactive @stevelatham </li></ul><ul><li>[email_address] </li></ul>
  2. 2. What We’ll Cover Today <ul><li>How our industry is Evolving </li></ul><ul><li>Challenges we face as Marketers </li></ul><ul><li>Roadmap for Success </li></ul><ul><li>Case studies: </li></ul><ul><ul><li>Measuring impact of advertising </li></ul></ul><ul><ul><li>Attributing credit </li></ul></ul><ul><ul><li>Indexing performance </li></ul></ul><ul><ul><li>Quantifying value </li></ul></ul><ul><li>Theme for this presentation… </li></ul>
  3. 3. A long time ago… <ul><li>There were two types of advertisers </li></ul><ul><ul><li>Brand marketers (ATL) </li></ul></ul><ul><ul><li>Direct Response (BTL) </li></ul></ul><ul><li>Brand marketers bought display </li></ul><ul><ul><li>Metrics: reach, frequency and cost per impression </li></ul></ul><ul><ul><li>Measured by: Ad Server </li></ul></ul><ul><ul><ul><li>Assumed premium inventory = more qualified reach </li></ul></ul></ul><ul><ul><ul><li>View-through was interesting but not important </li></ul></ul></ul><ul><li>Direct marketers bought PPC and 3 rd party email </li></ul><ul><ul><li>Metrics: Leads / Sales, Cost Per Click, Cost Per Action </li></ul></ul><ul><ul><li>Measure by: Site Analytics (crediting source of last click) </li></ul></ul><ul><li>Everyone knew the rules and everyone was happy </li></ul>Strategic Tactical Search Display
  4. 4. Today… <ul><li>Digital goes through the line </li></ul><ul><ul><li>Strategic and tactical </li></ul></ul><ul><ul><li>Branding and DR are merging </li></ul></ul><ul><ul><li>Engagement is the new goal </li></ul></ul><ul><li>Integrated campaigns target all stages of the funnel </li></ul><ul><ul><li>Can’t win by harvesting demand (search) </li></ul></ul><ul><ul><li>Must create demand (display, social, mobile) </li></ul></ul><ul><li>Focus on ROI is greater than ever </li></ul><ul><ul><li>Each Buy must stand on its own </li></ul></ul><ul><li>Yet… old metrics and tools are not conclusive </li></ul>
  5. 5. Marketing Conversation #1 How is our online advertising working? Great Boss! Wonderful! How do the results look? CTRs are up and CPC is falling. Length and depth of engagement are increasing and conversion rates are improving! We’re also nominated for a Webby! What the *#^@*! are you talking about?
  6. 6. Marketing Conversation #2 How is our online advertising working? Great Boss! Wonderful! How do the results look? We’re generating $7 in sales for every $1 spent while increasing our brand awareness by 75%. Can you handle a bigger budget?
  7. 7. Challenges <ul><li>We now know… </li></ul><ul><ul><li>Clicks aren’t very important </li></ul></ul><ul><ul><ul><li>8% of users contribute 80% </li></ul></ul></ul><ul><ul><ul><li>Ads are effective without clicks </li></ul></ul></ul><ul><ul><li>Can’t give credit to the last click </li></ul></ul><ul><ul><ul><li>Assists are just as (if not more) important </li></ul></ul></ul><ul><ul><li>Web site analytics still miss a lot </li></ul></ul><ul><ul><ul><li>Cookie deletion & multiple machines </li></ul></ul></ul><ul><ul><li>Tools are still lacking (and expensive) </li></ul></ul><ul><ul><li>Calculating online’s impact on offline sales is hard! </li></ul></ul><ul><ul><li>Yet… while Interactive is the MOST measurable medium, it’s often held to a much higher standard </li></ul></ul>
  8. 8. The Solution(?) <ul><li>There is no silver bullet </li></ul><ul><li>To be successful we must: </li></ul><ul><li>Understand how customers make decisions </li></ul><ul><li>Measure the impact of each channel and/or buy </li></ul><ul><li>Translate metrics into business results </li></ul><ul><li>Communicate results in terms that CXOs understand (ROI) </li></ul><ul><li>To achieve this we must: </li></ul><ul><li>Firmly understand how and why customers buy from us </li></ul><ul><li>Integrate our planning and measurement of media </li></ul><ul><li>Invest in tools, people and/or services to execute </li></ul><ul><li>With these in place, here’s how to do it! </li></ul>
  9. 9. 5 Steps to Success <ul><li>Define specific objectives </li></ul><ul><li>Define campaign actions and metrics </li></ul><ul><li>Measuring results </li></ul><ul><li>Analyze results: translate data into insight </li></ul><ul><li>Translate results into value </li></ul>
  10. 10. Step 1: Define Objectives <ul><li>Objectives must be SMART </li></ul><ul><ul><li>Specific: awareness, transactions and sales </li></ul></ul><ul><ul><li>Measureable actions: transactions and revenue </li></ul></ul><ul><ul><li>Attainable: 20% increase over last year </li></ul></ul><ul><ul><li>Relevant: tie directly to CXO’s objectives </li></ul></ul><ul><ul><li>Time-bound: will take place this month </li></ul></ul><ul><li>Tips: </li></ul><ul><ul><li>Think about it from the CXO’s perspective </li></ul></ul><ul><ul><li>Document them </li></ul></ul><ul><ul><li>Communicate them </li></ul></ul>
  11. 11. Step 2: Define Actions and Metrics <ul><li>Campaign actions and metrics (e.g.) </li></ul><ul><ul><li>Primary: registrations, sales </li></ul></ul><ul><ul><li>Secondary: goal pages, long visits, downloads, etc. </li></ul></ul><ul><ul><li>Online vs. Offline: coupons, survey results </li></ul></ul><ul><li>Assign Value to Actions (e.g.) </li></ul><ul><ul><li>Average sale = $1,500 </li></ul></ul><ul><ul><li>5% of engagements convert to a sale (each is worth $75) </li></ul></ul><ul><ul><li>10% of visits “engage” via registration, download, etc. (each is worth $7.50) </li></ul></ul>
  12. 12. Step 3: Measure Results <ul><ul><li>Direct KPIs </li></ul></ul><ul><ul><li>Attributable results </li></ul></ul><ul><ul><li>Offline Results </li></ul></ul>
  13. 13. Step 3: Direct KPIs – Traditional Metrics <ul><li>Basic Metrics </li></ul><ul><ul><li>Impressions </li></ul></ul><ul><ul><li>Clicks </li></ul></ul><ul><ul><li>Visits </li></ul></ul><ul><ul><li>Page views </li></ul></ul><ul><li>Engagement metrics </li></ul><ul><ul><li>Pages viewed per visit </li></ul></ul><ul><ul><li>Time on site </li></ul></ul><ul><ul><li>Goal Pages </li></ul></ul><ul><ul><li>Registrations </li></ul></ul><ul><ul><li>Transactions </li></ul></ul><ul><li>Social Media Metrics </li></ul><ul><ul><li>Follows / Fans </li></ul></ul><ul><ul><li>Likes / Comments </li></ul></ul><ul><ul><li>Viewing content </li></ul></ul><ul><ul><li>Uploading content </li></ul></ul><ul><ul><li>Sharing / Posting </li></ul></ul>
  14. 14. Step 3: Direct KPIs – Online Surveys <ul><ul><li>If you want to know if your ads are working… Ask your audience! </li></ul></ul><ul><ul><li>Case study: Awareness survey served to physicians </li></ul></ul>
  15. 15. Step 3: Direct KPIs – Online Surveys <ul><ul><li>Awareness Results: Exposed vs. Control Group </li></ul></ul><ul><ul><li>Control Group </li></ul></ul><ul><ul><li>Exposed Group </li></ul></ul><ul><ul><li>8.3% </li></ul></ul><ul><ul><li>21.3% </li></ul></ul><ul><ul><li>Lift: 156% </li></ul></ul>
  16. 16. Step 3: Survey Results 156% lift <ul><ul><li>Make sure to compare the results against competitors – you may learn a lot! </li></ul></ul>90% lift <ul><ul><li>Competitor with similar name also saw lift in awareness </li></ul></ul>
  17. 17. <ul><ul><li>Decision cycles are not linear </li></ul></ul><ul><ul><ul><li>Users often make multiple before taking action </li></ul></ul></ul><ul><ul><ul><li>Most “conversions” take place after multiple touches, e.g.: </li></ul></ul></ul><ul><ul><ul><ul><li>5-7 impressions precede a visit </li></ul></ul></ul></ul><ul><ul><ul><ul><li>2-3 visits precede an action </li></ul></ul></ul></ul><ul><ul><ul><ul><li>5-15 engagement points are the norm </li></ul></ul></ul></ul><ul><ul><li>Credit is usually attributed to the last click </li></ul></ul><ul><ul><ul><li>Design flaw of most analytics platforms </li></ul></ul></ul><ul><ul><ul><li>Generally rewards Search, punishes Display and Email </li></ul></ul></ul><ul><ul><li>Must understand which touch points drive action (aka “Attribution Analysis”) </li></ul></ul>Step 3: Attributable Results
  18. 18. Step 3: Roles of Online Media Goal!!!!!!
  19. 19. Step 3: Sample Engagement Path <ul><ul><li>Case study: customer engagement for an elective medical procedure (considered purchase with 60-day cycle) </li></ul></ul><ul><ul><li>If you want to measure impact of your Ads, you have to assign credit for the assists, not just the goals </li></ul></ul>Display Vendor #1 Impression Day: 0 60 30 Display Vendor #2 Impression E-Mail 3 rd party Impression Display Vendor #3 Impression Search “ Widget” Paid Click Search “ Brand X Houston, TX” Natural Click Direct Nav Visit / Action
  20. 20. Step 3: Attribution  Influenced Visits Attribution #1: demonstrate advertising’s impact on site traffic – regardless of source. Impact of Advertising
  21. 21. Step 3: Attributing Actions and CPA Attribution #2: Recast Actions by Source* *Actions = Visits, Conversions, etc. Attributes partial credit for “assists” or ads that preceded visits or actions Attribution #3: Recast Cost Per Action* *Recalculates CPA based on Recast actions by channel
  22. 22. Step 4: Analyze Results Information (results) Data (stats) Insights (actionable) <ul><ul><li>Determine what’s working </li></ul></ul><ul><ul><ul><li>By channel </li></ul></ul></ul><ul><ul><ul><li>By vendor </li></ul></ul></ul><ul><ul><ul><li>By creative </li></ul></ul></ul><ul><ul><ul><li>By keyword </li></ul></ul></ul><ul><ul><ul><li>By landing page </li></ul></ul></ul><ul><ul><li>Analyze user engagement paths </li></ul></ul><ul><ul><ul><li>Determine how many touches are needed </li></ul></ul></ul><ul><ul><ul><li>Quantify the funnel (quantity, conversion%) </li></ul></ul></ul><ul><ul><li>Assess performance against defined metrics </li></ul></ul>
  23. 23. <ul><li>Case: online leads precede offline sales </li></ul>Step 5: Translate Results into Value *Direct ROI captures only part of the value. Brand value of 2mm impressions plus 9,700 visits that did not convert is of equal if not greater value. Investment $10,000 Impressions ($5 cpm) 2,000,000 Visits (direct and indirect) 10,000 Direct Leads 300 Lead Close rate (est.) 10% Expected Transactions 30 Expected Revenue ($1,000 each) $30,000 Direct Return on Spend* $3.00
  24. 24. Step 5: ROI Methodology #2 <ul><li>Case: online research precedes offline sales </li></ul><ul><li>Determine how Actions  Intent (offline purchase) </li></ul><ul><li>Forecast how Intent  $$$ </li></ul><ul><ul><li>Some % of those who show Intent will buy </li></ul></ul><ul><ul><li>Do the math and apply across each set of actions </li></ul></ul><ul><ul><li>Use common sense to normalize results </li></ul></ul>Action Value Site Visits Indicates awareness Goal Page Views Indicates consideration Registrations Indicates preference
  25. 25. Step 5: ROI Methodology Define Metrics Assign Close Rates Project Value for each action Normalize (average) Values Divide by Cost or investment <ul><li>Such as: </li></ul><ul><li>Visits </li></ul><ul><li>Registrants </li></ul><ul><li>Goal Pages </li></ul><ul><li>Downloads </li></ul><ul><li>Store lookups </li></ul><ul><li>Forecast: </li></ul><ul><li>What % will purchase? </li></ul><ul><li>Based on actions </li></ul><ul><li>Based on audiences </li></ul><ul><li>Project Value: </li></ul><ul><li>Revenue, Margin, NPV </li></ul><ul><li>Based on action </li></ul><ul><li>Based on </li></ul><ul><li>Strengthen by: </li></ul><ul><li>Eliminate outliers </li></ul><ul><li>Net it out: </li></ul><ul><li>Return on Spend </li></ul><ul><li>Return on Investment </li></ul>
  26. 26. Step 5: Example of Offline Funnel / ROI
  27. 27. Step 5: Indexing Performance Understand the Context of your environment – use Google Trends as a proxy for Demand. Show RELATIVE performance by indexing your results vs. Google Trends
  28. 28. Step 5: Benchmarking <ul><ul><li>Market testing is another way to validate impact </li></ul></ul><ul><ul><li>Case study: Austin market test for a well-known retailer </li></ul></ul><ul><ul><li>1. Chart shows impact on site traffic from targeted campaign in Austin </li></ul></ul>
  29. 29. Step 5: Benchmarking <ul><ul><li>Case Study continued: </li></ul></ul><ul><ul><li>2. Austin showed 15% lift in in sales vs. other markets </li></ul></ul><ul><ul><li>3. Online outperformed all other media in post-purchase survey (how did you hear about our sale? (chart: Austin vs. other markets) </li></ul></ul>
  30. 30. In Closing… <ul><ul><li>The bar is being raised… we have to do better. </li></ul></ul><ul><ul><li>Employ this 5-step approach and your budgets will grow! </li></ul></ul><ul><li>Let’s stay in touch! </li></ul><ul><ul><li>Facebook.com/slatham </li></ul></ul><ul><ul><li>Twitter @spurinteractive </li></ul></ul><ul><ul><li>Linkedin.com/in/stevelatham </li></ul></ul>View this presentation at http://bit.ly/ROImeasurement