Whether you’re a online marketer just starting out or you already have an established online business, online marketing is going to be one of the keys to your success. Online marketing is an essential tool when establishing and growing an online business. To become an expert online marketer; read on…
I can’t stress it enough – you MUST test and measure the results of your online advertising. And you must do it often. To make sure you are spending your advertising dollars – or your time with free ads – effectively, you need to know the results of each advertisement and be willing to test different ads. The only way to determine which of your ads and offers are the most effective is to continually test and measure every one of them. This is true for email advertising, search engine advertising, banner advertising… any advertising, online or offline.
In its most basic sense, testing is simply trial and error. But don’t get discouraged by poor results from any type of advertising campaign – you’re probably going to have to err quite a bit before you find the most effective ads for your business. The test results provide you with the knowledge and information that enable you to make better decisions. In fact, ad campaigns that fail to yield the desired results provide valuable information that you probably wouldn’t have obtained if the ads had been immediately successful.
If, on the other hand, you hit the bull’s-eye right out of the gate – good for you! Leave that particularly successful ad alone and test another. The interesting (and, sometimes, rewarding) thing is finding out if what you thought would hit the mark actually turns out to be true. You may find that while a particular ad did well, another test may prove to be even more successful. This is where the learning begins. Your idea of a successful ad will change over time, as you gain more experience and have more data to compare.
* Ad placement – different locations and media have different audiences. You may have a fantastic ad that works well on search engines, but doesn’t perform in banner advertising, or vice versa. Test your ad placement to find out what ads work best in each applicable context.
* Ad copy – different words and layout affect results. Try putting the price at the top, middle and bottom of your copy, as well as testing with no price. Test different wording to describe your offer, and experiment with different graphics and color schemes.
* Ad offer – different price points, different products, different product combinations. Depending on the audience for a particular ad, the lowest price point may not necessarily be your most effective offer. Test offering single products and combinations of products. Some audiences may be single-item purchasers while other are looking for “package” deals (review the article on Price Testing if you’re unsure how to price test).
Your next step is to measure results and determine the effectiveness of each advertising campaign. This will be impossible to do unless you use source codes. Please review the article "Using Marketing Source Codes" if you haven’t started using this tool.
You must be consistent with how you measure each ad in order to get accurate results. Listed below are some key metrics, their definitions, and explanations of the types of advertising they are typically used for.
CPM – Cost Per Mille (Thousand). This type of advertising requires you to pay a flat fee per 1,000 impressions of your ad. An impression means your ad was displayed on a Web page. It does not necessarily mean that the ad was actually clicked on and a visitor thus came to your site. This format makes CPM advertising somewhat risky as you may end up paying a lot of money and never getting anyone to actually click through to your Web site to make a purchase. CPM advertising can be effective – but beware. Keep a close eye on the impressions you’re paying for and the actual number of Web site visitors the ads are generating.
CPC – Cost Per Click. While often resulting in higher conversion rates than CPM, CPC advertising is also typically more expensive. With this type of campaign, you are only charged when someone actually clicks on your ad. The key to CPC advertising is making sure that the Web page your ad links to is highly effective: Your offer should be prominently displayed on the Web page and your Web page must look professional, appealing and secure so the visitor feels comfortable purchasing from you.
Conversion Rate – This number tells you the average number of impressions or clicks needed to generate an order from your storefront. For CPM and CPC campaigns, you calculate the conversion rate as follows::
CPM: Orders / Impressions = Conversion Rate
CPC: Orders / Clicks = Conversion Rate
If my ad generates 5,000 impressions/ clicks and 100 orders, my conversion rate is .05%. Is this a good conversion rate? You won’t know until you test several ads. Your audience, storefront, niche market, existing customer base, brand awareness, ad offer, and ad copy are all unique to you. There is no “standard” for conversion rates – you must test enough offers to create your own standard for your own business. The same is true for any advertising measurement.
For each type of campaign described above, your advertising partner should provide you with impression and click-through data.
For search advertising, tracking measures are built in to your storefront for Google® AdWords®, Yahoo!® Search Marketing and Microsoft® adCenter campaigns.
Many email marketing software tools let you automatically import your customers – who opted to receive marketing email messages from you – to your subscriber list in the software. Email marketing lets you market special offers to your existing customer base, and, typically, some of those customers forward your offers to friends and family. This can help you gain new customers. Measuring email marketing is a little more complex than measuring banner and search advertising – there are more metrics to review and more ways to interpret that data.
# Emails Opened / # Emails Sent = Open Rate
Getting your customer to open your emails is the first step toward the end goal of getting an order. This is why the open rate should be measured and evaluated. The subject line of your emails can influence the open rate. It needs to be intriguing enough to get the user to open the email. You should test different subject lines to determine which ones are most effective at increasing your open rate.
Click-Through Rate – The Click-Through Rate tells you how many customers opened an email and clicked on a link to get to your Web site. The perceived value of your offer and the creative element (copy, graphics and layout) can impact your Click-Through Rate. You should test the same offer with different creative, and the same creative with a different offer to determine the most effective combination for your customer base. The Click-Through Rate is calculated as follows:
# of Clicks / # of Emails Sent = Click-Through Rate
The number of opened messages and clicks can be found in your Express Email Marketing tool if you are using it for your email marketing campaigns.
Response Rate – The Response Rate helps you determine the overall effectiveness of your campaign based on the number of orders received. The Response Rate is calculated as follows:
# Orders / # Emails Sent = Response Rate
You’ll want to look at your Response Rate, along with total revenue earned, to determine the overall effectiveness of a campaign.
AOS – Average Order Size. Determining your average order size will help you estimate a return on your advertising investment. You should find an overall AOS (all orders from your storefront) and an AOS for each individual offer. The overall AOS can be used as a “standard” for new campaigns. The AOS for each offer will help you gauge offer effectiveness from different audiences (i.e., search ads vs. banner ads vs. email campaigns).
For example, if my overall AOS is $20 and I try a new ad and get an AOS of $30, the result was better than expected. If I get an AOS of $25 on a specific search ad campaign and then test that same campaign in a banner ad, but get an AOS of $40, I might want to consider shifting my ad budget to the banner ad, or test the offer on more banner ads. Of course, this will also depend on the number of orders I get. One order at $40 AOS is not as good as 10 orders at $20 AOS.
When measuring the effectiveness of advertising campaigns, you’ll want to use a combination of the metrics above to reach your conclusion about a specific campaign’s effectiveness. Always consider total revenue earned, response and conversion rates.
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