Section 3.1. Hacks 3753: Introduction

3.1. Hacks 3753: Introduction

One of the most immediate and practical things you can do with web measurement is understand and optimize your online marketing efforts. Assuming you're doing something to attract visitors to your web sitebuying keywords at Google, running banner ads on MSN, sending email, or including your URL in your yellow pages adeven the most basic web measurement applications provide the necessary tools to quantify the effect of this advertising. More importantly, the best web measurement tools provide you the ability to tie acquired visitors to critical events like a purchase, a lead, or a download, so that you can analyze both the quantity and the quality of visitors you're attracting.

3.1.1. It's Only Data

If you're not an experienced online marketer, this chapter has the potential to be somewhat overwhelming. You're going to be hit with a number of new and fairly specific terms and ideas and, depending on which application you're using, be required to jump through some hoops to implement and use these ideas.

Don't panic.

If you take the time to read each of these hacks, you'll begin to see the common, underlying framework used to measure marketing on the Internet. You'll see terms like "click-through rate" and "cost-per-acquisition" come up again and again, each in the context of the particular medium being measured. Try and see this pattern, and you'll be "hacking the hacks."

3.1.2. ROI

ROI is a complicated and often abused concept. If you follow the Internet software market at all, you've likely seen the abbreviation "ROI" dozens, ifnot hundreds, of times. Companies always talk about "achieving maximum ROI" and "rapid ROI," and "exponentially increasing the ROI for your ERP, SFA, and CRM systems." What they're talking about is return on investment: the money they're going to make because they've made the right decision in purchasing a product, solution, or service. While ROI is an overused term, calculating return on investment is central to online marketing and worth understanding.

While we'll cover the necessary calculations in [Hack #37], you should know that return on investment has two different meanings in web measurement and marketing. The return on investment you get for an individual campaign should be thought of as micro-ROI, whereas the return you get for your investment in a web measurement application and the team to support it should be thought of as macro-ROI.

Micro-ROI is fairly easy to calculate. The same cannot be said for macro-ROI. To calculate your macro-ROI, you have to add up all the costs associated with selecting, implementing, and maintaining a measurement solution, including opportunity costs associated with time spent looking for a solution, phone calls, implementation costs (both internal and external), hiring or training people to manage the application, and any associated hardware coststhe list of related costs is very long.

On the flip side, you need to keep very careful track of incremental gains made based on the data you're able to generate and use. If you're lucky and you find some nugget of gold that, when acted upon, generates a strong and noticeable increase in revenue, this calculation becomes slightly easier to make. Most companies use web measurement to achieve small, incremental gains that are hard to differentiate from the rest of their business.

Perhaps the best advice is to focus on micro-ROI and ignore the larger calculation. Vendors will try to sell you on "the strongest and fastest ROI in the market," but it's the way you use the datanot only the way you acquire itthat affects the bottom line. When you're successful in measuring your campaigns, identifying the top performers, and rolling gained insights into the continuous improvement process, you'll be achieving return on investment without effort.