Web Marketing Metrics

Web Marketing Overview

Web marketing metrics are revenue metrics, because improving them leads to increased sales. They are also considered dynamic, because they are very sensitive to minor changes such as text on a homepage or the AdWords you purchase for sponsored links on search results. Web marketing is defined as the purposeful process of creating and increasing positive awareness of and interest in a specific positive or service offering, perhaps in the form of a brand, within a target demographic.

Target demographics are a group of people with common characteristics, such as all being a certain age, being from the same geographic area, etc. In order for marketing to be most effective with the limited resources available, marketers focus their efforts on those groups most like to become high value customers.

Web marketing distinguishes itself from more traditional marketing because of the sheer number of potential customers available. In order to be effective the target group needs to be much smaller than the three billion people who have an internet connection. The target demographic will be selected based on the specific product or service on offer.

AdWords

“AdWords” are search topics that Google auctions to companies who want to advertise on their platform. There are competing services offered by other search providers, but they are all relatively similar.

When a user enters a search term, Google identifies terms that advertisers have placed bids on that match the topic of the search. This is a computationally intensive translation. As an example, the search “emergency pet care” may match “veterinary hospital” and “animal hospital.” To bid on keywords, potential advertisers set a maximum cost per click-through, or max CPC, for the keywords they want to purchase. CPC bidding is sometimes abbreviated PPC, or pay per click. The actual cost of a click through, actual CPC, is usually $1 or $2. The most expensive AdWords at the time this course content was generated were insurance ($54), attorney ($47), and mortgage ($47).

Google maximizes its AdWords revenue by maximizing (CPC)(Quality Score), where the Quality Score is a function of expected click through rate, ad relevance, and landing page experience. Ad results are ranked highest according to this formula will be featured most prominently on the site. Optimizing for these features can be complex, but Egger states the best rule of thumb is to “be yourself.” What he means by this is to keep the text of the landing page relevant to the AdWords being purchased.

As companies gain experience with AdWords, they will have some sense as to the actual cost per click through they pay. The company can track the users who come to the website through a sponsored link, and determine what proportion of that category of users buy the product. That rate is called the conversion rate for sponsored links. The actual CPC divided by the conversion rate is the acquisition cost per customer through the AdWords channel. As an example, an actual CPC of $1 and a conversion rate of 1% means that the acquisition cost of each customer is 1/0.01 or $100.

Given more time on the platform, the company can determine a lifetime value (LTV) for customers obtained through the AdWords channel. Technically, the lifetime value of a customer is the present value of the future revenues associated with a new user obtained through AdWords. A simplistic means of obtaining this would be dividing the total revenue from customers obtained through AdWords, divided by the count of the customers obtained through AdWords. Note that the cash flow concerns described in other posts still hold true. Massive investment in AdWords is tantamount to a massive capital outlay, with revenues that may not materialize for months or years. Egger’s advice from other lessons holds true: “Don’t run out of cash on your way to riches.”

Segmentation

Segmentation is the process of dividing and grouping customers and potential customers based upon various information available to the company. Analysts performing segmentation work to identify common traits for visitors with high conversion to revenue rates and high lifetime value, in particular. Then, the company can take the marketing actions required to attract more users like those high-conversion or high-revenue groups.

Various pertinent questions for marketing analysts are listed below.

  • Where did a visitor to our website come from?
    • Sponsored search? Which key term? Which site?
    • Organic search? What search terms? Or was it a link in an email or tweet?
  • What kind of device are they using? Mobile iOS or Android? Mac or Windows? What browser?
  • What is their location? Country, state, and region IP addresses often provide a significant level of geographic information, often down to the zip code, in the US.
  • Are they a new or returning visitor? If returning, are they a registered user?
  • What did they do when they got to our site? Bounce (leave immediately from landing page)?
  • How long did they stay? How many pages did they visit? The precise clickstream a user follows contains all this information and more.

An example Egger presents is that among people who click through an organic link, a hypothetical site has a much lower bounce rate (25%) than people who find the site via a sponsored link (45%). Given that simple segmentation, it may make sense for the company to invest in Search Engine Optimization (or SEO). SEO is a complex topic, but some basic steps the organization could take to improve its search ranking is to ensure that the content on the landing page is current, relevant, and substantive.

A few links shared by Egger, with more in-depth subject matter:


This content is taken from my notes on the Coursera course “Business Metrics for Data-Driven Companies.” It is sponsored by Duke University and the course content is presented by Professor Daniel Egger.