Measuring ROI and Success with Analytics

SONY DSCOur 11th Analytics class was about ‘how’ to measure an online strategy’s return on investment (ROI) — which sounds much simpler than it often is.

Some of the many challenges are:

  • Assessing SEO  – It’s hard to estimate the SEO’s ROI because you can’t estimate the full impact of the long tail. A workaround is to multiply the search volume for top key words by 3.3 (or 30% of the possible clicks) but this is just an estimate.
  • Defining Social Media ROI – You can’t always definitively tie a social conversion to a specific financial metric.  Subsequently, you need to assign a financial value for each social engagement metric by testing and validating social activity. For example, if you generate a $1,000 sale for every 10,000 Twitter re-tweets (RT), each RT is worth $10
  • Attribution Analysis Quandary – There is no definitive answer on which brand/campaign touchpoint ‘wins a visitor over’ and prompts them to complete the desired action (e.g. purchase, sign-up or send an email inquiry). It may be the fourth visit to the website or seeing the item in the store after after reading about it once on the website. As an alternative, Sofia outlined a blend of Media Mix Modeling and Marginal Attribution Analysis. Specifically, this means measuring your baseline, allocating part of the budget to one marketing channel, run tests with/without it and track impact until the value declines. Repeat for each channel until you find the most cost-effective combination with the highest returns.
  • Offline Impacts – Offline promotions and external events (e.g. new competition, scandal, market crash) can skew results. You need to take extra steps to track offline promotions, such as setting-up vanity URLs to track coupons, and find rationale for traffic patterns.
  • App ROI – Apps aren’t cheap to make or run. To measure their ROI, you need to consider the Total Cost of Ownership (TCO), including development and ongoing operation costs, which can fluctuate over time.

So while measurement is a finite science, measuring online ROI is part art because it requires some subjective decisions.

Sofia provided comprehensive best practices and a number of formulas, which I think will give me long-term value — or ROI on the cost of her college course. However each campaign and scenario is different and there is no ‘cookie cutter’ solution.

What does this mean to me?

For example, the business model for my senior project generates revenue by selling online advertising. If I need 10,000 page views per month to sell a $1,000 ad but I currently only get 9,000 views per month, I might use a keyword upgrade to drive traffic to my site. The resulting formulas might look like:

For SEO Revenue:

18,000 (people searching for my keywords) X 10% (average success rate, where I define success as clickthroughs with page views) = 1,800 new page views

$1,000/1,800 = $0.50 value per page view

For ROI:

$1,000 (July SEO Ad Revenue)/$200 (Contractor to identify keywords and incorporate them into site) = ROI of 5

Illustration Source: Lisa Solonynko /Haml via Morgue File.

Why Catch Key Words and the Long Tail?

Long Tail ImageOur eighth Analytics class focused on Search Engine Optimization (SEO), which determines how prominent (or where) your website site will be listed in unpaid/organic/natural search results via Google or other online search tools.

A key part of attaining optimal SEO for your site is understanding your target audience’s search behaviours.

We learned that people usually access websites to solve one of the following types of queries:

  • Navigational – to find a specific URL
  • Informational – to find any information from an address to an in-depth research study.
  • Transactional – to complete a task, usually a purchase

A key part of mastering SEO seems to be identifying the keywords people use to find your site. Two main types for keywords are: one word to short terms (2 – 5 words) called Popular/Lead keywords; and longer, detailed phrases, called Long-tail keywords.  You need both for success.

As expected, transactional searches are the highest value because they usually generate revenue but I found it interesting that these are also the more detailed, long-tail words or phrases.

There are also other psuedo keywords, such as ‘Trophy Term-Keywords,’ which may drive traffic to your website but this traffic doesn’t convert or behave how you want it to, likely because it’s not a good fit between your audience and your site. For example, a term like ‘call to arms’ might drive military oriented people to a site but they will quickly leave if it’s about prosthetic limbs.

Sofia provided a great list of links and tips for maximizing SEO. Even pointers like setting URLs in the country of your target audience and putting keywords in JPG titles helps.

To compile a list for my senior project, I used Google’s keyword generator tool for my site, then searched my competitors’ sites and ran the generator for their sites.  I found many popular terms, like: senior care, help for caregivers and help for elderly.  I also found the following particularly useful long-tail options:

  • practical tips from real caregivers
  • outside resources
  • here to share advice from the community
  • online community for family & professional #caregivers
  • Where Caregivers Survive & Thrive
  • Caregiver’s Survival Network
  • family caregivers taking care of a loved one

As my project progresses and the content is clearer, I will re-do and refine my searches to find more.

(Photo: Taken by Gabor from Hungary via Morguefile)