Friday, February 6, 2009

Measuring the ROI of your digital marketing efforts

Few doubt that the Web is the most measurable media available to marketers - at least in theory. In reality, many struggle with putting that theory into practice. This is true for both brand building and direct response campaigns. And the measurement challenge becomes even more difficult when digital marketing tactics are used in concert with traditional media.

This situation has several negative results. For client marketers it means bad decision making and media investments that fail to deliver their full potential. For digital agencies it makes it harder to show the ROI of their efforts and justify future investments in online marketing programs.

In addition, consumers rarely make purchase decisions using one channel. The inability to understand the impact of online and offline brand interactions on consumer behavior (both alone and as a complement to each other) makes it nearly impossible for marketers to align experiences with consumer expectations.

Several approaches can be used to close the gap between measurement theory and reality. This is especially so regarding direct response campaigns where I believe the measurement challenge is most difficult. For example, one framework that I have seen used with success is illustrated below.

The theory behind the approach is quite simple: identify the source of visitors coming from online tactics to a campaign Web site using cookies. For offline tactics visitor source is identified using unique URLs. This source data is then carried forward and matched with leads and sales records in a campaign database. This approach can be taken a step further to provide deeper insights by collecting and matching data beyond source such as banner creative, offer, keywords searched, etc.

While this type of approach is simple in theory, the devil is in the details when it comes to implementation. This is especially so as more attribution variables are added. But the payoff more than justifies the effort: better attribution of sales to tactics and critical insights that enable more effective allocation of ad budgets for future campaigns.

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