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Strategies and best practices for online marketing, advertising and measurement

Twitter Weekly Updates for @SpurInteractive

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Steve Latham
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Measuring ROI: a Primer for Online Marketers

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Steve Latham
on February 4, 2010
in Marketing and Measurement
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money iconAs marketing dollars have become more scarce, the importance of measuring ROI and building a business case to support investment has become paramount.  For those seeking to better understand this subject, here’s a “simple” methodology for quantifying value.  In this case, we’ll look at ROS (return on spend = expected revenue divided by cost of online media) and ROI (expected net present value divided by total investment) from online campaigns.  If you find it to be of value, or if you have additional questions, please comment below.

Steps to Calculating Value

1. Determine the Value metric (Revenue, Margin, NPV) of a customer.
Some companies look at value of a transaction, annual revenue per customer or lifetime value (profit) of a customer.  Some assign higher values for new customers vs. a new sale to an existing customer. You need to determine what is best for your organization (hint: choose the metric that is most used by your executives).  For this example, let’s assume your average sale is $1,000 and that the lifetime value of a customer is $5,000.

2.  Assign conversion rates to approximate close rates.
Let’s assume 3% of site visitors request more information (inquiries) and that 30% of inquiries complete a purchase.  If you’ve done online campaigns before, you should have a basis for inquiry rates.  Hopefully your VP-Sales know how many leads convert to a transaction. If 3% of visitors become leads, and 30% of leads are closed, 0.9% of visitors will become customers.

3. Determine what your cost or investment will be.
Let’s assume you will spend $10,000 in online advertising (display, search, email, etc.) this month.

4. Do the math to calculate ROS and ROI:
Assuming your efforts drive 2,000 incremental visitors to your site (cost: $5 each) you should see 60 new leads (3% conversion rate) and 18 new customers (30% close rate) worth $18,000 in revenue or $1.80 direct ROS ($1.80 in revenue for every $1 spent).

The Net Present Value of the 18 customers is $90,000 ($5,000 each) yielding a Return On Investment of 900%.

If you present these types of results to your CFO, you’ll quickly find a lot of interest (and dollars) in online marketing.

Another Metric: Value per Engagement
Another way to measure results is calculating value per engagement (visit, inquiry, etc.).  In the example above, each visit is worth $9 in revenue ($18,000 divided by 2,000 visits), whereas each inquiry is worth $300 ($18k divided by 60), compared to a cost per visit of $5 and a cost per inquiry of $166.67.

Remember Your Margins
While revenue is an easy metric to measure, margins are much more important.  Assuming your gross margin is 60%, you are making profit as long as your cost per visit is less than $5.40 or cost per inquiry is less than $180.

Caveat Emptor!
Please use good judgment when applying these methodologies to your own business. Again, these are not a panacea for every situation.  But hopefully, they will give you some building blocks for quantifying the impact of your interactive marketing program.  If you have specific questions, please leave them here.  I can’t promise I’ll know the answer, but I’ll do my best to help you figure it out.  Happy number crunching!

Please feel free to COMMENT, SHARE with others and SUBSCRIBE to our blog. We look forward to your feedback!

Steve Latham (follow me on Twitter)

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Twitter Weekly Updates for @SpurInteractive

Published
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Steve Latham
on January 31, 2010
in Marketing
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Twitter Weekly Updates for @SpurInteractive

Published
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Steve Latham
on January 24, 2010
in Marketing
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  • Good info for Marketers! eMarketer report: What Social Followers Want http://ping.fm/wysYz #
  • Short article: 5 Tips for using social media in health care marketing (via @RSSirteubal) http://ow.ly/Yshm #
  • Momma Geeks rule! Digital Tools Help Moms Take Charge – eMarketer http://ow.ly/YnUy #
  • Classically funny! And yet sadly true… How a Web Design Goes Straight to Hell http://ow.ly/Xr20 #
  • Has anyone seen recent forecast for Media Budget allocations? Seeking latest on % allocated to online vs. TV, Print, etc. #
  • Great Stats on Boomers use of TV and Internet. 69% of 50-64 were online yesterday! via @emarketer http://bit.ly/57rrau #
  • Atwitter in Mass.: Brown’s Social Media Strategy Tops Coakley’s – WSJ http://ow.ly/YlkV #
  • Fun and interesting blog banter! RT: @TexasMonthly Mass hysteria! All eyes on MA senate race: http://ow.ly/Yloq #
  • How Small Businesses are using Social Media (via @MediaPost) http://ow.ly/YefH #
  • Good read for new SM Marketers: 10 Stages of Social Media Business Integration http://ow.ly/Xq35 #
  • eBook sales continue to rise (one of a few growth categories!) via @emarkter http://ow.ly/XLcP #
  • It's official! Consumers won't pay for news (did they really spend $ to figure this out???) Poor Rupert! http://ow.ly/Xqls #
  • Twitter growing Abroad; now accounts for 50% of users w/ UK, Germany, Brazil, Indonesia growing fastest http://ow.ly/Xq1H #
  • Cool to see Old Media adopting New Media innovations: Clear Channel's new radio ad program: http://ow.ly/XpXV #
  • New Blog Post: Twitter Weekly Updates for @SpurInteractive – Article: Meeting Busy Moms’ Needs (diapers.com case) … http://ow.ly/16mm2f #
  • Good read for new SM Marketers. Article by @briansolis: 10 Stages of Social Media Business Integration http://ow.ly/Xq35 #
  • If your life feels incomplete, you can now get Samuel Jackson on your *!^%@$&! iPhone :-) http://ow.ly/XpR1 #

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Twitter Weekly Updates for @SpurInteractive

Published
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Steve Latham
on January 17, 2010
in Marketing
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Twitter Weekly Updates for @SpurInteractive

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on January 10, 2010
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New Media Toolkit!

Published
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Steve Latham
on January 8, 2010
in Marketing and Social Media
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New Media ToolkitThe online media landscape is in a constant state of change, and with the growing list of opportunities to use digital media as a marketing channel, the tools are evolving quickly.  Below is my New Media Toolkit – a list of online apps, services and vendors that I’ve found to be of great value.  It is by no means comprehensive, and it will likely be outdated in a matter of months.  But if you need help today, these are great places to start!

Search Engine Marketing Tools

  • Google Estimator allows you to forecast ad inventory, cost per click and projected media spend for a given set of keywords and geographic market.  While this is better than nothing, the results may vary significantly from reality for a variety of reasons.  Use with caution.
  • Google Ad Preview allows you to see how search results appear in different parts of the World
  • Search Status Toolbar from Quirk: one plug-in allows you to see keyword density, no-follow links, page rank, inbound links and other great tools (referred to me by Catfish Comstock)
  • Google Trends and Google Insights are valuable tools for seeing trends in keyword searches. This is one of the best ways to measure changes in demand due to cyclical or seasonal factors.

Social Networking Sites

  • Facebook: join me and 300 million of my extended friends. Just don’t freak out when your mother sends you a friend request (love you mom!)
  • LinkedIn – if you are in business and you are not on LinkedIn, you are missing the boat. Seriously.
  • Twitter - before you say no, take a test drive.  It’s a great way to promote your content and you may even have fun doing it.
  • Slideshare – best described as “You Tube for Powerpoint” slideshare is the #1 place to post your presentations and demonstrate thought leadership.  It also happens to have some powerful Google juice; several of my presentations have top rankings (e.g. “Social Media Business Case“). To see how it works check out my Social Media Strategy preso.

Social Bookmarking and News Sites

  • While there are many social bookmarking sites, I prefer Digg.com, Delicious, and Propeller.  Stumbleupon is also worth exploring. I tried using Newsvine but they suspended me for linking to my own blog (now that’s an interesting policy…).
  • In terms of online marketing news, I like the eMarketer, Online Media Daily (MediaPost) and IAB SmartBrief newsletters
  • There are many social media news sites, but if you have time for only one, subscribe to Mashable for the latest in social media news and other cool things of interest.

Social Media Tools
No media toolkit would be complete without recommending some tools to help you manage social media activities. Here are a few for your Tweeting and Posting pleasure:

  • URL Shortening: http://bit.ly allows you to truncate links and track click-throughs
  • Post Aggregators: http://Ping.fm allows you to aggregate posts across multiple social media sites.  Also truncates URLs and tracks click-thrus.  I also like Twitter Selective Status app on Facebook as it allows you to selectively update your Facebook status with your tweets by adding #fb at the end of it.
  • Social Media Bookmark aggregator: Onlywire is a decent plug-in that allows you to share once and post across most social bookmarking sites.  If you have a blog you can use it for free (just add some code to your blog).  Or you have to pay $2.99 per month.
  • Blog Monitoring: several vendors offer solid toolsets.  The more robust and comprehensive, the more expensive including SM2 and Addictomatic (both are free) as well as the not-so-free tools BuzzMetrics and Radian6.

Twitter Tools

  • Search.Twitter.com is Twitter’s native search engine; use it to find out how much you or your competitors are being discussed on Twitter.
  • For charts showing how many users are following you (or your competitors) check out TwitterCounter.
  • If you are trying to keep your ratio of Following to Followers in check, use FriendorFollow to find out which of those you are following are not returning the favor.
  • If you are seeking to find influencers on Twitter (users with lots o’ followers), TweepSearch is a great place to start.
  • Twitter management tools:  there are numerous management tools.  I’ve used Twitterrific and TweetDeck, but now use Hootsuite due to its scheduling capabilities and cool stats feature.  While TweetLater appears to be more robust, the interface is complex and it hurts my eyes. For large companies with distributed tweeting, check out  CoTweet
  • MrTweet connects you with others on Twitter based on interests and industries
  • Twitpic allows you to upload pics with your tweets (and we all like pictures!)
  • Everythingtwitter is well… I guess the names says it all

Call Tracking Tools

Your web site should use dedicated numbers that allow you to track the source of inbound calls.  Two vendors we’ve used are Voice Star and Mongoose Metrics.  Both allow you to track the source and duration of inbound calls at a relatively low price.

Again, this is not intended to be the all-encompassing New Media Toolkit, and I’m sure there are many great tools that were overlooked.  That said, I hope these are helpful in becoming a more prolific online marketer.  Please feel free to COMMENT, SHARE with others and SUBSCRIBE to our blog. We look forward to your feedback!

Steve Latham (follow me on Twitter)

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Twitter Weekly Updates for @SpurInteractive

Published
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Steve Latham
on January 3, 2010
in Marketing
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Twitter Weekly Updates for @SpurInteractive

Published
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Steve Latham
on January 3, 2010
in Marketing
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SOCIAL MEDIA STRATEGY

Published
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Steve Latham
on January 2, 2010
in Marketing, Social Media and Strategy
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social mediaSuccess begins with a plan. Yet when it comes to social media, many marketers dive in without a thorough understanding of objectives, platforms, tactics, requirements, responsibilities and metrics for measuring performance.

Many marketers also fail to understand the pitfalls and shortcomings that can prevent them from achieving their social media marketing goals, including:

  • content that is overly promotional
  • content that is not engaging or relevant to target audiences
  • a one-way outbound approach to communicating (it’s all about me!)
  • failing to build a network (without reach, there is no ROI)
  • one-off isolated efforts vs. an integrated approach

What many lack is a comprehensive social media strategy.  To address this growing need, I developed a new presentation entitled “Social Media Strategy” you can view below or on slideshare.

The goal of the presentation is to help marketers understand the opportunities, challenges and pitfalls of social media marketing while providing a framework for developing a social media strategy.

“Social Media Strategy” includes the following:

  • 5 point business case for social media
  • 7 common pitfalls of social media (and steps to avoid them)
  • 10 point outline for a social media strategy
SOCIAL MEDIA STRATEGY | Spur InteractiveView more from Steve Latham.

This presentation provides the information you need to craft a social media strategy.  If you find it valuable, please feel free to comment below and share with others.  Enjoy and good luck with your social media strategy!

Steve Latham
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Related posts and presentations
Business Case for Social Media
New Media Toolkit
Social Media: Shiny Object or Killer App?

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