Is Your Digital Advertising Actually Working?

Advanced analytics tools in the field of digital marketing have made it easy to produce mounds of data. From user engagement metrics to conversion rates, the possibilities for detailed analysis are virtually limitless.

At the same time, an overabundance of data can result in a lot of "static." In other words, it can be difficult to sort through data sets for concrete findings or actionable insights. For example, think about an ad that has a click-through rate (CTR) of 10%. In a vacuum, that metric would be impressive — but context is everything. How much does the ad itself, or its CTR, actually contribute to generating more leads, acquiring new customers, or increasing revenue? If a high CTR results in a low ROI, then how important is that metric in the first place?

Marketers need more than raw data to determine whether their digital advertising actually works. The following will discuss several steps that are required to gauge the true effectiveness of your ads.

Start with a Baseline

One of the most fundamental steps to measuring the effectiveness of your digital advertising efforts is to establish a baseline from which to judge future results. Preferably, this baseline would be set before an ad campaign starts. However, you can also implement a baseline before an ad campaign changes, which will help you determine the relative effectiveness of one marketing initiative over another.

There are a number of advertising metrics that you can use to establish your baseline. Think of them as both non-website goals as well as website goals.  Non-website goals may include:

  • Total units sold
  • Percentage of sales increase
  • Increase in sales or units compared to previous year or month
  • Increase in overall foot traffic

Website specific goals may include:

  • Website traffic (the number of visitors to your site)
  • Website viewthroughs (an ad was delivered & then that person returned to your website within 30 days)
  • CTR
  • Leads generated
  • Email subscription rate
  • Cost per thousand impressions (CPM)
  • User engagement rate
  • Form Fills

Before you choose your metrics, you must establish your goals for the ad campaign.

Set Goals

Without specific goals in place, there's no quantifiable way to determine whether a given ad campaign has succeeded or failed. But which goals should you set for your ad campaign?"

The ultimate goal of any marketer is to achieve a positive return on investment from an ad campaign. However, there are many ways to measure ROI.

It may not be easy to directly correlate ad campaign metrics to company revenue. Consider the following scenario:

  • A marketing team designs an ad campaign for the purpose of increasing the company's email newsletter subscription list. The goal is to increase email revenue by 20%. However, marketers first need to determine how increasing the size of the organization's mailing list contributes to revenue.

Instead of measuring a campaign's success purely in terms of revenue, it is usually much easier to use other metrics for your primary objective. For instance, a goal of achieving 20% lift in email subscription rates is clear, simple, and easy to track. However, you'll ultimately want to link such a goal to positive ROI, which means you'll need an “analytics story.”

Establish Your "Analytics Story"

The ultimate goal of your ad campaign should translate to positive ROI. That means you need to figure out the "path" from your chosen campaign goal to concrete, measurable results. Developing a narrative in terms of analytics can be a highly effective way to do so. 

For example, imagine that you want to demonstrate the correlation between that 20% lift in your company's email subscription rate to increased revenue. Your "analytics story" may go something like this:

  • John Doe sees one of your ads and decides to join your subscription list. 
  • One day, John receives a newsletter that really captures his attention. He reads it intently and decides to do his own research as well.
  • During the course of his research, he visits your website and sees a special, limited-time promotion. After thinking about it, he decides to take advantage of the promotion, and purchases your product.
  • For every 50 subscribers, there's at least one "John Doe" out there that will eventually purchase from the company.

By framing your ad campaign's ROI in concrete, narrative terms, you make it that much easier for key stakeholders to grasp the positive impact that your objectives have on the business' bottom line.

Compare Campaign Performance to ROI

Finally, you should compare your ad campaign's actual performance to your expected ROI. In many cases, you'll see a positive correlation. In others, you may see little impact, or even a negative effect on marketing ROI. 

Your ad campaign may need some tweaking as your "analytics story" and campaign performance come more clearly into focus. Perhaps a 20% lift in subscribers does not translate into a significant increase in revenue or a positive ROI. 

The only way to know if your digital advertising is working is if you have a baseline, goal, and analytics story to explain potential results.

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