Title: 16 3 Metrics Used To Evaluate The Success Of Online Marketing
Course: Principles of Marketing > Section: Chapter 16

16.3 Metrics Used to Evaluate the Success of Online Marketing

Learning Outcomes

By the end of this section, you will be able to:

- 1 Discuss the role of marketing metrics in digital, online, social media, and mobile marketing.
- 2 List and describe the metrics used to evaluate the success of online marketing.

Types of Online Marketing Metrics

While online marketing tools have numerous advantages over traditional tools, it’s important for marketers to pay close attention to metrics that indicate the performance of their online marketing campaigns. Metrics are goals that marketers are trying to reach through their campaigns, and they are typically quantitative in nature. For example, companies measure the performance of their social media campaigns by measuring how many likes, shares, or comments are posted in response to the content. While each online marketing tool has its own set of metrics, we’ll focus on the following tools.

Website Traffic

Website traffic is the total number of visitors to a company’s website. For some companies, website traffic can help move consumers further along the sales funnel and closer to making a purchase. A sales funnel is a visual representation of the customer journey from product awareness to product purchase. For e-commerce sites specifically, online marketers want to increase traffic to their website, which represents the top of the sales funnel, where most consumers will stop. The number of consumers will eventually dwindle until there is an actual purchase, which represents the narrow, lower part of the funnel (see Figure 16.10).

Figure 16.10 Sales Funnel from Awareness to Purchase (attribution: Copyright Rice University, OpenStax, under CC BY 4.0 license)

Traffic by Source

Monitoring website traffic by source means paying attention to the site from which the website traffic came. For example, social media is famous for generating traffic to companies’ websites. Online marketers can track this information by attaching a piece of tracking code to links on social media pages and other sources to assess where the visitor came from. In addition to social media, traffic sources can be email, paid search, organic search, paid social, and affiliates.

Paid search is a type of digital advertising where marketers pay search engines like Google and Bing to place their ads in sponsored spots at the top or bottom of a search engine results page (SERP). A SERP (Search Engine Results Pages) is the list of search results that displays on a search engine’s page after someone enters key search terms into a search query box. Say, for example, a consumer is looking for a local company to investigate and fix a leak in their ceiling. That customer would likely visit Google and type in the search terms “plumbers near me.” Google then displays the SERP featuring sponsored companies in top positions on the page. Companies bid on key search terms like “fix leaky roof” in an auction with competitors. If their bid is high enough, they will secure a top position on Google’s search results page. In turn, when users click on that sponsored add, they are directed to the company’s website or landing page.

Organic search refers to the list of websites on a search results page that have not been paid for by marketers. Search engines use algorithms to deliver search results that are relevant to the key search terms that a visitor has entered. When someone is searching for a local plumber on Google and they click on an organic search listing, the company that appears organically in those search results does not pay for the traffic that visits its website.

Paid social is similar to paid search in that marketers pay social media companies to display sponsored digital advertisements to targeted customers on their platform. Social media users who click on a sponsored social advertisement are then directed to the company’s website or landing page.

Affiliates are people or companies that earn a commission for driving traffic to another person’s or company’s website where they make a purchase. CJ Affiliate, formerly known as Commission Junction, provides affiliate marketers with a marketplace to connect with brands who pay affiliates for driving traffic and purchases online.

Conversions

Simply put, conversions happen when a company turns a visitor into a customer. When a consumer purchases a LEGO set on the company’s website, that’s a conversion. When a new user signs up for TikTok, that’s a conversion. Conversions are important in measuring the success of online marketing campaigns and the consumers’ purchase experience.

Bounce Rate

Bounce rate is a metric that online marketers use to measure what percentage of visitors visit the site, view one page, and then leave. Bounce rates can be examined for each page of your website. Online marketers want to aim for a bounce rate that is lower than 40 percent. Higher bounce rates indicate issues with pages, including the time it takes for them to load in a visitor’s browser.

Search Trends

Search trends are data points that indicate how frequently a term is searched. Researching search trends provides insight into who a company’s customers are and what they are currently interested in. Google Trends is a free tool that online marketers can use to gather this information. Monitoring search trends has some predictive benefits to online marketers, who can recommend changes to products, advertising, and budgeting based on what consumers are searching for. For example, marketers utilize keyword tools offered by companies like Semrush to gain insights into customer search activity. Semrush provides customers with information on the value of popular search terms.

New versus Returning Visitors

New visitors, or new users, are people who are just learning about your website. A new visitor is someone who is visiting your website for the first time. Returning visitors are visitors or users who have been to your website before. Analyzing new and returning user metrics provides online marketers with a sense of how effective the company is in attracting new visitors compared to returning visitors. If there’s an increase in new visitors, online marketers may be able to conclude that they are successfully attracting new customers via the online marketing tools they are using.

Average Session Duration

A session is defined as a collection of interactions that occur on a company’s website. For example, if someone searches for Nike soccer cleats on Google, they’ll likely click on a landing page that takes them to the Nike website’s page related to soccer footwear. While on the page, the visitor may then click to browse different styles and colors and maybe watch a video of a famous athlete playing in the cleats. The visitor may then decide to make a purchase by selecting their size and clicking on a CTA (call-to-action) button such as “Add to Cart.” This collection of activities equates to a session. Online marketers examine session duration as a way to measure engagement. If someone visits your shopping cart page after adding an item but then leaves within a few seconds (known as shopping cart abandonment), that may indicate issues with that page.

Page Views

Page views is a metric related to how many total pages have been viewed on your website. Websites typically have a home page, which is where visitors land when they type in your main URL. But depending on the company, its website could have many pages in addition to the home page. For example, e-commerce sites have pages that allow visitors to browse products. There might be review pages for each product and pages dedicated to blogs or articles about featured products. There’s likely to be a customer support page and a terms and conditions page. The possibilities are almost endless. Online marketers use page views as a metric to gauge the success of their website pages.

Most Visited Pages

In analyzing page views, online marketers can gain important insights, such as which pages are most visited. If they identify content on their website that attracts a larger number of views, they can attribute those page views to a traffic source, such as social media or a blog.

Social Engagement

Social engagement relates to the number of actions that social media users take in direct relation to your company, brand, or product. Social engagement can be measured by the number of likes, shares, retweets, and comments made by account followers.

Click-Through Rate

When users visit Google and begin searching for something they are interested in, Google returns what are called search results. This is the list of solutions or answers to the search terms a user entered in the Google search bar. Some companies pay to appear at the very top of that search results page. As noted above, this is known as paid search. When users see the ad, this is known as an impression. The click-through rate (CTR) is the percentage of people who click on your ad. Measuring CTR indicates how successful their search advertisement is in attracting users to click. The ads are linked to a landing page, where the consumer is presented with additional information that is designed to lead them to a purchase. A high CTR leads to more traffic and ultimately conversions.

Cost per Click

Search engines like Google and Bing generate revenue by charging companies that pay for search ads to appear on search result pages. The cost per click (CPC) is the cost companies pay search engines for each click that a search advertisement receives. This cost is based on the keywords that a company bids on. Simply put, there are competitors in the auction who are willing to pay a certain amount to appear on the search results page when a user enters certain keywords. Depending on how competitive the auction is, CPC can fluctuate, and online marketers analyze CPC to ensure they don’t overpay to have their search ads display.

Let’s suppose that you wanted to purchase a Tampa Bay NFL jersey. You are interested in finding one at the lowest price possible. You’re also interested in the team’s home jersey. You may type in the search engine bar: Tampa Jersey in white. Retailers like Fanatics and NFLshop.com will appear at the top of the search results page next to the word “Ad.” If NFLshop.com appears first, it won the auction over the search keywords you entered.

Online marketers set limits on how much they are willing to bid on certain keywords. If they bid too low, they lose the auction and may not get the impressions they need. If they bid too high, they risk overpaying for their search advertising. They should identify their goals and bid accordingly.

Cost per Acquisition

Cost per acquisition (CPA) is also known as cost per action or cost per conversion. It relates to the aggregate or cumulative cost of acquiring a customer. CPA can be measured by channel or campaign. The conversion could be a sale, a form completion, or a click.

The CPA formula is:

For example, let’s look at CPA for a paid search campaign. Fanatics uses paid search to reach customers interested in buying athletic apparel. Let’s assume that Fanatics runs a search campaign for one month that costs the company $20,000. The campaign was responsible for driving over 1 million visits to the website and 32,000 conversions. 32,000 conversions at $20,000 would result in a CPA of $0.63, meaning that each customer conversion cost the company $0.63.

This calculation can be somewhat misleading, however, because it fails to account for the resources spent creating the ad and managing the search campaign. Nevertheless, online marketers monitor CPA because it helps them measure the effectiveness of their online marketing strategies. The lower the CPA, the more effective the campaign.

Marketing Dashboard

Targeted Advertising

As a consumer, have you ever wondered why you see certain advertisements on social media but not others? The answer is targeted advertising. Targeted advertising allows marketing professionals to specify a target audience of their choosing. For example, you may see advertisements for winter boots if you have recently initiated a search with those terms. At the same time, a friend might see advertisements for winter tires for the same reason.

Targeted advertising can be expensive because it is tailored to a marketer’s exact specifications. Therefore, marketing professionals calculate the cost every time a prospective customer clicks on a targeted ad through their website. This cost-per-click metric shows us how much the marketing professional pays every time a prospect clicks on an ad.

Cost per click has a role in search engine marketing as well. For example, if our advertisement is served up on a search engine results page (SERP) and a prospective customer clicks on that advertisement, the marketing team must pay the search provider.

As savvy marketers, we know that not every click results in a purchase. So, we have to be careful not to invest more in clicks than our profitability allows. We also need to consider the average revenue and profit per order and the customer lifetime value when determining the efficacy of a targeted advertising campaign.

The formula for cost per click is the total cost for the digital campaign/number of clicks.

Give the cost-per-click calculation a try for yourself. What is the cost per click of each of the four campaigns for a pet store?

Campaign | Total Campaign Cost | Number of Clicks
Dog Food | $12,000 | 18,100 clicks
Cat Food | $10,000 | 20,200 clicks
Aquariums | $7,000 | 19,050 clicks
Bird Feeders | $5,500 | 5,000 clicks

Table 16.1

Solution

Dog food: $0.66/click

Cat food: $0.50/click

Aquariums: $0.37/click

Bird feeders: $1.10/click

What additional information would we need to know to determine whether the cost per click for each product is a good investment?

Solution

Average revenue and profit per order, percentage of people who click through who make a purchase, and/or customer lifetime value

Let’s suppose that Najja found our pet store website on a targeted ad, clicked through, and placed a $70 order for bird feeders that had a 10 percent profit margin for our pet store. Was the click-through rate a good investment?

Solution

Yes. The pet store profited $7 on the single purchase at a click-through rate of just $1.10. In addition, Najja may purchase more in the future, making the click-through rate an even better investment.

Knowledge Check

It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.

1.

Which of the following best describes why online marketing metrics are important?

1. Online marketing metrics help marketers understand whether or not their products and services create value for consumers.
2. Online marketing metrics are an important part of understanding the factors that influence consumer behavior.
3. Online marketing metrics help marketers measure the effectiveness of marketing managers.
4. Online marketing metrics help marketers measure the performance of their online marketing campaigns.

2.

An online automotive magazine is running a social media campaign to increase paid subscriptions. Which of the following would be an example of a conversion on its website given the campaign’s goal?

1. A visitor uses the search tool on the website to search “vintage European cars.”
2. A visitor enters their email address to receive updates.
3. A visitor enters their payment information and contact information and clicks on “place order.”
4. A visitor downloads the app on their mobile phone.

3.

The Warton Hotel is running an online marketing campaign and would like to measure the percentage of people who only visit its site one time. Which online marketing metric would be most helpful to the hotel in this situation?

1. Counting new and returning customers who visit the site
2. Counting page views
3. Examining the bounce rate
4. Counting unique users

4.

Which of the metrics could be used to measure the performance of a social media campaign?

1. Social engagement
2. Page views
3. Bounce rate
4. Cost per click

5.

Jax’s Sushi House wishes to compare DoorDash’s and Google’s performance in driving traffic to the restaurant’s website. Which of the following explains why Jax’s Sushi House wants to compare sources?

1. Measuring traffic by source provides insight to online marketers about the effectiveness of sources that best drive traffic to a company’s website.
2. Measuring traffic by source allows marketers to measure the effectiveness of the online shopping cart experience.
3. Online marketers can determine the effectiveness of their home page by examining traffic by source.
4. Evaluating traffic by source means looking at the total numbers of visitors to a website and comparing it to the total number of visitors from a source.