Digital Marketing has many benefits over traditional marketing, especially when it comes to advertising. Never before could companies track and measure value more thoroughly than they can today with online tools.
However, many businesses don’t understand that measurement of return requires you to have an intimate knowledge of your customer and business, and to implement proper (sometimes vexing) tracking. When you’re ready to better understand your digital advertising return, here’s where to start:
How Well Do You Know Your Customer?
This is less about demographics or psychographics and more about how much the customer is worth to your business; after all, this is a discussion on monetary return. What is the lifetime value of your customer? How many of your leads (from newsletter sign-ups, contact form fills, etc.) turn into paying customers? If your business is service-based, are certain facets of your business more valuable than others? It’s great to know if your customer is into wind surfing on the weekends, but other information needs to be ascertained in order to move your bottom line.
Being able to define value for micro conversions, in addition to macro conversions, is important for measuring the full return of your digital advertising efforts.
How Well Do You Know Your Gross Profit and Net Profit?
I say this as lightheartedly as possible, but don’t be a wise guy. Saying your goal is to earn new customers “as cheaply as possible” is as funny as the guy at the supermarket who asks if something is free if it doesn’t scan. But not only is it trite, it can be detrimental to your advertising success. Not to mention, it shoots for quantity and not quality, and that directly affects value earned in the present and future. Not setting tangible goals based on actual profit data is a recipe for disaster (seriously, I wouldn’t want to eat that cake).
However, what if you don’t know your profit margins? Gasp! (Just kidding, it will be okay)! If this is the case, it might help to start advertising, see where you are, and then set goals for improvement. However, please note that you will only be able to know your return on ad spend (ROAS), not your true return on investment (ROI).
Is There a Hole in Your Tracking? Spoiler: Yes!
I don’t want to be the one to burst your bubble, but online tracking (as magnificent as it is) is not magic. If that were the case, we might all just be able to wish for new customers. So just like most things in life, we’re going to need to put in some effort. Then, after we’ve put in all that effort, it still won’t be perfect. Again, just like life.
For example, privacy settings, broken UTM codes, lack of supplemental tracking codes, etc. can lead to holes in your tracking. And holes are only good in donuts. Unless it’s a jelly-filled donut, then you just have a mess.
Anyway, here are some things to think about when starting your never-ending journey of improving trackability:
Do you get orders or make appointments over the phone? If so, incorporating call tracking to your site can help you determine what’s driving your most valuable calls (CallRail is our favorite). Other ways to help close the gap include incorporating tracking codes for social media advertising, setting goals in Google Analytics, and if applicable, choosing a strong e-commerce platform that easily links and transfers important data to your analytics tools.
With all of that in mind, analyzing your digital advertising spend will be much more comprehensive. Because don’t we all like when advertising dollars come home and bring their new dollar friends? If this seems overwhelming, don’t fret! Here at Cosmitto, we can help you navigate the daunting digital advertising beast. Contact us to chat about your business!