Measuring Up

One of the greatest things about direct marketing is the ability to measure results. But surprisingly, many search-engine marketers aren't keeping track of their efforts.

A March report from Jupiter Research asked marketers about the primary goals of their SEM programs and whether or not they measure progress against those specific goals. One key finding should be a loud wake-up call for industries such as automotive, financial services and pharmaceuticals, which commonly use the Web to drive offline leads:

Forty percent of marketers that consider leads for offline sales to be a primary goal of their SEM efforts do not measure results against this goal.

The report, Jupiter's biannual search-engine marketing survey, illustrates the measurement disparity for several SEM goals, including Web traffic, immediate online sales, branding, leads for offline sales, leads for online sales, call center volume and physical store traffic. Only 21% of all respondents indicated they measured leads for offline sales, while 35% considered this to be a primary goal of the program — a 40% disparity.

The 40% that value leads for offline sales but do not currently measure corresponding results need to change their practices before the situation goes from bad to worse. Testing, measuring and modifying is the only way to understand shortcomings and improve an SEM effort. The programs that continue to operate blind will only worsen as competitors fine-tune their work.

Those committed to their SEM spending for the purpose of generating offline transactions are ahead of the curve. But they now need to take the next step and apply a methodology to incorporate offline business generated into online success metrics.

It begins with identifying the two distinct measurable objectives for the program. What online activity being fueled by the SEM program is then producing offline sales? For an automobile manufacturer, an online lead for offline sales might be defined as a consumer who requests a price quote online and enters a local dealership within 30 days.

After a clear definition has been set, marketers can begin creating a framework for a two-step measurement process that gets to the heart of whether the SEM program is effective. Data points are captured independently, with the real challenge being to incorporate a feedback mechanism where the offline activity is associated with the data collected online.

The initial online data gathering must include two things: SEM-related information (visits, click costs, leads from the online form) and a means for contacting the consumer for a price quote. As all good direct marketers know, when developing a lead-generation program, they must provide a benefit to the consumer for completing the online form, such as an e-mail or phone call with a specific price quote.

Some level of technology is required to capture SEM-related information. Certain service providers and software tools can help automate this process or make it more advanced. Those preferring to manage this task themselves can use tracking URLs to collect the required information and compute the ROI for a small SEM program or a small number of keywords. At this stage, marketers should be using technology to collect the following information at minimum:

• Which engine each visit originated from.

• Which keyword generated each visit.

• Click costs of each visit.

• Whether or not an online lead was captured.

The second set of information needed is collected from the online registration form. Keeping this online form as streamlined as possible will increase the odds that visitors will complete it. Limit the amount and type of information being requested; marketers should only ask for the essentials to move the consumer to the next step. Don't ask questions online that eventually will be answered in the offline channel. Give consumers the information they want in exchange for the basic data points necessary to marry the online registrant (name or e-mail address, for example) with the offline activity.

Be prepared to test different registration forms to improve online conversions. In the automotive industry, a good example in practice is the online price-quote request process. Good marketers keep data collection short and simple and provide the requested price quotes to the consumer quickly to avoid losing leads.

Offline, marketers rely on many methodologies to measure success rates. Many have historical data indicating how consumers move through the buying cycle. In automotive, if a certain number of dealer visits are generated, the ultimate number of sales can be predicted. These metrics still apply. However, the missing link is the feedback loop where offline success metrics affect how an SEM program is managed. Did the online consumer requesting the price quote make it into the showroom within 30 days? If so, that's a qualified lead and a victory for SEM.

Collecting, marrying and understanding this data enables marketers to begin proactively managing keywords and the overall ROI of their SEM efforts, putting them on the fast track to a more effective and efficient SEM program. Local automotive dealers may have no idea how a consumer came to enter their showrooms today, but a two-step measurement process can help a marketer determine which search engine and keywords were responsible for the lead.

Marketers that find themselves within the 40% disparity must get started right away. Those that move quickly can refine their programs while their competitors are still running blind.

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Chris Henger is senior vice president for marketing and product development at Performics, an online marketing services firm in Chicago.

Anatomy Lesson

An example of a two-step measurement program for automotive SEM*

Online:

Monthly spending on search paid placement: $100,000

Average cost per click: 25 cents

Monthly visits to Auto manufacturer.com: 400,000

Conversion rate (from initial visit, to completing form, to requesting a price quote): 2%

Completed forms for price quotes: 8,000 leads

Online cost per price quote request: $12.50

Offline (using an 8,000-lead base):

Conversion rate of leads to confirmed price quote: 50%

Qualified prospects (with price quote communication): 4,000

Conversion rate of qualified prospects to a dealer visit: 10%

Results and considerations:

Dealer visits occur

Total cost per action for each dealer visit: $100,000/400 = $250

Rate on dealer visits to sales: 25% (figure determined from historical dealership data)

Resulting sales: 100

Average sale: $20,000

Total revenue for 100 sales: $2 million

Overall results: 1000% return on marketing spending (20-1)

Margin per sale: $2,000

Return on investment: 100% (2-1)

*Data is figurative and not based on actual program. (Source: Performics)