March 20, 2009 - Comments Off on How to track the ROI of your digital marketing

How to track the ROI of your digital marketing

ROI, ROI, ROI! it is the battle cry of the digital age isn’t it..? the perfect marketing medium, measurable to the last penny!?

Well at least it should be.. however in my experience and in the experience of many of my peers I know that this is rarely the case. Whilst it is certainly possible, unless you are a purely online business taking no offline orders, tracking spend and return perfectly can actually be quite a challenge. I thought it would be useful to publish my check list for perfect tracking of your digital marketing.

For ease of explanation I have broken the challenge down into three stages, spend,response and ROI.

1. Spend

Most marketing requires spend, actual or time (which after all is money) the first thing to be certain of is how much you are spending and on what channels and over what time period. I know this seems obvious but it is critical for some less obvious reasons which I will highlight later.

So for instance you may allocate digital marketing spend like so:

Month 1

SEO – £5000

PPC – £56,789

Affiliate commission – £3,456

Display – £2,389

Tracking spend of PPC & Affiliates will be done via the PPC vendor or affiliate network or you may choose to use a tracking system such as atlas or double click, SEO costs should be agreed up front and be transparent, display advertising can be bought in a number of ways but should always be easy to track and understand.

2. Response

Again at first this may seem simple but when you look into the detail there is actually a lot to consider.


Tracking – The beauty of digital marketing is how well it can be tracked, but different tracking systems produce different results for a variety of reasons.. whilst a detailed explanation warrants an entirely new blog post I’ll highlight some of the main issues.

First click Vs Last click – a visitor may arrive at your website several times before a conversion or action is recorded, for instance initially via an organic listing in Google followed shortly by a visit from a PPC advert, will you assign the credit for the conversion to the organic activity or the PPC advert?

No tracking software captures 100% of your visitors – some analytics packages are better than others but to highlight the range of difference I have seen Google Analytics under report visitors by as much as 15% on some client accounts in comparison to other packages such as Omniture. I’ll come back to what to do about this shortly.

Digital marketing causes offline conversions – in a perfect world customers who find your company via digital channels would all  conveniently convert via digital channels and tracking them would be (relatively) easy.. unfortunately this isn’t the case, particularly if you are selling high value items or work in a B2B or service environment. Customers may want or may need to speak to you before an enquiry can be logged or sale completed. Joining the dots between this digital and offline customer journey represents a key challenge when assigning value to your marketing activities.

Offline marketing causes digital conversions – it is also worth mentioning that the reverse of the above is also true and that offline marketing often generates a digital response, i.e. a TV advert may prompt a customer to log onto your website and then place an enquiry via email or from the phone number on your site, where in this chain of eventsshould you assign the benefit and where in reality are you assigning the benefit?

Single transaction value Vs lifetime value – customers may only order from you once.. but hopefully they will order many times.. how should you value your efforts if initially the customer found you via an organic google search but converted the second time via a direct visit to your website? should you assign the value of the second transaction to the initial conversion source?

3. ROI

The final challenge I have seen is when to account for the return, again this is easier in an ecommerce environment but consider the circumstance where a digital marketing channel delivers an enquiry, which in turn prompts a call back, an appointment to be booked and then finally a sale occurs. The lead time from digital response to offline conversion could be weeks or even months and therefore the cost is incurred in a different time period to the benefit. I have often seen this produce reports where there have been more orders than enquiries in a given week, the alternative is to allocate the benefit back to the time period where the enquiry was received but this means that historical data is constantly changing meaning decision making is difficult and requires constant re-evaluation.

So what can be done about these issues? my top 10 tips are listed below:

1. Accept that there are lies, damn lies and then statistics.. no model is perfect, the pursuit of perfection will only hinder your progress in this instance so get something that is a reasonable best practical case, make it work and stick with it.

2. Choose an analytics package – i.e. a good free option is Google Analytics and is my personal favorite from a usability point of view, your selection will determine whether you assign first click or last click to the enquiry

3. Accept that web analytics packages are good for trend analysis not absolute analysis of enquiry volumes or order values, only the physical enquiry or order should be used for this

4. Enable your website to assign a marketing ID to each enquiry/order and capture keyphrase or referrer data – i.e. MID=1 (Google organic search) & keyphrase = digital agency. This will necessitate a dynamic element to your website and I would suggest that enquiries are stored in an online database as well as being fed into the back office CRM.

5. Use a range of unique telephone numbers on your website – i.e. a telephone number for each channel you wish to track, so 0800 111000 = Google organic search 0800 111111 = Google PPC and so on, then if you are a large enough organisation your phone system can display this and pass this to your CRM, if you are a smaller company hopefully your phone can display this and you will have to rely upon humans to assign the right marketing code to the enquiry

6. Take the benefit when it hits but bear in mind your sales cycle, constantly changing historical data is unusable, but it is important to ask why a particular week/month was good/bad and to understand this in the context of good weeks/months for enquiries for instance.

7. Remember to track offline lead sources and dont mistakenly give the benefit to your digital marketing. The same Marketing ID’s can be assigned to direct URL requests or domains advertised on TV adverts (.tv for instance) to differentiate traffic that has been generated via offline marketing but utilising your online tracking systems, this is rarely perfect as a TV advert can initiate a Google search which makes it impossible to track the benefit to the tv ad.

8. When deciding whether to assign initial order value or lifetime order value i think the answer if possible is to do both, if your CRM can handle it multiple enquiries or orders shoudl be assigned to an individual customer and enabling the evaluation of the initial ‘hit’ to be taken in the context of other campaigns the customer has responded to.

9. Build a dashboard – even if it is only in excel, capturing this information is pointless unless you can distill it into a simple to understand format that allows side by side comparison of the performance of your marketing channels.

10. Challenge your data – finally if you are looking at your data and seeing something that doesn’t make sense, there is probably something wrong with the tracking, marketing ID’s or another fault in the data or process, dont immediately axe a channel or pour in the cash, query it first.

There will of course be more to consider for different organisations and whilst some of the issues I have raised here sound simple enough, getting business processes and back office software to support them may not be. However i would argue that it is always worthwhile doing even at considerable cost, start now and the benefits of informed decision making enabled by this transparency of evaluation of your marketing will ensure you derive maximum bang for your buck and could make the difference between a company that survives this current economic cycle and one that doesn’t!