How to Define a Web Conversion

Apr 25 2012

You know, one of the first things one should do when flipping a lame business into a successful one, is to create business definitions. The beauty about business definitions is that it helps you know what you count when you count. In addition, it makes sure you count the same thing every time you count it. That’s a perquisite for creating a baseline, that shows where things are at, which is a starting point for any optimization process.

What does it have to do with web conversions?

A conversion is a type of business definition, indicating an event in a user life-cycle. A series of such events, leading to a desired action is called a funnel. While often there are several types of conversions, when acquiring new customers it usually make sense to focus on one specific event. This specific conversion should be the event in the user’s life which is likely to indicate about his future behavior. It often might be registration of a user, user’s first deposit, user’s submission of a sales lead, etc.

Once you have this solid definition of conversion, you can start calculating your conversion rate. Conversion rate is the chance that a person arrived to your website will make a conversion and is equal to #Conversion divided by#page-views. After you reached an understanding of what is your current conversion rate, you can start think of ways making it even better (Anyone said a-b testing?)

Defining a conversion enables another critical capability besides optimizing your conversion rate. It allows to associate revenues with conversions and to attribute revenues to a conversion (The singular form was chosen on purpose. It’s important to be able linking revenue to a specific user).

For example, if your website generated 1,000 new users and these users will deposit throughout their life $1,000, each user worth to you $1. If a registered customer is likely to deposit, it make sense to acquire registrations of customers and to attribute revenues to the event of registration. Your user’s value, or user’s lifetime value equals $1. To simplify things, it’s important to attribute users’ lifetime value (LTV) to the acquired acquisition and not to any other type of conversions, otherwise you might find yourself counting the same money twice.

Understanding LTV is nice in many ways, but it’s critical in three main ones:

- Be able to project  your cash-flow: Once you know how many users you have, and once you can project how they will behave, you can start projecting your cash-flow.

- Understand how much you will be willing to pay for a conversion: If your LTV for registration is $1, and you want to earn money, than you will need to pay less than $1 for a new registration. If your cost per acquisition (CPA) is $0.5 and your LTV is $1, for each acquired customer you earn $0.5.

- Increase your LTV:  Once you know what is your LTV and you have a baseline for that, you can start playing around with cool ideas expected to increase your earnings for each acquired customer. You can’t really do that beforehand!

Well folks, that’s not all, but that’s all for today. Soon I’ll be writing about LTV calculations, a/b testing, and few more exciting topics. In the meantime, let me know if it make sense to you.

Cheers, Dada

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Marketing Time Attribution Problem Explained and Resolved

Mar 30 2012

It often takes a while between the time we are making a marketing effort until the time these efforts makes a business impact. This time gap that creates the marketing  time attribution problem can often distort reports and can drive to wrong business decisions. In the context of internet marketing, any web analytic solution must attribute the conversion to the time in which a click occurred, or to the time in which the conversion occurred. Google products (Google Adwords, Google Analytics) for example, attribute the conversion to the time of click.

But what happens when we are taking the cost from one source (e.g: an ad-server) and the conversions from another source (e.g backend reporting tool)? How can we know how long elapsed between the click and the conversion? How can ROI be calculated when the conversion are still coming in?

This problem can be resolved to a large extent using cookies. If you are a website owner that injects tracking cookies to your visitors, and this cookie records your campaign attributes, you can add to that a click time stamp. Whenever this user will visit your site again, and will make an action, you can pull the campaign attributes and the time in which the user clicked your ad. The time of the click is indicative of the time in which the cost incurred.

This way you can report cost and conversions plotted on the same timeline.
Though it will not be suitable for accounting purposes, for optimization and business decisions, it will be often much more of a precise view than the alternative. Let me know how it works!

Yours, Dada

2 responses so far

The Best 10 Internet Marketing Blogs

Mar 23 2012

A part of the daily routine of the internet marketer is to read internet marketing blogs. To get your life easier I’ve listed  the must read internet marketing blogs you shouldn’t drink your morning coffee without:

1. Mashable

Mashable provides industry news and industry insights. Mashable started with a clear focus on social marketing and expanded to be one of the industries’ main references.

2. The Next Web

Similarly to Mashable, TNW provides news for internet entrepreneurs. In my eyes, TNW is less trendy and often more in-depth.

3. Quora

The famous Q&A website that started as a closed community of engaged and influencing beta users and evolved into a place allowing direct communication between entrepreneurs and executives.

4. Techmeme

The most comprehensive industry news aggregator, updated at the speed of light. Reading it though, might become a full-time job.

5. SEOmoz Blog

SEOmoz is by far, the best hands on manual for Internet marketing. Don’t get confused by it’s name because it’s much beyond SEO. SEOmoz is an excellent tool to understand the micro level questions of internet marketing, packed with tips for beginners and advanced marketers.

6. Search Engine Land

Search Engine Land is aiming at a very similar audience to SEOmoz’s, keeping it’s readers up-to-date about technical news such as algorythem changes and it’s implications.

7. Inside Adwords

Inside Adwords provides updates about the most important tool in paid internet marketing – Google Adwords. Whether you like it or not, changes to the Google Adwords can often become a turning point to your business, so keeping yourself up-to-date on that front is critical.

8. Google Analytics blog 

Web analytics is a critical chunk of the internet marketing world. The Google Analytics Blog offers not only product news but also helpful tips for making some sense in your data, that can be used also with other web analytics software.

9. Adage

Calling Adage internet marketing blog might be somewhat of an insult but yet, I often find exclusive pieces of internet marketing pearls, that could not be found anywhere else. Full access to Adage requires subscription and payment.

10. Wickedfire

As implied also by its design, Wickedfire can provide you with an insight to the shady world of affiliate marketers. You don’t have to love them, but you must appreciate these independent, self-reliant type of marketers.

I’m sure I missed a few, and I’m confident you can help me getting this list even better. Which ones you expected to see in it and you didn’t?


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Web Analytics, Cookie Tracking, Pixels and In-Between

Mar 16 2012

If you already read the ever famous post about the best internet marketing tip, you should know by now that the only way to survive in this business is to constantly keep testing out new things and to make sure you can attribute an effort to a business impact.
The first step in resolving the attribution problem is to track your marketing efforts. Since the majority of web analytics tracking is based on cookies let’s talk about cookies!
Cookies are small files that are saved in a user’s browser under a certain condition. This condition might be “When a user lands here, inject a cookie”, or “If a user arrived via Google Adwords Campaign then inject a cookie”. These files can contain a small portion of data. This data is kept on the user’s station and is accessible to who ever created it from the first place.
When a user arrives from a managed marketing efforts, that you would like to measure, you can use tracking parameters which will be saved on the user’s computer within a cookie. Whenever this person makes an action, the tracking system can call the cookie and save the unique campaign identifier you used while creating the link. This way the specifiec effort is attributed to it’s business impact.
Another tracking mechanism, which is also cookie based, is pixel tracking and is commonly used by ad–servers (e.g. Google Adwords). Unlike in the past in which a pixel was a visible object, nowadays it’s usually a piece of java which fires (that’s what a pixel does. It fires) when a certain goal was obtained. A cookie issued by the ad-server is following the entire user’s behaviour. The same cookie records the user’s click on an ad with all it’s unique identifiers and when the same user makes a conversion the java script triggered.

The script than call the cookie and send back to the ad server it’s unique identifiers. It allows us to attributed a specific conversion to a specific ad.
While cookie based tracking is  the most common way for internet marketing tracking, is far from being perfect. First a growing part of the internet disables cookies. Secondly, one person is using several computers and on each computer one person is often using more than one browser. Since cookies are saved in a browser installed on a computer, the click on the ad and the conversion must occure from the same computer/browser combination. Otherwise tracking will not be possible.

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Analyse Your Site search – Browse Their Minds

Mar 09 2012

We spend tons of hours figuring out what our users are interested at.
They are few good ways of doing that, as described in the post about internet marketing tools, but there is one way no one can bit.

What people are searching for, is what they want to find and when they want to find it. What your audience searched in your site, is what they expect to find on your website.

Simple tools like Google Analytics Site Search gives you a list of search terms your users search while visiting your site.

Though it’s interesting by itself, combining site search analytics with other filters can be powerful at assessing the quality of traffic and optimizing ongoing campaigns.
Checking out searched terms for a specific audience can be done using Site Search with Google Analytics Advanced Segments. If for example we want to know what users coming from Mashable.com, simply create an advanced filter in which source is containing Mashable.com and go through the searched terms list.

You’ll probably need to filter out words like “sex”, “boobs” and “naked” (unless you are in that business), because it may often be at your top searched terms.

I found that to be great way of assessing campaign in it’s preliminary stage, optimizing an ongoing campaign or as another component in a market research for your niche.

Let me know how it worked!

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Internet Marketing Attribution Problem Explained

Mar 03 2012

I know that the title “attribution problem” sounds intimidating or even boring but first, it’s one of the most important principals of internet marketing and second, I swear to god, it is simple to understand.
Let’s say you have a hot dog stand inside a mall and you came up with creative ways to boost up your sales.

Creative way No. 1: You found someone to handout flyers wearing a hot dot costume at the mall’s entrance.

Creative way No. 2: You placed a new sign saying “Awesome hot dogs here”.

A week later, you can definitely say that your sales went up, but you don’t know why. You do have more customers coming in, but you don’t know whether it  because of the hot dog guy, or because of the new sign. We will call that source attribution problem and the asense of that is that we can not attribute new business to acquisition source.

Cause you so damn clever, you decided to write a coupon code on the flyers the hot dog guy is handing out. This way, when a new customer is dropping by, he is likely to show you his flyer and you will know that he was the acquisition source.

Another week later, once you solved the source attribution problem you found out that the sign didn’t bring any new customers even though it was a costly marketing efforts for you.
Without further dues, you stoped paying for the sign, and you tried to figure out whether or not to continue with the hot dog guy. Even though it does drive sales, it was costly (Warning: Attention required). You paid the hot dog guy $1000 during previous month, and he generated only $700 of operational yield (What you actually earned, deducting the cost of the hot dog itself). Based on that calculation, you halted hot dog guy marketing but than something unexpected happened.

Customers with coupon codes kept arriving. At the first few days, there were many, and later there were few. When you re-did you calculation, you noticed that actually there were $1200 worth of sales attributed to the hot dog guy. You understood you did a mistake. You attributed the cost and the revenues of the hot dog guy to the same month, even though the revenues kept  growing while the cost remained the same. This problem will be referred as time attribution.

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Self Brand Bidding: Yes Or No?

Mar 02 2012

Self brand bidding is to bid (and to pay) in order to appear at the sponsored ads slot when people are searching for your own brand name over a search engine.

Funny enough, brand bidding is highly recommended by Google, Bing and by any advertising agency. Are they objective? Of course NOT.

From a PPC agent point of view, bid for your brand name is the easiest way to demonstrate a positive ROI. From an advertiser or brand owner point of view, it fails to prove causality. Are these new customers arrived to your website because of the self brand bidding? What makes these users to search for that brand from first place? (Hint – Not the brand bidding)

If you are building up a brand, brand searches might become your biggest marketing cost. If you are using attribution model of last click (If you are using Google Analytics than you are using last click attribution model) your brand campaigns tracking links will overwrite the tracking links of the campaigns made this person to search for your brand from the beginning.

But brand bidding does have few advantageous. First, if you have a big brand, your competitors will ride on your name. By self brand bidding, you are making sure that you competitors will not appear above your organic listing. In some cases, in which you have a big brand and your competition doesn’t have any real barriers (Like Groupon and Living Social) self brand bidding should be considered seriously.

Another advantage for self brand bidding is that it usually drives super high CTRS that increases quality scores and hence  helps to stabilize a  new account.

Additional consideration for your self brand bidding should be the SERPs for brand words. If you have a unique brand, your SERP for brand searches must be 1. If for whatever reason this is not the case, you might want to compensate on that with self brand bidding.

Let’s have a look what the big guys, brand savvy advertisers are doing. I searched in Google.com, surfing from an I.P situated in the US and got these results:

eBay.com are doing self brand bidding
Zappos.com are doing self brand bidding
Etsy.com are doing self brand bidding
Elance.com are doing self brand bidding
Odesk.com are doing self brand bidding
Amazon.com are not doing self brand bidding
Paypal.com are doing self brand bidding
Netflix.com are not doing self brand bidding
Hulu.com are not doing self brand bidding

So as a wrap up, if  you are not focused on killing your competition, you probably have better places to spend your money at, than on self brand bidding. A recommended middle way you might want to consider is to bid on long-tail brand key-words. If you choose this alternative, make sure to put your exact brand as exact negative keyword. Using this method will decrease the odds that you will pay for visitors who would have reach you anyhow significantly.

 

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Best Internet marketing tip

Feb 29 2012

So I know it sounds pretensions but I truly believe I’m about to share with you the best internet marketing tip out there. You can spend hours reading internet marketing blogs, browsing through blackhat forums or hiring a social media expert. You can go to conventions or even take online courses, but there is one thing there are few which are brave enough to say and you know what? It’s a real shame because this one thing is the most important thing you need to know about internet marketing.

No one know’s sh*t

OK, I know it doesn’t come across as the most constructive piece of advise but it is and I’ll explain. In this allegedly perfect market called “The Internet”  there’s allegedly perfect competition, in which everything is known and everybody have the same access to resource. In these conditions, no one can earn a significant amount of money or at least to operate in high margins.

To a degree this is true, especially when running around the most popular online forums and competing with all the others in the same game, but in reality, pockets of profitability will always be found, regardless if it’s inbound marketing or paid marketing.

And now I’m getting to the point.

In reality no one knows anything, you must experiment all the time, and to make sure you have the ability to attribute the success or failure of every effort.

The cost and revenue of each and every marketing effort, suppose to be measured. Based on ROI, whatever effort which is working should be expanded, and whatever activity which is not, should be optimized or eradicated.

So to wrap-up this post, no one know more than you, and if someone does, he will not tell you that. Experiment everything, but before experimenting, make sure you know how to measure your success. Get your numbers right and make quick decisions.

Does it make sense?

4 responses so far