Four Easy Ways To Measure Performance Online
I'd like to begin with a bold statement: E-marketers in today's online world are trapped in a box. They are still conceptually tied to “impressions” and “views,” ignoring basic measurements of online campaign success.
This brings to mind the famous legend of the Gordian Knot:
When the Phrygians were without a king, an oracle decreed that the next man to enter the city driving an ox-cart would become their ruler. A peasant farmer named Gordias was that man. After entering the city, he tied his ox-cart to the temple post in a perfect knot.
The cart remained tied to the post for centuries. There was not a single person who was able to untie it. Another prophecy was then made stating that the man who untied the knot wouldl become the conqueror of Asia.
Around 333 BC, after numerous people tried their luck to no avail, Alexander the Great made his way to the city. He stood in front of the knot and examined it from all directions. He then drew his sword, slicing the knot in half, in a sharp, rapid stroke.
And the rest is history…
This story draws parallels to the state of today's display space. E-marketers are currently trapped inside a post-view box, instead of measuring performance the way it has always been and should be measured.
This post-view approach became prevalent as providers started selling highly complex, view-through-based models. They convinced us that clicks, and more importantly, conversions generated by clicks were no longer of value. They offered their own angle to handle this “knot.”
Some providers convince marketers to run A/B tests to validate view-through, but actually use it as a false pretext to charge 95% PV. They cite “uplift,” “lift” and “engagement” to demonstrate value. Ignoring the most basic measurement of success, marketers end up running pure post-view display campaigns.
Anyone who has run an A/B test knows that post-view provides value in display campaigns. But it should be regarded as an added value and not the only or even most important measurement of a successful campaign.
The time has come for marketers to draw their sword of reason and slice the knot by returning to measuring performance according to three basic metrics: CTR, CR (conversion rate) and ROI. Unlike offline media channels, the online world offers us the luxury of having these accurate and telling metrics.
Here are four methods performance metrics:
1) eCPM – You’ll always pay a higher cost per 1K impressions for a retargeting campaign vs. other channels because of its degree of precision and optimization. However, don’t pay for an over-priced CPM.
2) eCPA - Measure eCPA by post-click sales only to get a true CPA model, which is the essence of performance in display advertising.
3) eCPC – Measure clicks only in relation to actual conversions they generated. Remember, although important, a click is only the first step toward the goal. Marketers should focus on conversions rather than clicks. After all, you can't go to the bank with clicks, can you?
4) ROI - For each $1 spent, measure how much you made from post-click conversions only.
While I am not advocating against post-view conversions or running campaigns on a straight CPM basis, I am stressing the point that advertisers should adopt models that adhere to basic measurements of success.
When comparing providers, no matter which business model you choose to adopt, remember the most important goal of a successful online display campaign: driving post-click conversions.
Reconnect with these performance metrics and the rest will be history -- not only for Alexander the Great, but for you, too.