Web Analytics - Murder by Numbers - Part 1

By Jason OConnor
Posted Friday, June 18, 2004

Want to know a methodology to learn the exact effectiveness of every e-marketing initiative you conduct? It’s a method that every company online should implement. It’s a must-have if you’re actively trying to leverage your web presence to increase your bottom line.

One of the great aspects of the Internet and e-marketing is its ability to give immediate results and feedback regarding all kinds of online activities. This of course requires tracking.

Let us delve into the world of tracking. Part 1 of this two part series will explain the basics of e-marketing tracking. Part 2 will provide a fool-proof method for website statistical acquisition.

If you rent some banner ad space at a website whose audience is your target market, you can learn exactly how many people saw your banner ad and how many clicked through to your site. You can also determine how many people actually became a lead from the banner ad and even see how many were converted into a sale.

If the numbers were low the first time around, you can create a new banner ad and submit it again, then track those results. You can keep tweaking ad infinitum until you discover the perfect combination of design, copy and presentation that yields the best results. This is one of the wonders of the Net. But you’ll need a way to make sense of all the numbers. And there will be a lot of numbers. Enter Web Analytics.

Here are the most important data points for an e-marketer:

1.Cost for campaign
2.Reach or total visits (in Netspeak, ‘eyeballs’)
3.Unique visits
4.Click-thru number
5.Click-thru percentage
6.Number of leads generated
7.Cost per lead
8.Lead conversion rate
9.Lead to sales ratio
10.Number of sales generated

In the banner ad example above, let’s say the statistics for a day are:

1.The banner ad’s cost for the day = $500
2.Total visits = 1000
3.Unique visits = 800
4.Click-thru number = 50
5.Click-thru percentage = 5%
6.Leads generated = 20
7.Cost per lead = $25
8.Lead conversion rate = 40%
9.Lead to sales ratio = 10%
10.Sales generated = 2

The daily, weekly or monthly visits to the site that houses your banner ad will be the reach or visits to the site. This number can be broken down to both total and unique visits. If there were a 1000 visits to that web page in a day but 200 of those visits were from the same people visiting twice in that day (and all the rest came only once), then total visits is 1000 and unique visits is 800. This is because if 200 people came to the site twice that day, then 200 of the total visits for the day were repeats which leaves 800 unique visitors (1000 – 200 = 800).

Continuing with the example, the number of people who view the banner ad and actually click on it over to your site is the click-thru number. The click-thru percentage is ascertained by dividing the number of click-thrus by the number of page visits. For example, if 50 people clicked-thru to your site from the banner, and there were a total of 1000 banner views (because there were 1000 views to that page that had the banner ad on it), then the equation would be 50 divided by 1000, or 5%. (You could also use the unique visits to calculate this percentage: 50/800 = 6.25%.)

Leads acquired is how many people actually filled out a form on your site or called as a result of the banner ad. In other words, the user saw the banner ad on another site, clicked the banner thru to your site, and then actually gave you their information via a web form or phone call.

Cost per lead is very important. The lower this is the better. You calculate this by dividing the total cost by the number of leads, in this case $500 divided by 20 leads, or $25 per lead.

The lead conversion rate is the percentage of new leads you obtained from the visitors driven to your web page as a direct result of the banner ad. Of course this page needs a call to action in order to convert a visitor to a lead. A call to action is a statement on the page that says “Call today” and gives a phone number or is a link that points someone to a web form.

If your banner ad cost $500 and you got 20 leads (leads acquired), then your cost per lead for this banner ad campaign was $25.

If 2 people out of the 20 new leads actually bought your product or service, then your lead to sales ratio is 1/10 or 10%.

Obviously, the whole point of all this is to increase the last number, our final sales. By monitoring all these numbers continuously and systematically, we can gain an almost omnipotent view of our various e-marketing campaigns. We can then leverage that knowledge to improve each initiative to yield the best results.

Look for Part 2 of this two-part series. It will explain how to get all the initial web statistics to plug into these formulas. It will also describe a great method for obtaining accurate click-thru numbers.

Good luck number crunching! The better you get at it, the more sales you’ll create.

About the Author
Jason OConnor is President of Oak Web Works
The synthesis of Web marketing, design, and technology
Jason is a Web development expert, e-strategist, and e-marketer who
is trying to affect the future of the Internet in a highly positive way

(http://www.oakwebworks.com)

mailto: jason@oakwebworks.com for a FREE site consultation and to learn how to increase your bottom line by properly leveraging the Web