By: Kim McCormick – Bayshore Solutions Corporate Marketing Team

 Follow the Money

I’m writing this on Tax Deadline day, as I am thinking about the flow of money and the incentives that drive it: a refund – lawful compliance – avoiding IRS inquisition or unwanted attention. In business, the bottom line is pretty clear – profits. Profitability (business success) is fueled from sales, and marketing efforts fuel those sales – some more directly and measurably than others. This holds true for Internet marketing as well.

Internet marketing enjoys credibility in the “Marketing Toolkit” line-up due to a wealth of metrics to show success and return on investment (ROI).  This same plethora of metrics opens the floodgates for all the things that can be measured – in a variety of ways.  So now the strategic question becomes: what metrics are you/your resources/partners, etc. managing to?  And a really interesting query: what are the incentives shaping those management tactics?

In the old days of traditional marketing, agencies enjoyed a commission on the sale of advertising media.  Without the ability to truly track and measure Return on Ad-Spend (ROAS) for specific advertising initiatives, agencies had a fairly easy time convincing clients that X amount needed to be spent on advertising media.  And agencies enjoyed a nice margin on that spend – whether or not it conclusively contributed to the sales and health of the client.  This was just a cost of doing business. Today, the ability to track Internet marketing has enabled corporate marketers to better measure results and better invest in cost-effective marketing initiatives.

It seems pretty basic that if success is ultimately fueled by sales, then all efforts should align to this.  If your business were in full control of all the variables, this alignment would probably be a given. Unfortunately, the business models of many needed aspects of marketing today (like search engines) have their revenue models centered around other metrics.

A classic example is Pay-Per-Click (PPC) Advertising. As the title clearly states, the revenue for the search engine or ad platform is based on how many clicks are delivered – not how many leads are converted from those clicks or how many of those leads then convert to sales.  Is your agency or PPC manager gaining from your amount of ad-spend (i.e. do they earn a commission or get a cut of this)?  Or are they standing in alignment with your goals of conversion optimization – and further, optimizing for cost-effective conversions that end up converting to sales? Check your business arrangements and agreements to understand this dynamic.  Then you’ll be better prepared to ask the right questions, sift through the myriad of metrics available and determine the metrics to manage to – the metrics that quantify your success.

For example, if a PPC ad platform recommends increasing ad-spend, fine – there are many valid reasons why investing in your marketing is advantageous. But your PPC manager should be able to clearly explain this “why” to you and how it can measurably increase your end-goal of sales in a cost-effective manner.   Canceling an ad campaign that “is missing out on clicks because of limited budget” versus increasing that budget to capture those clicks,  is an easy decision when the conversions are low, are not cost effective or are not yielding quality leads that convert to sales.  Likewise, if an ad is judged to be an under-performer because of a low click-through rate (lots of impressions and few clicks), that’s not necessarily a bad thing if 100% of those clicks are turning into customers when you are paying per click and not per thousands of impressions.

Another web marketing metric to apply the “Follow the money test” is Traffic.  As you celebrate an increase in the traffic to your site, are you also celebrating a commensurate increase in leads and sales? This probably is not a 1:1 relationship – but if more traffic is not feeding into or accelerating your sales funnel, then traffic is not a great success metric to manage to or exclusively incent.  Likewise, “Top Keywords,” defined as keywords that bring traffic to your site are good.  Better is measuring a step further to “Top Converting-to-Leads-and-Customers keywords.”  And Best is managing to optimize those top keywords to also be your top converting keywords, and to help the top converting keywords become bigger traffic generators.

The orchestration of Internet marketing initiatives and measuring them is a complex symphony.  When you focus on, align your performance expectations to and “Follow your money metrics,” you can achieve powerful, effective marketing within your own organization and with your partner and vendor relationships.

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