Marketing pioneer John Wanamaker once said: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half”.
Unfortunately for John Wanamaker this uncertainty was unavoidable in the late 1800’s; but we’re here to argue it’s no longer true in the digital age!
Digital Marketing Metrics
Marketing metrics are used by digital marketers to evaluate different marketing strategies and discover which ones are most effective.
There are a plethora of metrics used; most of which have their own acronyms. But don’t worry if you don’t know your CPI’s from your CTR’s just yet. There’s only one type of metric you should really be thinking about to start with, and that is CPC (or cost per conversion).
What Is A Conversion?
A conversion is any event which is important to your business, for example:
- Generation of a sales lead
- An online payment
- A user registration
- A user spends X minutes on your site
Once you have identified a particular conversion metric the next step is to ensure that it is being measured; using a Google Analytics goal for example.
Let’s suppose that your conversion metric is the generation of a sales lead. When a user submits an enquiry form they could be taken to a thank you for your enquiry page. As submitting this form is the only to arrive at the thank you page; Google Analytics can be set up to register a conversion each time this page is loaded.
This is the crux of the matter. TO AVOID LOSING MONEY you want to find the point at which marketing costs outweigh the profitability of the marketing activity itself.
At CrowCreate we call this point the maximum cost per conversion or maxCPC. You heard it here first, marketing’s newest acronym: maxCPC!
Estimating A Maximum Cost Per Conversion
Estimation is the keyword here. Consider the simplest of examples, an online product sale. Your maxCPC is equal to the profit margin of the product sale right? But what if the customer you acquired becomes a repeat customer? Or perhaps your marketing activity drew a customer to your site but they did not make a purchase until later that week (meaning they were not tracked as coming via a specific marketing channel)? Finding a maxCPC is not an exact science!
The point here is to exercise common sense when estimating a maxCPC. Take into account ‘conversion leakages’ and other side-benefits of driving traffic to your site, such as branding. Averages, estimates and guesstimates will all come into play. Try to not take more than a couple of hours to define a ballpark maxCPC; more time will often result in diminishing returns.
} The Benefits Of Defining A MaxCPC Benchmark
- You can see if your marketing activity is profitable! As long as your marketing team’s CPC is lower than your maxCPC benchmark you are making money!
- It’s easy to see which of your marketing channels have the highest return on investment and ramp up your spend in these areas accordingly.
- Having a maxCPC benchmark gives you a tool to performance manage your team, by linking bonuses to those targets for example.
} Sorry John Wanamaker!
Remember John Wanamaker’s quote?
“Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”
Well it was a wise and poetic quote; but times have changed.
There’s really no excuse in this day and age for the kind of hit and miss advertising strategies of the past. Using data analysis techniques alongside a well thought out maxCPC benchmark is paramount to our style of marketing at CrowCreate.
Get In Touch Now
One of our favourite ways of working with clients is to define maxCPC targets and tie incentives to these being achieved. We have even worked on behalf of clients at a reduced cost following this model. We feel this creates a win / win relationship that keeps everyone involved highly motivated; get in touch now to find out more.