Optimizing For ROI

You’ve heard me talk about campaign optimization before, but I’ve never really delved down into the gory details. Optimization is what makes a positive media ROI possible. Without it, you’ll have to be pretty darned lucky to make your advertising investment pay out. Here are the things you’ll need in order to be able to optimize

1.A closed-loop tracking and reporting system — The basic thrust of campaign optimization is that you buy more of the media placements that pay out, and fewer of the placements that don’t. To do this, you need to be able to track all media placements past the click and right up to the point that defines your business objective (leads, sales, visits, etc.) Currently, K2 uses a system from AdKnowledge, but other providers have comparable solutions, such as DoubleClick’s DART for Agencies or AdForce.

2.An advertising sales rep that is willing to work with you — Once you know what’s working and what’s not, you’ll need to make some adjustments to your buy. Make sure that the media properties you buy from have competent sales reps that are willing to work toward your business goals and help you with adjustments to your buys. Also be sure that your contracts with these sales reps are flexible enough to accommodate cancellation. More on this later.

3.MS Excel (or a comparable spreadsheet app) — Once you start getting closed-loop reporting data back from your campaign, you’re going to want to develop metrics such as Cost Per Click, Effective Cost, Cost Per Sale and other metrics that might be unique to your business. It gets a whole lot easier when you can simply dump the data into a preformatted spreadsheet with formulas. Some of the closed-loop reporting providers can build these metrics into your reports for you, but you never know when you might decide to look at other metrics, so a spreadsheet is still the best way to look at your data.

Now that you know what the tools look like, let’s talk about how to use them. Using the tools properly can boost your ROI a couple thousand percent (as we discussed in a previous column). The tools allow you to look at your campaign on a granular level, which will provide you with information you can use to steer future buys.

Let’s use an example. Here’s a topline report for a fictional buy for our favorite fictional company, American Widget.


Source

Ad Views

Clicks

CTR

Cost Per Sale

Yahoo

200,000

1,000

0.5%

$5.25

DoubleClick

Network

500,000

5,000

1.0%

$2.09

The Onion

10,000

25

0.25%

$10.50

Now, if you’re predisposed toward jumping the gun, you might cancel the Yahoo and The Onion buys and reallocate the money to DoubleClick. But wait — we haven’t even come close to seeing what stories might be hiding within the campaign data. What if we look at it this way?


Source

Location

Ad Views

Clicks

CTR

Cost Per

Sale

Yahoo

Finance

150,000

100

0.06%

$50.00

Key
words

50,000

900

1.8%

$1.10

Double
Click

Alta
Vista

200,000

2,500

1.25%

$1.95

Shock
rave

300,000

2,500

0.83%

$2.95

The Onion

Home Page

5,000

12

0.24%

$10.50

1st Level Page

5,000

13

0.26%

$10.50

Hmmm We were all ready to cut Yahoo loose and look what happened. We found out that Keywords are kicking butt, but the Finance section is dragging down the efficiencies. We would never have known that without looking at the data on a more granular level.

That’s the basic concept behind campaign optimization. Of course, these spreadsheets get a lot hairier. Think of how big your worksheet can get when you start tracking more metrics, the locations within network sites, and the individual pieces of creative on the campaign. And we haven’t even looked at things like Effective Cost, Cost Per Visit, Repeat Business or Volume of Sales. These important metrics can make your spreadsheet look crazier than your Weird Uncle Larry.

Happy optimizing.

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