So you’ve got your webshop up and running. You took a leap of faith and went all out with online advertisements. SEA, Affiliate marketing, RTB, you use it all. But, are you already measuring your Return-On-Investment (ROI)? Or are you just advertising as much as possible and hoping for the best? Read on to find out why and how you should measure the ROI for your online advertising efforts!
What do you expect from your customers? To undertake an action on your website after seeing one of your advertisements, right? This action should add value to you, whether that is signing up to a newsletter, liking you on Facebook or actually purchasing one of your products. That’s what we call a conversion. Conversions can be both online and offline and they happen when a customer’s click is transformed into business.
Why does it matter?
A common saying by John Wanamaker describes precisely how many business owners feel when they are using online advertising:
“Half the money I spend on advertising is wasted; the trouble is I don’t know which half” – John Wanamaker
However, if you are able to measure how many conversions derive from your online advertising efforts, you are able to conclude whether it is worth it and if it gives you lots of (new) business. It is actually one of the most important metrics to measure to see if your online advertising methods are profitable and if you can even maximize profitability by making small adjustments (like increasing the cost-per-click, but more about that later).
Google has the perfect solution for you!
Google can be used for anything. So, not surprisingly, it also has a Conversions tool. Assuming you already have the Adwords account set-up and you are using it extensively for both search and display advertisements. It also offers a free (I’m not kidding) tool called Conversion Tracking. This tools shows you exactly what happens when visitors click on your ads. All uncertainties will vanish like frost under the morning sun as the Conversion Tracking tool clearly displays whether those visitors have purchased a product, signed-up for a newsletter and performed any other conversion.
Basically, tracking your conversions allows you to:
Maximize profit and boost your ROI
You are able to connect certain advertisements and keywords to the actual conversions. In this way, you can see which advertisements are performing better, as they are bringing you relatively more business than others. This allows you to allocate your budget wisely; spend more budget on the advertisements that bring you business and consider decreasing or completely pausing the advertisements that aren’t bringing you business.
Connect your online advertising efforts to the business objectives
Are you actually able to achieve your business objectives via online advertising? If you keep track of your conversions, you are able to draw such conclusions and find out if it is actually profitable for your online business.
Analyse how your advertisements are performing on different devices
The Conversions Tracking tool also shows the Estimated Total Conversions. This includes cross-device conversions: when people have clicked on your advertisements using one device, but actually purchased a product via another device.
Counting your conversions
Before we get started with installing the free tool, you should take knowledge of the most important conversion metrics: Converted Clicks and Conversions. Even though both these metrics are visible within the tool, one might be more suitable for your business than the other.
- Converted Clicks
The Converted Clicks column shows how many advertising clicks resulted in one or more conversions (based upon the type of conversion you indicated beforehand). This is a useful metric for determining which advertisements or keywords are performing better. A downside of this metric, however, is that it does not take the converted value into account. This means that it does not differentiate high-value conversions from the low-value conversions.
- All vs. Unique Conversions.
The tool also displays the number conversions, in which you can choose between all conversions or only unique conversions. When one visitor first requests more information on your website and then purchases a product, the visitor generates multiple leads. The unique conversions column will then only show one conversion, as the multiple conversions derived from the same visitor.
Are you already convinced? Here’s how you can set it up:
There are three basic things you need to set up Conversion Tracking:
- A website (obviously)
- The ability to edit the website
- An AdWords account
Google knows how the converted visitors ended up on your website by means of temporary cookies. Every time a visitor clicks on one of your advertisements, Google places a cookie on that person’s computer. This cookie ensures that the conversion will be recorded by the time the visitors reach one or more conversion pages.
Improve your ROI
Start with optimizing the keywords for your advertisements. Track the conversions that derived from a specific keyword to determine if the keyword is profitable. Keep in mind that it all comes down to the keywords value as opposed to its costs. If there aren’t any conversions via that particular keyword after a significant amount of time, consider lowering the maximum cost-per-click or even deleting that keyword.
On the other hand, if you find out that other keywords are performing very well and result in many conversions, you might want to consider increasing the cost-per-click. A higher budget will create more visibility and thereby generate more traffic. This in turn, might result into more conversions and thereby more business!
More information about the Google Conversion Tracking can be found here.
If you’re interested, find some more conversion optimization tips here: