Online/Digital/Social Metrics

Marketers are tapping into mobile communications as well, sending text messages to subscribers of services around the world.
The Internet has evolved from a form of electronic brochure in the early to mid-1990s to a platform for advertising, videos,
music, PR, blogs, and new product launches. Since the mid-2000s, the growth of social media, particularly companies like
Facebook, Twitter, and Google+, have quickly gained acceptance around the world. Facebook alone has over 900 million
users, a staggering f igure considering the company was founded in 2004. These new digital tools have created additional,
powerful marketing opportunities for companies, effectively accelerating the shift in power from companies to individuals.
Gross Page Impressions (or Gross Page
Requests)
Measurement Need
The Internet has become a key vehicle in a marketer's communications "toolbox." It can be used for a wide range of functions,
from a general information source, much like an electronic brochure, to a product-delivery service (e.g., software downloads).
Unlike print ads placed in different publications, which are difficult to measure beyond general circulation numbers, the
Internet's electronic foundation allows for easy measurement across many different criteria. Overall, marketers want to
measure whether their website is being used and, if it is, how frequently.
Solution
Gross page impressions (GPI) measures a website's total traffic volume. It is the number of times any person has accessed a
website, irrespective of repeat visits or unique visitors.- Website traffic data can be collected from web server logs, which are
software programs that automatically record each and every website visit.
Impact on Decision Making
Gross page impressions is useful for starting an analysis of marketing vehicle usage as it will suggest to marketers whether
their website is generating much interest from the market overall. However, it does not reveal any specifics about the users or
their web surf ing choices. If marketers want more in-depth information, a third-party market research f irm, such as an
audience measurement company, could assist. For example, marketers may want to determine the advertising potential for
their website based on the traffic visiting it, using that data to sell the attractiveness to potential advertisers. GPI is a helpful
measure to show potential advertisers the number of people visiting the website. Of course, many other variables will be
important to advertisers, but GPI is a good starting point.
Cost per Click
Measurement Need
Each advertising medium has different pricing and payment conventions. Print and broadcast advertising, for example, cost
less per ad as advertisers buy more print ads or airtime. Payment is usually up front, meaning that the advertisement will not be
placed until the advertiser has paid the media vehicle in full for the use of that space. Web advertising is most often in the form
of banners, interstitials (e.g., pop-ups), and links (referenced in Chapter 65,
"
Click-Through Rate"). Marketers know how to
measure the effectiveness of these ads using click-through rates, so now they must determine how to measure cost of these ads.
An important aspect of social media marketing is getting community members to share positive word of mouth that
ultimately leads to clicks. This effort involves both financial and time investment, so marketers need to understand the cost per
click of their word-of-mouth efforts.
Solution
Two approaches to determine cost per click will be discussed.
Approach 1: Cost per Click
Cost per click is the price paid for an Internet advertisement on a per click-through basis. Websites that offer online advertising
have simple pricing structures. For example, consider a campaign where payment is based on the number of times a banner is
clicked. Clicks are sold for $0.10 per click. Hence, if there are a thousand clicks per week on the banner, the total amount
payable to the website for that week would be $ 100.
Approach 2: Cost per Click
J
Cost Jkt (Jicfe,. -
i wor n
U,U,V/
where
CPC = cost per click
WOM= word of mouth (based on Chapter 63)
To determine CPC, the marketer divides the total cost of the online marketing campaign by the number of direct clicks. The
result is then divided by the WOM calculation.
Example: Let's assume the campaign cost $50,000 and generated 100,000 direct clicks. Simply plug in the numbers as
follows:
cpc = S50
,ooo/mooo
= 0.50
From Chapter 63, we know that WOM = 4.8. Completing the calculation gives the following result:
0-50/4.3= 0-104
Therefore, the cost per click
,
equals $0,104 or 10.4<t.
When compared to the CPC of $0.50 or 505, the cost per click
wom
is cheaper on a per-click basis, suggesting that the WOM
campaign was cost effective.
Impact on Decision Making
Generally speaking, advertisers must weight costs with each media vehicle chosen. Online advertising is a simple approach,
although the costs are not always obvious, since predicting the actual number of user click-throughs is difficult. Advertisers
have faced the unfortunate side effect of competitors who repeatedly click the online ad, just to increase the cost. Since per-
click pricing is relatively inexpensive, a competitor has to be devoted and persistent to drive up the costs. Fortunately, most
online websites have software tools that can determine if click-throughs are following a repetitious pattern, so that advertisers
don't pay for these types of clicks. Marketers should ensure the website they have chosen has user statistics that provide
guidance on the audience type. This helps marketers determine if the site reaches the desired audience.
CPC
wom
estimates the cost per click with WOM, showing marketers how much less per click it costs using WOM
incentives than marketing designed to motivate direct clicks from target customers, providing a clearer sense of the cost per
click for all clicks, direct and WOM. This helps determine if a WOM campaign is maximizing its potential. If the result of the
calculation is less than one, then the campaign is considered successful.
Cost per Action
Measurement Need
Cost per click (Chapter 66) charges an advertiser whenever one of their ads is clicked, whether or not a paying transaction
ultimately occurs. Senior management may f ind cost per click
'
s lack of a guaranteed transaction too imprecise to justify their
advertising expenditure; therefore, marketers need to demonstrate a stronger correlation between advertising and final sales.
Solution
Cost per action is based solely on specif ic results, such as sales or registrations that are converted from user clicks. The
website owner takes most of the advertising risk since their commissions depend on good conversion rates that translate into
sales.
Let's assume your company pays $0.10 to a website for every completed transaction (instead of every click) coming from a
banner ad. If one thousand people visit your website daily, one hundred click on the banner, and ten buy a product, then the
cost of advertising on the website would be $1 per day ($0.10 x 10 sales).
Impact on Decision Making
For website owners, the decision to charge for completed transactions versus per clicks is a higher-risk strategy, but it will also
build confidence with customers because a cost-per-action payment system suggests you are willing to support your website
audience claims, since you receive no payment until a transaction is completed.
For advertisers, a cost-per-action approach will cost more per click since you are paying for a revenue-generating result.
But your marketing and senior management will likely be happier since the cost is directly related to a positive f inancial result.
Social Media Prof itability
Measurement Need
Marketers need to evaluate whether their company's social media efforts, such as blogging and tweeting, are producing
profitable results.
Solution
{R - Cg) X (F X Cr X OrX Pr)- hXT = Pmfit
where
7? = Revenue per sale
Cg = Cost of goods per sale
F= Number of followers/friends
Cr= Click rate (percentage of followers that click on the marketer's social media links and then go to their company's
site)
Or = Opt-in rate (percentage of followers that opted to receive email)
Pr = Purchase rate (percentage of followers that opted that also purchased)
h = Hourly rate charged for marketer's social media efforts
T
= Amount of time marketer spends on social media
Example: The following assumptions are made:
R= $500
Cg= $80
F= 3
,
500
Cr= 30%
Or= 5%
Pr= 30%
/?= $65
7= 60 hours
In addition, the measurement period covers 30 days. The result is: ($500 -$80) x (3,500 x 0.30 x 0.05 x 0.30) - $65 x 60 =
$2,715.
Therefore, this social media campaign produced a $2,715 profit.
Impact on Decision Making
The variables in this calculation are the key areas requiring a marketer's attention since an improvement in each of the
percentage rates improves the profitability. Marketers can then focus their efforts on how to improve the click, opt-in, and
purchase rates individually by improving the design of each of those parts of their social media efforts.