Advertising is a Numbers Game

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by Michel Foreign

Mr. Ted Turner once said, "Early to bed and early to rise, work like hell and advertise." While in our case the first part of Mr. Turner's equation is probably the least followed (sleepless nights working the Web are too many to count), there is an immense truth behind it all. To survive and thrive in today's hypercompetitive online world, one has to both work hard and advertise -- which are in my estimation two key ingredients of online business success.

Obviously, to put your site on the "cybermap" you need to promote it. But you also need to know not only if your marketing efforts are working but also how they are working. As the old cliché goes, "It is better to work smart, not hard." Well, working smart is where the "how" comes into play.

Most people wrongfully tend to make assumptions by looking strictly at the end results (or dollars, in other words) and not the pipeline results. Pipeline results go beyond tracking the obvious. You need to know the number of leads a specific ad or marketing effort produces, the conversion ratio of those leads into customers, the cost-per-lead, and the value of each and every visitor to your site -- whether they've bought or not.

Armed with this information, you will obtain at least 3 specific insights into the results of your marketing endeavors.

1) You will know if your ad copy is pulling the numbers you intended for it to pull.

2) You will know if your Web site copy is converting curious browsers into serious buyers. And most important, 3) you will know where your ads are pulling the most leads (i.e., where you're getting the biggest bang for your advertising dollar).

According to a study conducted by Cognitiative, Inc., consumers felt empowered by vendors that they trusted and with whom they had built up an online relationship. Of course, any relationship based marketing approach requires repetition, credibility, and time, which are virtually impossible to track. However, some of  the study's findings were interesting nonetheless:

- Consumers discover/find new Web sites via:

Word of mouth (100%)
Links (83%)
Advertising (67%)
Magazine articles (61%)
Newspaper articles (50%)
Conferences (17%)

- And business users discover/find new Web sites via:

Magazine articles (94%)
Links (88%)
Advertising (76%)
Word of mouth (71%)
Newspaper articles (53%)
Conferences (47%)

[*Source: http://www.cognitiative.com, press release, April, 1999]

Consequently, if you're going to advertise, particularly if you're going to invest in paid advertising and take advantage of that potential traffic mentioned above, you will need to know from where your traffic originates. Tracking is essential to your online business' health. However, there are a few basics that need to be considered beforehand. First, realize that the problem in many cases is that most advertisers use institutional advertising to promote their site. They also have the tendency to place their dollars on what looks good or what makes them look good (and not on what offers the best potential results). Institutional marketing is the kind that simply says "I'm open for business" but does not invite people to do something. Tracking such an ad is next to impossible.

Direct response marketing on the other hand is the kind that invites people, directly in the ad, to do something. Whether it's to click on a banner, buy a product or service, subscribe to a mailing list, call or write for more information or view a specific page, the ad should lead to a clear and specific outcome. Thus, it must contain an action-word or verb, such as "click here," "buy now," "act today," or "call for more info." This way, your advertising efforts become quantifiable and measurable.

Next, you should set goals on what amounts of traffic you wish to achieve out of a specific ad or marketing effort. While you should be conservative, your goals should still be good enough so that you have a pretty good benchmark against which to compare your results. That way, if your ad is not producing the quantity of traffic you originally projected, you will be able to take corrective action along the way rather than when it's too late.

For example, according to the latest data from NetRatings, www.netratings.com, the average click rate of online ads is about 0.85%. If the traffic on the site on which you wish to advertise is, say, 1,000 visitors per day, that should equal to approximately 8.5 leads per day of course, with all things being equivalent and depending on the quality of  your ad.

If you track your visitors, and if your ad is not pulling at east 8 visitors a day from the site mentioned above, then you know that something's wrong with either the quality of their visitors  (target marketing) or the copy of your ad. Eventually, the more information you gather, the better equipped you will be to make more profitable marketing decisions.

For instance, if your ad has produced the expected traffic on one site but the same ad has done poorly on another, then you know that the problem has to do with the site on which your ad appears. However, if your ad is not pulling at all, then you know that it may have something to do with the quality of your ad.

Essentially, advertising of any kind is a risk. But tracking your results and working around them is to calculate those risks.