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Measuring Internet Marketing

How to verify ROI

By Ian Lurie

A Quick Reality Check

Advertising exists to help you make money. That's it. There are no moral victories in marketing.

Chances are, you already know this, and you are pretty careful about any print or other traditional advertising you purchase - if you don't see a clear upside from this or that advertising asset, it's gone.

But do you do the same with your Internet marketing? Internet advertising is growing fast - companies that do no other advertising are using outlets such as Google Adwords, banner ads or search engine optimization to try to build sales. You're probably using some form of internet advertising - at a minimum, you have a web site.

You need to track the return on investment of Internet advertising every bit as carefully as other media. Most companies don't - that's the bad news. The good news is that it's far, far easier to measure the effectiveness of individual Internet assets.

A quick clarification: As we continue, you'll see me use 'marketing' and 'advertising' a lot. To me, 'marketing' is the strategic work that drives your overall advertising strategy. 'Advertising' is the act of purchasing individual assets to enable your marketing strategy.

What's ROI?

Going back to our reality check for a moment, you get a return on a piece of advertising when it helps you make money. You can define return on investment as:

Any time someone does what you want them to do, because of advertising designed to get them there.

It's a little more difficult to measure than to define, of course. That's what I'll talk about for the rest of this article.

Measuring ROI: The Four Questions

You can measure internet advertising effectiveness if you can answer four questions:

  1. What's the goal of your web site?
  2. What's that goal worth? What's the value each time you accomplish that goal?
  3. How many times did you achieve that goal?
  4. What did it cost to achieve it?