Measuring ROI - cont'd

Question 1: What's the goal of your site?

Why did you build your web site? Please don't answer 'Because everyone has one' - even if you THINK that's why you built it, there has to be another reason.

Can't figure it out? Try asking this, instead: How does your organization generate value? Does it sell stuff directly? Through a sales force? Get donations? Inform the public?

Your web site is there to grow your organization. Its goal is likely in line with larger organizational goals, which may include:

• Sell more stuff, right then and there.
• Generate leads, so salespeople can close the deal.
• In a more general sense, generate interest in a product or service.
• Get donations.
• Inform/persuade the public.
• Get votes.

Next, you need to define how that goal plays out on your web site. What does a visitor do when they complete the goal? Examples include:

• They view the 'thank you' page at the end of an online store checkout process.
• They view the 'thank you' page after someone completes an information request form.
• They view the 'thank you' page after someone subscribes to your e-mail list.
• They read a specific page of your site.
• They watch a specific video on your web site.

Goals run the gamut, as you can see, from making money to less tangible stuff. Regardless, there's value generated. You can, and MUST, assess your Internet advertising's ability to generate that value. Which brings us to the next question.

Question 2: What's that goal worth?

Now the hard part - what's it worth to your organization each time you achieve that goal?

If you're selling stuff online, it's easy: Find out your profit per sale, on a sale-by-sale basis.

If you have a salesforce, it's still pretty easy: Figure out how many Internet leads convert to customers, and the average value of those customers. Then multiply the two:

If 25% of all Internet leads convert, and
On average, each conversion is worth $1000.
Value of a lead is: .25 X $1000 = $250.

If your only online goal is to get people to see a specific page - say, an article about Internet ROI - it's a little more difficult. I play the pessimist, and do it like this: I know that over time 1% of everyone who reads my articles online will become a client. Let's say that my average client pays me $1000 per year (just an example - my kids would be wearing barrels if that was true):

1% convert and average value is $1000.
Value is: .01 X $1000 = $10/person reading article.

Got a newsletter? Start tracking how often newsletter subscribers become customers:

10% of all subscribers become customers, and
Average customer is worth $1000.
Value of one signup is: .1 X $1000 = $100.

Even organizations who sell nothing can measure effectiveness. One of my clients is a political organization - most of their work focuses on getting the word out, persuading the public, etc.. For them, I created a points system:

1 person reading a specific article = 5 points
1 person viewing a specific video = 5 points
1 person signing up for a newsletter = 10 points
1 person joining the organization = 100 points

This is pretty arbitrary, but it works as a comparative measure:

Campaign one got 30 people to watch a video:
30 X 5 = 150 points

Campaign two got 500 people to watch that video:
500 X 5 = 2500 points

We may not know, literally, the value of each campaign. But we know their relative effectiveness.

The point here is you should always consider what your web site's goal is worth.

Accuracy is important, but consistency is crucial - as long as you can measure relative effectiveness, you can evaluate advertising effectiveness.

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