Two secrets to estimating digital communications ROI

Digital marketing has always been a paradox. It is two things simultaneously: Extremely expensive and nearly free. It is pricey because the skills needed to stage digital campaigns and “collateral” are still rare compared to those needed to stage traditional media efforts. And it’s free because once you’ve published the material, every incremental interaction costs a fraction of a cent. So how in the world do you estimate a digital return on investment (ROI)?

Here are two trade secrets. In honor of the fast-approaching close of the summer vacation season, I’m going to use a road trip as a metaphor.

1.) Focus attention on the speed of your progress and not on whatever city is currently outside your window.

Web metrics are notoriously untrustworthy. They may be off by 11.5%, or -18%, but of one thing you can be sure: They are never exactly correct. Living with this imperfection requires both a diligent focus on precision and a resignation to the medium’s inevitable “slop.”

Road Trip, Creative Common photo courtesy of Jim FrasierThe solution is to chart metrics over time, using the last period as a benchmark for this one. A saving grace of web metrics is that as imperfect as they are, they’re always imperfect in perfectly identical ways, month after month (assuming nothing technically has changed).

2.) Remember the cost of the car as you calculate what you’ve spent.

Break the costs of your trip into two: Fixed and variable. With the car trip metaphor, you need to remember that part of your costs are sunk into an asset. Whereas the gas, oil and accelerated depreciation come from the variability of the trip, the expense of the car itself is fixed — something you would have to pay even if you left the car at home.

In the same way, every communication is a contribution to the maintenance of a crucial intellectual property: Your brand. Whether you did nothing this month to burnish that brand, it is still an asset — a source of wealth. (Consider this: You can’t sell a vacation you’ve just had, but you can sell the car you took it in!).

You spent dearly in the past to get your brand where it is today, and you should acknowledge that every investment in communication that mentions the brand is like the replacement of a radiator hose or car battery. It helps retain the brand’s value.

Don E. Schultz and Jeffrey S. Walters, in their book Measuring Brand Communication ROI, used a different metaphor. They compared a brand to a physical property (instead of the intellectual property that it actually is). Should you stop spending every year on its upkeep, it will begin to crumble, and will eventually fall to the ground. In digital marketing efforts, this spending is a portion of every PPC campaign, every email blast, every social media initiative.

What fraction of your digital spending should be put toward the “car” and not the “gas and oil?” That’s the subject of another day. But simply shifting to this paradigm is progress.

Take these two tips to heart and you’ll be well on your way to reporting reliable ROI.

Are you in the Milwaukee area? Then you can learn more when I speak at C2’s September Five Dollar Friday. On the afternoon of Friday, September 18, I will be a co-presenter there, as part of an exciting exploration of “crucial web acronyms: SEO, PPC, SEM,” and — ultimately — ROI!

Multi-touch table magic, courtesy of MS Surface

Robert Scoble just posted this YouTube video of a demonstration of Microsoft’s Surface multi-touch tabletop monitor. Shot at last week’s Gnomedex, this video serves as a sneak preview of what this technology can do in a social setting.

Last month I posted about the new Bokode barcode. One application I described to friends was its use on trade show floors. The barcodes would be worn on presenter name tags, and reveal much about the wearers to any conference attendee wielding a smart-phone camera (the link to the Bokode post is below).

The MS Surface offers a different solution to the same challenge. It’s one of making the most of a networking opportunity. The tabletop displays the conference’s social graph, which can be manipulated and organized by anyone who steps forward and plops down their name tag.

Making the most of conferences

National conferences demand efficiency from its attendees. The cost in time and money is considerable, so many of us look at them as a competition to beat our personal best: How many relevant contacts can we make? How many friendships and business ties can we deepen? It’s all an effort to be efficient, and not fly home feeling we’ve overspent on a rare chance to make valuable face-to-face contacts.

This strong networking benefit is what’s convinced me that Microsoft is on to something. I suspect the main challenge with their tables will be the over-crowding that takes place around them. Conferences providing this technology will be hard-pressed to have enough tables to go around.

Related links:

Employers of marketing and PR pros are undervaluing a key skill

Online newsroom specialists iPressroom recently surveyed businesses to see what sorts of skills they are looking for in their marketing and PR pros. The survey had a small sample size, as many of these do, and this report’s many charts read far more into the results than can be reliably concluded. But I credit its authors for noting something that jumped out at me as well:

Rather than focus on attracting or pulling visitors to their website by publishing high quality content and researching popular language, organizations appear to be more interested with pushing out messages to “friends” through social media, even though, in many cases, those messages include hyperlinks back to their own websites. Until these organizations learn to develop a more sophisticated approach to building and managing landing pages and web content management on their websites, they will have difficulty evaluating their return on investment for these emerging channels.

(Emphasis mine.)

I found this report by reading a trendy headline somewhere. It proclaimed that marketing and especially PR executives are expected to possess skills that most are still scrambling to master. Here is a sample chart showing the data behind this assertion:

The digital skills expected of marketing and PR executives

The employers surveyed should be commended for understanding the pressing demands of social media. However, they’re overlooking an equally important skill in their communications hiring checklist. They must hire people who understand the importance of good site content and how to measure its value. This is essential to making long-term gains from social media and search engine efforts.

It’s not enough to know how to attract eyeballs. The owners of those eyeballs had better find something on a site that’s worth experiencing and sharing.

What b-to-b customer retention changes would YOU recommend?

A friend with a successful b-to-b eCommerce business posed a simple question to me: “If you could only do one or two things for an ecommerce business (that sells actual products rather than a service or software or something) to increase customer retention, what would you recommend?” Here are my recommendations, in priority order. What are yours?

  1. Place your web address, with a compelling call-to-action, directly on the products being shipped. Make this call-to-action as time-sensitive as possible. Don’t be lame and do include a deadline. NO: “Fill out our warranty card online.” YES: “Set up an email reminder on our site so you’ll never forget to replenish. Do it by [date] and we’ll give you an automatic 10% off your next purchase, and free shipping!” Enclose a card reiterating the offer. This may be your last best shot at creating a repeat customer.
  2. Follow up your shipment with a “We’d like to know if your products are fitting your needs” email or letter. Include a customer satisfaction survey that rewards them with something they can use with an immediate order. If you’re using snail mail, naturally you should enclose a printed catalog. Draw their attention to related items that can be found within it (or if it’s an email, found on the eCommerce site). If possible make the effort self-financing by generating an immediate re-purchase. Use the Net Promoter Score (NPS)* methodology in the satisfaction survey, to track current loyalty for this customer and as a way to track overall likelihood to repurchase as a trend over time.

Those are my recommendations. What are yours? Comments are especially welcome, for me and my friend.

*I’m including this because, although NPS has fallen out of favor as a predictor of company growth, and in other ways is definitely not perfect, I agree with Dale Wolf in that I like its simplicity. You need to use something as a predictive baseline that can (hopefully) be compared with real loyalty measurements. The NPS methodology, associated with Satmetrix Systems, Inc. and Fred Reichheld, is good enough to do the job.

PPC landing pages start talking at the 200th click

There’s a trick to conducting pay-per-click (PPC) campaigns on a shoestring. Larger campaigns buy popular keyword phrases. They consequently generate a torrent of clicks. Smaller campaigns, on the other hand, must make similar decisions success using a comparative trickle of data. So how do small-time marketers know when they have enough information to make reliable decisions?

A good rule of thumb is to start trusting the results of a PPC landing page at about 200 clicks. That’s according to Tony Brewin, of SuperEvent in the U.K. His advice was part of a Wordtracker post on optimizing Google Adwords campaigns.

This is coincidentally similar to the rule of thumb I’ve used in direct mail campaigns. For smaller mailings, direct mail veterans have known that you could start to be confident about results once you’ve received roughly 20 of them.

A statistician friend once described these critical mass numbers as the thresholds where there is enough information to get simple yes / no answers about whether a campaign is succeeding. He compared them to when you watch a dot of light coming at you from a distance during an evening drive. This threshold is the point where you can first tell whether you’re seeing a single headline, from an approaching motorcycle, or from a car’s pair of headlights.

It’s still a limited amount of information, but knowing what’s coming at you quickly and definitively can be useful both in driving and in direct response.