Posts Tagged ‘Media Planning’

June 12th, 2009

Measuring web sales from offline advertising like TV, press and radio

If you are running press, radio, TV or DM activity to drive traffic to your web site and generate online sales, you may be wondering how to measure the relationship between offline media and online sales. This short piece will give you a simple guide to analysing whether your offline advertising is delivering web sales.

It’s worth stating at the outset that the job of relating offline media to online response is a complex area. Media channels like TV, press and radio don’t carry cookies so the tracking options available within the online sales funnel are simply not available when you start working with offline media.  Consequently,  we have to use other techniques that can give us an informed view about ROI from offline media in online environments.

The approach I am going to take you through is not 100% watertight, but it is a fraction of the cost of statistical modelling and will give you a reasonable idea of how to explore the efficiency of offline media in driving online sales.

Stage 1 - Visual observation of the data

  1. Obtain web log data running around 1 month prior and 1 month post your offline campaign activity
  2. These web logs should be daily level data showing both total unit sales and total sales value by day
  3. If possible obtain data for sales originated through both search engines and direct browser visits
  4. Enter into an excel spreadsheet
  5. Separate these two sources of data and undertake the following for each of the two sales data sets
  6. Add your daily offline media spend
  7. Chart the direct and search sales alongside the spend data
  8. Look at the data and see if there is any visual pattern in it. See of there are slight rises either during or lagged behind your offline campaign activity
  9. If there are any patterns which suggest an effect between your offline media and online sales proceed to the next stages.

Stage 2 -Sales analysis by day of week

  1. We need to ‘eliminate’ any day of week effect (for example, for many online companies Sunday and Monday are often their best sales days) so sort your data into the seven days of the week for the whole period
  2. You should now have seven mini data sets, one for each day of the week, each containing media spend (where applicable) and sales data.
  3. Calculate the average number of unit sales or sales revenue for each day of the week
  4. Now rank within each mini data set of days by daily unit sales or sales revenue
  5. Compare the sales for each day to the average of that day over the period
  6. If the advertising supported days are all above average, then your offline advertising is likely to be driving these online sales.

Stage 3  - Estimating the value of web sales driven by offline advertising

  1. For each of the days of the week, refer back to the average sales for each day
  2. Now for each of the days with web sales above the average, subtract those sales (or their sales value) from the average figure for the day of the week
  3. This is your incremental sales revenue
  4. Now compare your total incremental sales revenue to your offline advertising spend in the period
  5. You can now estimate sales and gross margin ROI
  6. For revenue ROI, compare the incremental sales value to the ad spend
  7. For gross margin ROI estimate your gross margin a percentage of sales and then compare the margin value to the advertising spend.

You will also need to factor in seasonality. Ideally, you would undertake the same exercise for the same period one year prior to the period you are analysing. If your sales in March are high, it may be the case that March is a good seasonal sales month. You need to account for this eventuality too.

If you’re an advertiser with large volumes of traffic and omnipresent advertising, then of course, things become more comlex. You will need to build a test marketing campaign structure with lots of media variation - i.e. different channels running at different times with different messages. This can then be seasonally adjusted and modelled using multiple regression to estimate the sales effect of each media channel being used.

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June 9th, 2009

Online advertising works beyond the click

It’s an ongoing debate: just what influence does digital communication create beyond clicks? Well the short answer is a lot. It contributes the following:  subsequent search visits (product and brand terms),  subsequent direct site visits (over the short and long term), visits to retail premises in the case of retailers, visits to attractions in the case of leisure destinations and shifts in brand and product reputation in the case of branding messages and content.

Recent research from iProspect / Forrester (May 2009) supports this view. It reveals that of those who viewed online ads on an ad funded web site,  only 31% actually clicked, but a further 48% either searched for the product in a search engine or subsequently visited the site via a direct browser visit. A further 9% reported that they investigated further through social media or message boards.

forrester-click-behaviour-june09

Readers who run online campaigns will observe that few online campaigns generate click through rates as high as 31%, in fact, most display campaigns generate click rates of about 1% of that, i.e  0.31% or less.  If we factor down the other responses by a similar level, then we get to 0.27% performing a direct search and 0.21% visiting the advertising site directly through their browser.  Whilst these numbers may appear low, it does indicate that responses are many and varied and exceed the response counted as clicks alone.

I’d argue that when it comes to branding effects, such as awareness, attribution and considerations scores,  the numbers may be higher than the figures above suggest.  The problem is that we have not fully understood how to quantify these additional branding effects. There are products able to isolate groups people who are exposed to online communications and, via online surveys, compare their advertising and brand awareness to non-exposed groups, and these can reveal interesting short term results. See some of those here.

But often the changes in awareness and consideration build slowly over time, particularly in products which have to be advertised almost constantly in order to reach comparatively small groups of active buyers. Mobile network O2 springs to mind here.  Whilst much of its online display activity is designed to attract potential buyers to its online shop, there is no doubt that the constant presence of O2’s blue and white imagery on the UK’s top 250 or so web sites helps to maintain and reaffirm its credentials as a player with a big interest in the digital space.  Would we still see O2 that way of we had never seen its distinctive blue online display presence?

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June 1st, 2009

TV media planning for site traffic generation

If you are an advertiser looking to use TV to drive traffic to your web site or increase brand term searches, you can do a lot worse than employ some well tested techniques from the world of DRTV advertising to improve your results. In this short think-piece, I am going to review some of the techniques that can be borrowed from DRTV media planning to increase site visits from your DRTV media spend.

Before we go into techniques, it’s important to recognise that measurement is key to the response planning process. Many believe TV is not accountable, but in fact, audience delivery is measured on a minute by minute basis across the day. The BARB audience measurement panel allows us measure the audience size and composition for any spot on almost any channel at any time of day. This is minute by minute data which is ideal for matching to your second source of planning data; your own web traffic logs.

Using a combination of these two data sources enables advertisers to track web traffic, leads and sales back to their point of TV origin. So for example, we may be able to conclude that sales for product X with a value exceeding £50 are most likely to be gained from a given channel at a given time of day on a given day of week (which was traded at a given cost).

It is also possible to undertake other tests by developing a text matrix and deploying it over a given time period.  For example an advertiser can run a creative effectiveness test by running creative 1 over week 1 and creative 2 over week 4 (leaving a gap of two weeks to eradicate lag from the first campaign). From a test like this it may be possible to conclude that creative treatment 1 is more effective at driving online sales than creative treatment 2.

What do the results look like?

If you imagine that weekdays are twice as cost effective as weekends, and Channel 2 is twice as effective as other channels, and that creative 1 is three times as effective as creative 2, then you are already into the type of performance multipliers that can make the difference between an average campaign and a very strong ROI performance.

Let’s now look at this in currency terms. Let’s assume that an advertiser is experiencing a TV to Web cost per sale for a financial services product of £500 across broadcast media. Our day of week selection could reduce that to £250, our channel selection could reduce it to £125 and our creative selection could reduce it to £62.50.  This means the difference between a TV generated web sale costing £500 and a TV generated web sale costing £62.50.  These are the differences between making a sale at a significant potential profit and making a sale at a loss.

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May 27th, 2009

Does TV advertising drive web site traffic?

The answer to this question is a resounding yes. In my experience  - and if you are running optimised TV activity - then you can expect to see web response rates to TV activity of between 0.1% and 1% (measured as site visits/TV impacts).  That’s between 1,000 and 10,000 site visits per 1 million TV impacts.  This is much higher than traditional phone-based DRTV where a good response rate is around 0.05%, with weaker campaigns performing at 0.005% or even less.  Of course one could argue that a click is a much less committed response than a person to person phone call and this is generally reflected in a much lower online conversion rate from click to sale.

What do these web response rates this mean from a cost efficiency point of view? If you are paying a £3.00 CPM for TV impacts then 1 million TV impacts will cost £3,000. At a 0.5% site visit rate from TV, we’d see 5,000 site visits. This gives a cost per visit of £0.60 (60p) each. That’s a reasonable cost per click when compared to online sources of click traffic - especially search engines.

The challenge  is to make sure that the clicks you generate from TV are high quality clicks, but this is becoming easier as TV fragments and targeting opportunities increase. So how do you optimise TV to web site activity?There are two answers to this question. One is optimising how you select and use TV channels and the other is how you manage traffic when it comes to your site. Were going to look at how you achieve these objectives in a mini series over the next few posts.

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February 24th, 2009

Using ROI metrics to evaluate Pay per Click search marketing

For many online advertisers, trading and evaluating paid search marketing (PPC) has now moved beyond paying for clicks.  More advanced search marketing campaigns are traded and evaluated on cost per “action” - i.e. paying for a marketing outcome; the generation of a lead, subscription or sale for example. Even more advanced campaigns are evaluated using Return on Investment (ROI) metrics where search engine marketing activity is optimised around the relationship between online spend and revenue generated.  ROI evaluation can be a very powerful way to evaluate paid search, but it is not without its own pitfalls. You need to be careful about which ROI metrics you work with - pick the wrong ones and your best endeavours may still end up generating high volumes of low profit business.

I thought it might be interesting to explore how we can look at ROI as a measure of margin or even profit.  But before I do that, here’s a quick review of current PPC evaluation options.

1) Cost per Click

Cost per click is the most basic and easy to obtain evaluation metric in search marketing. Unfortunately, clicks are of limited value for a number of reasons. First they do not represent whether or not a purchase has taken place. Second, they offer no view of sales value. Third, they are the metric by which most paid search campaigns are traded. Search engine owners want to sell you as many clicks as possible because they’re paid by the click. But you need sales because only sales will drive your business forward. So how can you move from evaluating search on clicks alone? There are two options:

2) Cost per Action

Cost per Action (sometimes called Cost per Conversion) is a much more interesting metric. It can be obtained using either the conversion tracking tool in Google’s main Adwords dashboard or via the Google Analytics tool. You can set conversions as particular actions “goals” or on your site. These might be sales, leads or subscription sign-ups. So if you have a target cost for generating lead or sale, conversion tracking can help you to achieve this. But there is a problem with looking at Cost per Action alone; it does not allow you to understand your revenue Return on Investment.

3) Revenue Return on Investment

Search marketing can only be fully optimised when you can understand the relationship between the cost of generating a sale and the value of that sale. If you are selling a product, or capturing online orders, then it is possible to capture the sales value from the forms generated on your web site. You can then use an analytics tools to look at the relationship between sales cost and sales value across either keywords, ad texts or products.

How do we develop ROI as an evaluation metric?

Calculating ROI in isolation of margins can produce superficially healthy feedback which in fact covers potentially disastrous business practice. ROI ratios can be used to help us understand the business metrics that keep businesses healthy - gross and net profit margins.  Here’s an example of three sales:

1) Sales Value: £200 Cost Per Sale: £50 Sales ROI: 400%

2) Sales Value: £600 Cost Per Sale: £100 Sales ROI: 600%

3) Sales Value: £900 Cost Per Sale: £125 Sales ROI: 720%

So, which sale would you rather have? In sale 1, the cost of the sale is 25% of the revenue generated. In sale 2, the cost of the sale is 16.6% of the revenue generated.  In sale 3, the cost of the sale is 13.8% of the revenue generated. Whilst the capital cost of sale 3 is much higher, it offers more potential profit because it’s a lower proportion of the revenue generated.

If you were optimising your campaign on a cost per sale basis at £75 per sale, then cutting out keywords or ad text that delivered over this level may mean that you miss out on higher margin business which offers better profitability. In a worse scenario, because revenue is flowing in, you might think that the relationship between ppc spend and revenue is healthy and bid for a higher share of the market. But this may be an online form of the venus flytrap;  the revenue may mask preilkously low margins or even loss-making business.

As a post text, there’s an interesting book about understanding the economics of generating sales in direct marketing by Peter Rosenwald, a former CEO of both Wunderman Worldwide and Saatchi & Saatchi Direct called “Accountable Marketing, The economics of Data Driven Marketing”.  Rosenwald attaches great importance to calculating and understanding your own “Allowable Cost Per Order” (ACPO) so that you can organise your marketing activity to deliver profits as well as sales.  Tim Ambler at London Business School takes these ideas further, arguing that marketers need to look at the rate at which cash is generated in relation to outgoing marketing expenditure.

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December 16th, 2008

UK advertising predictions 2009

I think 2009 is going to be a year of immense change in the UK media landscape. But it’s not going to be the same for everyone. I predict that it will be a bad year for the traditional offline players whilst newer digital players will find 2009 painful but manageable. For many traditional media owners 2009 will be about survival - particularly in print. There is no doubt that the UK media scene will look very different in December 2009 to how it looks in December 2008.

Before we get into the detail, I think it makes sense to divide my 10 predictions into two groups: “structural change” and “reality checks”. The “structural change” predictions deal with fundamental corporate realignments that will be forced upon businesses in order to survive in the UK communications industry. The “reality-check” predictions relate to businesses that will have to make significant changes in how they operate to remain healthy and be in good shape to meet the challenges of the next few years. So below is a summary of what I think will happen in online and offline marketing and media community in 2009.

Structural changes (1-5):

1. The full effect of the flow of advertising revenue from offline to online media in recent years will make a profound impact on the the UK media scene in 2009. Media owner denial about underlying structural shifts in our industry will evolve into acceptance and the adoption of a ‘change or die’ corporate mentality. On reaching this enlightenment, media owners will use the recession as an excuse to make the big changes they’ve been putting off for years. There will be ruthless cost-cutting, divestment, re-structuring and closures.

2. In print, some established brands will collapse. One national newspaper will close or be sold. But the worst pain will be reserved for regional and local media which will come under severe financial pressure because of the combined effect of the shift to online, the crisis in the housing market and reduced expenditure from advertisers, particularly car dealers and retailers. Regional and local directories like Yell and Thomson will also have a very difficult year. All in all I predict regional media will be in for a torrid year, and suffer worse perhaps than any other channel.

3. In broadcast there is also going to be serious financial trouble. Some smaller TV stations may suffer badly and probably collapse. ITV’s situation will get steadily worse. Sky will continue to feel the impact of Freeview through declining rates of subscription growth, but its subscription base will make it less dependent on advertising revenue and allow it to weather the recession in reasonably good shape. Problems will come for Sky if the recession goes on for more than a year and consumers think twice about re-subscribing. Regional radio will suffer badly because of its dependence on cars and retail.

4. Online will not be exempt from any pain (see also 6,7,8) but it will be display advertising networks that have to bear the brunt of it. The whole area of blind networks delivering view based conversions will come under increased scrutiny. These advertising / business models will be under the magnifying glass of both advertisers and investors. Ad revenues will decline and investors will start to duck out. This will cause a shake out in online display advertising networks; some will fold and the lucky ones will be taken over.

5. On the agency side of the business, some traditional agencies could run into serious financial trouble and some may even go under - particularly those with an over-dependence on automotive and retail brands. As usual in a recession, those agencies able to prove a causal link between their activity and sales are likely to suffer less than those agencies who can’t.

Reality-checks (6-10):

6. The business models of social media stars like Facebook will come under increased financial scrutiny as brand owners realise it’s very difficult to communicate in these environments and investors realise it’s therefore very difficult to make money. Some social media sites will be bought up by bigger online and perhaps offline players seeking to broaden their offering.

7. Microsoft may concede it can’t win in paid search and may even surrender and divest from it. Even if this doesn’t happen, watch out for other significant online and offline investments from Microsoft.

8. Google will show signs of maturity and will be forced into making a big move to maintain momentum and investor interest. Anticipate something like a big traditional media owner purchase, the takeover of a big social media player or more mobile developments.

9. There will be significant shedding of non-core corporate assets across the board. More companies will lose patience with their seedlings and turn out the light. Rather ironically from a corporate point of view, traditional media businesses are likely to close their digital businesses. This will reflect the fact that the dominant business model in these companies cannot yet monetise online and digital profitably.

10. Consumers will be lackadaisical about very high speed broadband. As the revelations about high speed actually being slow speed gain more momentum, offers of higher speeds will be met with increased cynicism. As a result, take-up will be slow and providers may run into problems. Those companies betting that offering even higher speeds will add new life to a maturing market may lose.

Despite all this, here’s to a Happy Christmas and 2009.

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