Understanding How Organizations Can Measure Digital Success

The following is a guest piece by digital and business strategist Joe Wozny.

Success comes in many forms . . . including digital marketing success. The digital marketing promise has always included the ability to measure the impact of your online marketing dollars. Delivering on this promise has been a challenging activity that many leaders grapple with when measuring digital marketing benchmarks for success.

How can digital marketing deliver on measurement – particularly in an increasingly, socially saturated world? Should and can digital marketing success be gauged on items broader than just analytic measurement?

Framing ROI
The reality is: business needs to measure things. Measurement creates a context of success and progress. Without measurement, you can’t address where you are generating value or profits nor gauge where new or continued efforts should be directed.

Regardless of how it’s asked, “are we earning a return for our digital dollars” is a “hot button” marketing question poised by leaders, management and operating staff. Agreeing to what is being measured, and how to measure it, are natural follow up questions to this “hot button” item.

To address return on investment in the digital landscape, many organizations collect digital marketing costs and then treat these costs as a percentage of sales, on an overall or per unit basis. This measurement, while good, can fail to answer the question of effectiveness. In others words, what/where amongst our multiple digital channels is delivering the best return and what/where requires more focus, etc . . .

Understanding what comprises the digital marketing “envelope” prior to creating return on investment calculations is an important step. From experience, many organizations differentiate between digital marketing, digital business and digital branding to make calculations easier to manage and understand:

• Digital Marketing can refer to online programs, that activate an audience to take a specific and directed action and which provide an ROI measurement
• Digital Business – can refer to engineering or re-engineering the way business is conducted online. This can include modifying processes to create efficiencies in areas such as accepting customer service inquiries, or publishing a frequently asked question and reference material database.
• Digital Branding – can refer to placement of content, brand messages and your brand in online “locations” to create associations and a perception of your organization, for example, sponsorship of a community event. Subscriber growth, not ROI, can often be measured.

Digital Marketing – ROI Measurement

Digital marketing measurement presents the challenge of knowing which metrics are most relevant to pay attention to, given the plethora of activities you can measure. Some measurements become indicators that help with operating and strategic direction. Other measurements provide hard ROI data.

The Cost Per Acquisition – CPA measurement is a ROI measurement used in digital marketing. CPA is a measure of the total digital media or channel cost divided by the number of completed actions. For example, if your objective is to drive purchases through an email campaign that cost $1,000 to prepare and you activated 500 purchases during the campaign execution, your Cost Per Acquisition is $2.00.

It’s relatively straightforward to generate a CPA model for a paid online advertising program, and for your SEO initiatives. Analytics can tell you which of these channels (down to the specific ad) are driving leads or online sales. By reviewing ads (display, CPC) you can also gain insights into the messaging that generated activation, allowing you to further optimize your marketing communications programs.

Social media can provide the same CPA opportunities when call to action messages are integrated into activities that are measurable (example an activation page). Experts suggest that engaging your customers in social media naturally results in more sales. They point to the fact that engagement correlates with reach and reach should translate into sales.

The question of balance between digital branding activities and digital marketing activities is an important item to pay attention to. Social media followers, when surveyed, note that they will not recommend a social media channel to their trusted networks if the channel focuses solely on solicitation.

Frequently Asked ROI Questions
These frequently asked questions resonate with the theme of “where’s the return for our digital dollars”? Your digital marketing, business and branding success will benefit if these issues are clearly addressed within your organization.

1. Is our email communications “sticky”? . . . meaning do we have an email database that we can activate. Email marketing is an excellent vehicle to connect with your subscribers. Email analytics provide great insights into who is active and what content in your email communications resonated with your readers. CPA can measure customer activation.

2. Is social “working” for us? . . . meaning how do we turn these participants into customers. Social media builds a connection to your business. The best recommendation for your products is from a trusted source – your followers, fans, etc. Ensure your organization agrees to and understands what activities are digital branding related and which activities are digital marketing related.

3. Do people read the content we post on web pages? . . . meaning is the web page messaging, positioning, etc. hard working enough to provide value. If your page content is ‘call to action oriented’ you can use CPA to measure it. If the page is informational in nature, it’s purpose is related to digital business or branding. Analyze the frequency of visits and what actions the visitor takes when they leave the page.

4. Where are we getting the best return on our “digital dollars”? . . . meaning give me the short answer on what is either activating visitors or generating visibility. Always understand the marketing mix between digital marketing and digital branding. Apply CPA calculations (on a per online channel basis) for digital marketing activities where relevant.

5. Do we have a strong online presence/brand? . . . meaning can we or are we recognized as an authority brand. Combining CPA calculations with the visitor insights on a per channel basis could provide a great starting place for a discussion.

6. How are we doing in search? . . . meaning do we show up when people look for us. Analytics on what type of visitors you are are attracting (by interest or their activity) should be at your fingertips. CPA for your organic activity is easily measured. There may also be additional insights from visits that you can use to assist in digital business and digital branding activities/initiatives.

7. Is our online advertising working? . . . meaning what’s the return on investment for the money we are spending. Start with separating the online advertising used for branding purposes and online advertising used for activation purposes. Then provide CPA analytics together with insights (analytic plus anecdotal) gained from branding advertising activity.

Final Word . . . for now . . .

Digital marketing success includes leading and sometimes wrestling with the measurement of return on “digital dollar” investments. In fact, the act of assessment opens broader opportunities for your organization as you discuss where and how you can measure ROI.

Be sure to educate your organization so that all participants understand the difference between digital branding, marketing and business activities. Open up debate on social call to actions and create an analytics culture. With these foundational concepts in place, your company will be well underway to make decisions on new digital opportunities as they come your way.

Joe Wozny, author of The Digital Dollar: Sustainable Strategies for Online Success, is a digital and online media thought leader, strategist, author, blogger and international presenter on strategies to improve the reach and success of Internet, social and digital media initiatives. Through his company, Concentric, he helps leaders leverage their businesses using smart, well planned digital strategies.