Online S&M (Strategy and Metrics) Steve Latham February 2009

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My goals for today… Provide some useful data points Prescribe a Roadmap for Success Explain how to measure ROI from online marketing Present a case study If that doesnʼt work…

...Iʼll try to impress you with graphics and animation

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Consumer Behavior is Changing… Web accounts for >30% of media time (1) Online is becoming the medium of choice

 #1 medium among under 30 (2)  15 million seniors online (growing fast)

50% of online time = “communitainment”  Community, Interaction, Entertainment  Enabled in part by Social Media

(1) Credit Suisse, 2006 (2) Forrester 2006

We’re #2!

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Media Landscape is Changing… In one word… fragmentation

 1966: 5 mediums dominated  2006: 30+ mediums

TV no longer offers same reach  1977: 70% reach 3 commercials  2007: 70% reach 184 commercials  >50% of primetime TV is time-shifted

Print news circulation is declining

Radio losing share to Satellite + iPods

Direct Mail is losing effectiveness

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What This Means to Us (Marketers) “Prime-Time” has been replaced by “My Time”

  Consumers choose when and how they engage Web impacts all businesses

  While only 3% of retail sales are done online…   Web influences 25% of offline sales(1)

  70% of searchers purchase offline   p.s. they spend more in-store

Customers have high expectations   They expect to find “it” quickly and

easily…regardless of device

Customers have more options   Competitors are only clicks away

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Threat or Opportunity?

While some are threatened… …Others are excited!

Crisis = Danger + Opportunity(1)

Savvy marketers are embracing the new paradigm

Ford: 15% of $1bn budget to digital GM: 50% of $3bn budget to digital JC Penney: 70% of BTS budget

(1) The two characters for Weiji or “Crisis” in Mandarin are often said to represent “danger” and “opportunity.” Chinese dispute the translation.

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Portals

$$$

Display Rich, Flash and

Static Ads

E-Mail House & 3rd Party email

Video Display and

Pre-roll Social Networks, Blogs, Photos, Videos

Search Paid + Natural

Search

Social Networks

Online Media Mix Can Be Overwhelming

Content

Affiliate

Ad Networks

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What To Do in Troubling Times?

Weak economy shrinking budgets

Increases focus on ROI   Leads, Transactions, Revenue

Follow lead of savvy brands   Shift budgets to digital   Focus on proven methods   Test, Test, Test

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So Where Do You Start?

(everyone has a different opinion, here is mine)

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Start With a Foundation Optimize Site Usability and Effectiveness

  Good User Experience + Effective Branding + CTAs = $$$

Establish metrics and system for measuring results   Focus on metrics that indicate intent to purchase

Search Engine Marketing   Engage customers who are “in the market”

Email marketing   Cultivate long term relationships

Site Usability Metrics Search Email

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Whatʼs Next?

Site Usability Metrics Search Email

Social Media Display Video

UGC Mobile

???

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..And if youʼre interested in Social Media

What the #*&@%# ???

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How to Play in Social Media Participate in online discussions

 Start posting on other sites  Be transparent: http://flyertalk.com/forum/showthread.php?t=786742

Get on LinkedIn, Facebook and Twitter  Low-cost way to reach and engage audiences  Make sure you have resources to market it!

Start a dialogue on your site   Invite users to participate in discussion  Market like crazy!

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Measuring ROI begins with Metrics

So…what should we measure?

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Measure that which Indicates Value Basic Metrics

  Impressions   Clicks / Visits   Page views

Engagement metrics   % Returning   Frequency of visit   Pages viewed per visit   Time on site   Registrations   Transactions

Web 2.0 Metrics   Posts / Participation   Viewing Videos or Photos   Uploading content   Sharing / Posting

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Look Beyond the Last Click  Decision cycles are not linear

  Users often make multiple before taking action   Engagement entails multiple touch points

 Credit is usually attributed to the last click   Design flaw of most analytics platforms   Generally rewards Search, punishes Display and Email

 Takeaway: understand which touch points drive action (aka “Engagement Mapping”)

Case Studies: • FedEx Kinko’s: 20% of “search” leads had display cookies

•  After adjusting, reduced display CPL by 50% • Zeno: average purchase took place after 3rd visit

•  Search was used 50% of 2nd visits, 40% of 3rd visits

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Take a Holistic View Some results are directly traceable… but many are not!  Due to cookie deletion and multiple machines

 Create a baseline for comparison

 Agree upfront how to attribute credit

Case Studies: • B2C retailer: 30% increase in home page traffic when display campaign

launched (beyond click-throughs) • Bank: 4 “home page” actions for every traceable 1 action

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A New Way To Index Performance

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0.5

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312MonthGoogleSearchIndex:WIDGET

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1.00

1.20

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Jan32009 Jan102009 Jan172009 Jan242009 Jan312009

"GoogleTrends‐30DayIndex"

"OnlineLeads‐30DayIndex"

Understand the Context of your environment – use Google Trends as a proxy for Demand.

Show your RELATIVE performance by indexing your results vs. Google Trends

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Communicate in a Way that Works

Daily and Cumulative Leads

Campaign Summary Cost per Lead by Outlet # Leads by Outlet

Executives LOVE Dashboards!

Communicate Results, not data

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How Do We Value Engagement? Determine how Actions Intent

Forecast how Intent $$$  Some % of those who show Intent will buy

Do the math and apply across each set of actions Use common sense to normalize results

Action Value Visits Indicates awareness Registrations Indicates consideration Store lookups Indicates preference Coupon Downloads Indicates action Tell A Friend Indicates loyalty

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A Quick Example Campaign assumptions:

Investment $10,000 Impressions ($5 cpm) 2,000,000 Visits (direct and indirect) 10,000 Registration (lead) rate 3% Lead Close rate 10% Revenue per customer $2,500

Another way to view it: • Value per visit: $7.50 • Cost per visit: $1.00

Expected Results: • 300 leads • 30 customers • $75k in revenue • $7.50 ROAS*

*Direct ROI captures only part of the value. Brand value of 2mm impressions plus 9,700 visits that did not register is of equal if not greater value.

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ROI Methodology

Define Metrics

Assign Close Rates

Project Value for each action

Normalize (average) Values

Divide by Cost or

investment

Such as:

•  Visits

•  Registrants

•  Friend invites

•  Coupon D/Ls

•  Store lookups

Forecast:

• What % will purchase?

•  Based on actions

•  Based on audiences • Customers • Prospects

Project:

•  Revenue, Margin or �NPV

•  Based on action

•  Based on audience •  Customers •  Prospects

Strengthen by:

•  Eliminate outliers

•  Separate by audience •  Customers •  Prospects

Net it out:

•  Return on Spend

•  Return on Investment

•  Based on audience •  Customers •  Prospects

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Case Study Client: Stage Stores

Audiences: female teens in underserved markets

Objective: drive in-store purchases

Strategy: back-to-school social networking site

Blog

Comments

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Now What? Once you have a Plan and a ROI model  Document the assumptions  Show the expected economic impact  Show your execs / client how it works

Communicate your successes   Internally  Externally

Continue to think about “whatʼs next”

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In Closing… We all know the value is there… …We need to focus on what works …we need to be able to show it

Success requires…   Methodical approach   Analytical rigor   Creativity   Common sense

Today Iʼve showed you one approach   Many others exist – feel free to share!

Letʼs stay in touch!   Check out our blog http://blog.spurinteractive.com   Join me on Facebook and LinkedIn   Email me steve@spurinteractive.com

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About the Presenter

Steve Latham is the founder and CEO of Spur Interactive, a strategic interactive marketing agency. In this role, Steve has planned and managed successful campaigns for leading brands, including ConocoPhillips, FedEx Kinko's, Southwest Airlines, The Scooter Store, and Medical Hair Restoration.

Steve is an accomplished industry lecturer and an active member of the business and non-profit community. Steveʼs articles on interactive strategies have been published by MediaPost and iMedia Connection and he has been quoted in PR Week, Fortune and CNN.com.

Steve received an MBA from Harvard Business School and a BBA from the University of Oklahoma. You can find Steve on Facebook or email him at steve@spurinteractive.com .