Information Technology Program

Aalto University, 2015

Dr. Joni Salminen

joolsa@utu.fi, tel. +358 44 06 36 468

DIGITAL ANALYTICS

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Report sections of Google Analytics

1. Audience – tells about characteristics of visitors

2. Acquisition – tells about sources of visitors (e.g.,

marketing channels)

3. Behavior – tells how the visitors acted on the site

4. Conversion – tells how goals defined by the

organization are met.

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Traffic sources à la Google Analytics

(Google, 2015)

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About ’source’ and ’medium’ (Google, 2015)

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How to track ANY digital campaign?

1. UTM builder: [hands-on]

2. annotations [Joni shows]

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”Captain, we are flying blind!”

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How does campaign tracking appear in GA

reports?

• [JONI SHOWS]

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Standard values for UTM parameters

• Medium:

– cpc

– display

– social

• Content:

– (name of ad version 1)

– (name of ad version 2)

• (Remember, they are case-sensitive.)

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Custom channel groupings (Google, 2015)

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EXAMPLES OF ANALYTICAL

DECISION-MAKING: BUDGET

ALLOCATION & SALES

ATTRIBUTION

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Budget allocation with help from analytics:

case of search-engine advertising

Avainsana Klikit Kustannus Myynnit ROI

lahja naiselle 110 75 € / pv 120 € / pv (120-75)/75=60%

lahja miehelle 40 25 € / pv 90 € / pv (90-25)/25=260%

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• Result: ”men’s dress shoes” is more profitable

• Conclusion: increase the bid for this keyword

and campaign budget, do the opposite for the

other keyword

The problem: Your marketing budget is 100 € per day

– how should you allocate the money?

Keyword Clicks Cost Sales

dress shoes 110 75 € / pv 120 € / pv

men’s dress shoes 40 25 € / pv 90 € / pv

What should we check before

making the final decision?

Attributing sales value

• You are the manager of an ecommerce site

• You have one sales conversion worth 1000€

• From analytics, you can see that four clicks have

preceded the conversion

• The last click came from a search-engine with a

specific keyword.

How do you allocate the value of

the sales conversion?

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”Last click fallacy”

a. our analytics tool can only identify the last interaction

leading to conversion (i.e., we are blind to the

previous interactions)

b. based on this information, we conclude that a certain

campaign or channel resulted in the conversion,

even though, when there are other touch-points, at

least some value should justifiably be attributed to

them as well.

• why does it matter?

– the result is an attribution error, due to which we are

potentially making bad decisions. (think of funnel!)

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The conversion path

• Some channels tend to have bad direct conversions,

therefore it’s important to see assisted conversions

(you can find them in Google Analytics)

• [JONI SHOWS]

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1st touch Conversion

Assisting effect

Last touch 2nd touch

What’s the length of the

conversion path?

For example, analytics categorically shows

me that…

• Google converts much better than Facebook

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Direct ROI of social media is oftentimes bad

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…but indirect ROI (assisted conversion)

might be better

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So you see, this is partly the

solution! But there is another

one as well…

Attribution models (Google, 2013)

Last touch 100% of conversion value to the last touch-point (e.g.

campaign, channel)

First touch 100% of conversion value to the first touch-point

Linear model each touch-point receives an equal share of

conversion value (eg. 3 touches = 33% each)

Time-based model based on a time factor, the touch-points

closest to conversion receive a larger share of conversion value

U-shape model 40% of conversion value to the first touch, 40% to

the last touch, and the rest 20% divided equally among the remaining

touch-points.

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Which one is the best?

What do you think?

Attribution models: an example

First touch

model

Last touch

model

Linear

model

1 Facebook

2 Google organic

3 Google CPC

4 Blog article

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• one conversion = 1000 €

• the conversion path includes four

touch-points in the following order

• how to attribute conversion value?

Attribution models: an example

First touch

model

Last touch

model

Linear

model

1 Facebook 1000€ 250€

2 Google organic 250€

3 Google CPC 250€

4 Blog article 1000€ 250€

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• one conversion = 1000 €

• the conversion path includes four

touch-points in the following order

• how to attribute conversion value?

Attribution modeling in practice

• [Joni shows]

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METRICS

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Definition

“A business metric is any type of measurement

used to gauge some quantifiable component of

a company's performance, such as return on

investment (ROI), employee and customer churn

rates, revenues, EBITDA, and so on.” (Rouse,

2007)

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Objective → Goal → Metric

• Objective: a broader goal, i.e. capture market share

from competitors

• Goal: a specific goal, like gain 30% of market share

by the end of 2015

• Metrics: market share, market growth, generated

leads, sent quotes, closed sales

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Basic business objectives in digital

marketing (Google, 2015)

1. For ecommerce sites, an obvious objective is selling

products or services.

2. For lead generation sites, the goal is to collect user

information for sales teams to connect with potential

leads.

3. For content publishers, the goal is to encourage

engagement and frequent visitation.

4. For online informational or support sites, helping

users find the information they need at the right time

is of primary importance.

5. For branding, the main objective is to drive

awareness, engagement and loyalty.

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There are many ways to classify metrics…

Let’s look at some!

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Google’s classification

1. Audience metrics – e.g. number of visitors, new

users, returning visitors

2. Behavioural metrics – e.g. pages/visit

3. Conversion metrics – how many times visitor

completed a goal on the website

Metrics classification

(that we sometimes use at ElämysLahjat.fi)

a. sales metrics (these are measured in campaigns

that are sales-oriented, e.g. product campaigns)

b. visibility metrics (these are measured for brand

identity and awareness campaigns)

• it’s a crude but effective division, as all campaigns

can ultimately divided between direct response and

latent or indirect response.

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• Platform specific:

– PageRank, Quality Score (Google)

– EdgeRank (engagement), Relevance Score (FB)

• Website (before click): – CPM (cost per mille)

– CPC (cost per click)

– CTR (click-through rate)

• Website (after click): – BR (bounce rate)

– CVR (conversion rate)

– CPA (cost per action)

– CAC (customer acquisition cost)

– ROI (return on investment)

– CLV (customer lifetime value)

Basic digital marketing metrics

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Let’s look at the most common digital

marketing metrics. In addition to showing

performance, some of them are used as

pricing models for online advertising.

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CPM (cost-per-mille)

• The price for thousand impressions.

• NB! This is what we call a ”vanity metric”, used by

media sales people to sell inventory but useless for

business purposes

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The good The bad

Emulates reach, i.e. proxy

for increase in awareness

which is a requisite for

branding

Banner blindness (Benway

& Lane, 1998)

Waste (lack of targeting,

mass media approach)

Does not tell about the

performance; will someone

click and what happens

after the click

CPC (cost-per-clikc)

• The price of a click, i.e. visitor (€)

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The good The bad

Bypasses banner blindness

(the user first need to

process to click)

Click fraud (even up to 50%

of clicks can be fraudulent)

As a metric, you see

performance. As a payment

method, you pay for

performance.

A click does not contain

information about

conversion

A skillful traffic-oriented

marketer can drive

irrelevant traffic, in which

case the company ”pays for

nothing”

CTR (click-through-rate)

• Ratio (%)

• CTR = users who clicked / all who saw the ad

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The good The bad

Tells how well an ad

performs

Does not tell how qualified

the traffic is, or how good of

a match the landing page

and the ad has

Indicates relevance &

quality

Does not correlate with

sales, ad recall, awareness

or purchase intent (Nielsen,

2011)

CTR can be artificially

manipulated by over-

promising ads

CPA (cost-per-action)

• The cost of a desired action, e.g. sales conversion or

acquired lead (€)

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The good The bad

Bypasses click fraud by

showing after-click

performance

As a pricing method it’s rare

– in practice only affiliates

As a pricing method it’s

great – you only pay for

conversions

As a measure it doesn’t tell

what happens after 1st

purchase (relationship)

Also, does not tell about

revenue, how many

converted, or how good

relative performance was

Misses externality effects,

such as latent conversions

and word-of-mouth

CVR (conversion rate)

• A relative number (%)

• CVR = users who bought / all visitors

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The good The bad

Tells what has happened

after the click

Does not measure profit

Does not measures

volumes of spend or

revenue (e.g. small

insignificant search terms)

(Geddes, 2011)

ROI (return on investment)

• ROI = (P – C) / C * 100% ,

• where

– P = the revenue from an investment (e.g. campaign)

– C = cost

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The good The bad

Tells what happened after

click

Does not consider margin

(a good ROI can still mean

unprofitable marketing)

Considers sales revenue Does not consider lifetime

revenue

CLV (customer lifetime value)

• All the revenue a customer brings during the his or

her period of patronage (€)

• In general, the goal is CAC < CLV, in which CAC is

customer acquisition cost

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The good The bad

Takes into account what

happens after purchase

(customer loyalty, churn)

Hard to measure

The exact figure is known

only afterwards

CONCLUSION: No metric is perfect

• CPM banner blindness

• CTR indicates quality / match, but does not tell

about conversions or revenue

• CVR tells about how efficiently a conversion is

reached, but not how big the purchase is

• CPA misses latent effects, lifetime revenue and

word-of-mouth

• ROI does not consider product margin

• CLV hard to measure, known only afterwards

• Best to use a combination, and to understand

limitations.

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I don’t have an ecommerce site – should I

still add monetary value to goal

completions?

• Yes.

• Consider this example:

A lead-generation site generates leads for sales people.

Last month, it paid 500€ for online advertising generating

10 leads. Sales people closed 2 leads. The revenue from

these leads was 3000€.

– What is the conversion rate?

– How much is a conversion worth?

– How much is a lead worth?

– How much is cost per action (CPA)?

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I don’t have an ecommerce site – should I

still add monetary value to goal

completions?

• Yes.

• Consider this example:

A lead-generation site generates leads for sales people.

Last month, it paid 500€ for online advertising generating

10 leads. Sales people closed 2 leads. The revenue from

these leads was 3000€.

– What is the conversion rate? 20% (from leads to sales)

– How much is a conversion worth? 1500€

– How much is a lead worth? 300€

– How much is cost per action (CPA)? Depending on

action: CPL is 50€, CPS is 250€.

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