How to Measure the Effectiveness of Web Advertising: 10 Steps

Online advertising is available in a number of formats, from banner ads, to rich media ads to social media pages and more. As you get increased traffic to your website, you may wonder which advertising campaigns are providing the best return on investment (ROI) and which are not proving valuable to your business' goals. Tracking web campaigns requires some investment in your website up front. It also requires diligent work in monitoring campaigns separately according to your goals. Read how to measure the effectiveness of web advertising.

Method 1 of 2: Tracking Web Campaigns

1. Establish the goal of your advertising campaign(s). For many sites, this is an increase in sales; however, for websites that sell advertising or contacts, your goal could simply be an increase in traffic or database numbers. Once you decide your goal, you can choose the metrics by which to judge when it is met.

2. Decide what metrics will be used to judge the effectiveness of your ad.Choose 1 of the following metrics that proves an ad has met your ad campaign's goals and devise your tracking method accordingly:

Increase in web traffic. This can be judged simply as the number of people who go to your website daily. If this is how you market to advertisers on your site, then a simple increase in traffic as proved by tracking software, may mean your campaign is a success. A more sophisticated web traffic campaign would judge the number of visitors who sign up with their name, email, age or address. If your goal is to establish a database, then judge your traffic based on new visitors who sign up on landing pages.
Length of visit. If your page's effectiveness is judged by how long a person visits your site, then judge the effectiveness by the number of people who spend 30 minutes or longer on your website. Pay for web tracking software that gathers the amount of time new users spend on a page.
Page views. If you are providing high-quality content, such as downloads or videos to users, you will want to establish how many people download or stream your content. Invest in software that gathers the information on how many people play the entire video and how many close it early.
Clicks. Many online ads are Pay-Per-Click (PPC), and you should gather both the number of clicks and the conversion rate. Choose a PPC ad provider that tracks both clicks and conversion rates. Google AdWords provides this tracking along with your bid on clicks.
Ad views. The number of ad views tells you how many times during a day, week or month that your ad was shown to web page viewers. This number is usually much higher than the number of people that click on your ad. Use this as a metric if you are trying to measure the effectiveness of 1 ad against another. For example, if you have an ad that appears on a search engine with the keyword "surf gear" and another for "surfing gear," the number of ad views and the number of clicks will determine which ad is more valuable.

3. Establish baselines for traffic, clicks, sales and current campaigns. Gather 2 months to 1 year's worth of data on the visitors that arrive at your site, where they come from and what the conversion rate is. You will use this data to compare against your online campaigns.

4. Invest in website tracking software that will work with your chosen metrics.Although most websites have basic traffic tracking, it is important to invest in this if you do not already have it. Look for a program or plugin that can collect and archive data, as well as run reports on campaigns.

Possible software programs include Webalizer, Urchin and WebTrends. Google Analytics provides free campaign tracking with limited functionality. Some advertising programs, such as Google AdWords, include traffic and conversion tracking.

5. Invest in creating landing pages, if you do not already do so. Landing pages are specially designed pages that are used to collect data from users and they often allow you to sign up users for an account. They are popular with online advertising because they allow you to design a page that will cater to a demographic and keep track of precise increases in web traffic.

Link your web ads to a landing page instead of your general website. They increase your ad's chances of working. They can also help you develop your own database, if you offer high quality content when users create an account. Communicating with your database with email specials and promotions will increase the ROI.

6. Choose to advertise on sites that will give keep track of analytics. Some ads, like Rich Media Ads, stream video or animate, so they can get your information to a potential customer, and they don't have to click. In this case, make sure that the website you are buying the ad from can give you the number of people who have seen the video, how many times it was viewed and the average amount of time a user stayed on the ad.

Method 2 of 2: Judging Ad Effectiveness

1. Keep track of the money spent on investment. In order to get a good view of the ROI, you must add up the investment, which is usually the price of the ad, the labor used to create it and any other software or web programming required to track the ad.

The cost of general website tracking may seem like a large investment at first, but it shouldn't be reflected as an investment for a single ad. This upfront investment will allow you to track many ads at once, so you may choose to split the investment over a series of ads when you calculate return on investment.

2. Assign someone to monitor each web advertising campaign. New advertising campaigns should be checked at least a few times per week, if not daily. Ask this person to regularly gather data on your campaign's metrics that can be used for reports.

3. Determine the return on investment. Divide the return or sales figures for a period by the cost of the ad during that period. This percentage is your ROI.

If you are not selling products on your site, then you should monetize your metrics to figure out the ROI. For example, if you are gathering contacts in a database, establish how much each person's information sells for and multiply that by the number of people in the new database. If you are looking for an increase in page views, divide the number of new views by the investment cost to get a ratio of cost per view.

4. Compare your advertising campaigns against each other and against your baseline data. Calculate the ROI for all your advertising campaigns for the same period. Rate their effectiveness and remove all ads that are not profitable or give very little ROI.

Sources and Citations

How to Measure the Effectiveness of Web Advertising: 10 Steps