What Are The Benchmarks for Conversion Rates?

Filed Under , Online Advertising, Online Marketing, Web Analytics, Web Technology | Leave a Comment

Pondering upon the conversion rate made me wonder what the standard, normal conversion rates for various types of sites could be.  If I am entering online retail business, what should I strive for or measure against when I launch my site?

According to MarketingSherpa’s Ecommerce Benchmark Guide 2007, the average conversion rate on top tier search sites 2006 & 2007 was 4.3% for both years. In 2006, high end of normal range was 10%, most common rate was 2.5 % and low end of normal range was 1.0%.  In 2007, the average rate remained the same (4.3%), but the high end rose up to 12%, thus driving the mode (most common rate) to 3% and leaving the low end the same (1%). So, it is not 50% or 70% that we should expect seeing from online marketing and if we reach 12% - we are the winners! It make sense if we simply look at the formula for conversion rate (total number of outcomes (leads, orders) divided by the total number of unique users), with the former number being significantly lower than the latter.  Of course, these standards apply only to e-commerce sites, which assume purchases as a result of conversion.  Lead generation and content sites might enjoy higher rates since all they track would be of somewhat easier visitor engagement behavior (filling out the registration form, signing up for a newsletter, requesting more information or providing comments and viewing the content).

So what could you do to drive and truly impact your conversion rates? To do so, it is worthwhile to look at the conversion data on all acquisition channels that you employ (email, banners, SEM and organic traffic) separately and summarized.  Once you go through this exercise, it is easier to see where to invest to drive the right traffic to your online store and eventually see those rates go up!

Targeting Methods in Online Advertising

Filed Under , B2C Marketing, Digital Marketing, Ecommerce, Online Advertising, Online Marketing, Search Marketing, Segmentation, Web Analytics | 1 Comment

Selecting the right audience is the key driving factor in online advertising - your marketing campaigns’ performance depends on it almost 90 percent. With numerous tracking systems for monitoring users behaviors online, their ways to interact, their purchase habits, there are a number of targeting variables available to modern marketers. What is a well-targeted advertising? It is more relevant, compelling and subtle. What are the tools we have these days? According to the Advertising Research Foundation in its latest publication titled as The Online Advertising Playbook , there 7 highly usable methods:

Demographic Targeting - the old and familiar approach that defines audiences by gender, age, occupation, household size. It will always be there due to its advantages for broader product categories. It is easy to project behavior for such products based on demographic information and it costs less than tracking individual purchase behavior. More on the tips for successful demographic targeting, read the article on iMedia Connection.

Contextual Targeting - implies placing ads on sites that are related in content to the products, as an example: diet programs ads show up on healthy living related sites, financial products ads are displayed on money and investment sites. Contextual placements catch shoppers at the time when they are thinking about the product or related to it issues, catch up on news or read up on tips.  Due to the fact that shoppers (potential and actual) are caught in the active state - it becomes quite important to select quality sites, with relevant and most popular content to make your campaigns perform.  Site credibility is also important for the product especially when sales occur offline. Thus, it is a key consideration for your branding efforts.  Also, if you are tasked with building a community around your product, having a group of high regarded sites extends your influence further with the already highly engaged audience.  More on the contextual targeting, check this blog post that cites the research study on its effectiveness.

Behavioral Targeting - is the hottest method these days and the most controversial, allows marketers to track users’ site “hopping” through the cookies and come up with models and behavioral patterns for targeting those users later on those sites. Advertisers use these models to serve ads that are relevant to those “mapped” individuals across the various sites. It could be cheaper to do behavioral targeting than a contextual one: you have more points to reach the same audience. At the same time, it has its pitfalls and Jack Jia covers them well in his recent article.

Geographic Targeting - is especially powerful for smaller businesses that would like to capitalize on the local searches for products and services. DMA areas, area codes, time zones, GPS coordinates and IP protocols provide some geo targeting capability and allow marketers maximize the reach.  In addition, it can always bring additional sales to the brick-and-mortar store if you send your shoppers to the nearest location to pick up the purchase. More on the ways you can leverage geo information, read this blog post by Charles Thrasher.

Daypart Targeting - comes back to online advertising from the more traditional media (TV, radio) where it reaches specific audiences. Daypart targeting varies by audience size and specifications, can be very cost-efficient - as you expose your message to the largest audiences at the right time when they want to hear, see, view your message. Internet is used differently throughout the day with the highest percentage of people shopping and surfing the web during the normal business hours at work! According to emarketer, 31% people shop online at work, and if you add more detailed data on at which hours exactly they heavily engage into it - you are in business!

Affinity Targeting - refers to reaching customers on their favorite sites (usually related to hobbies and interests) that they heavily visit and interact with. Those users spend more time online (on those sites), are more favorable to the site content and ads and purchase faster and easier. If you like one site that you visit daily, you are more open to digest the message in the ads and in fact act on it. Works every time.  Affinity targeting especially works for brand evangelism.

Purchase-Based Category Targeting - represents a new method of merging data from the online behavior database to the purchases. It is very efficient, but very costly since you do have to customize the databases for your specific markets.  Companies like Nielsen try to create profiles of the “heavy shaving cream users” and low-carb dinners buyers” and map it against their online surfing patterns and predict their next purchase across product categories.

With all those methods, marketers are indeed empowered to deliver the right message at the right time to the right audience, even when the data is not perfect. Select 2-3 methods that fit your business and marketing strategy and find the good enough fits for your audiences and you are bound to have success.

What Is Your Conversion Rate? Plus Two Other Metrics That Make It More Meaningful

Filed Under , Ecommerce, Online Advertising, Online Marketing, Web Analytics, Web Technology | Leave a Comment

Posing this question to myself last week, brought me to a number of nuggets that I wanted to write down for reference and share.

Conversion rate is a percentage of your audience that was successfully “sold” to your message and engaged into a purchase to the overall audience that viewed your communications. Conversions come in various shapes: sales, leads, sign-ups for newsletters, information requests, linking to your site or blog, views of a certain page, downloads of a specific media material or referrals. In other words, it could be any action that you want your target audience to do as a response to your communications.

Conversion tracking becomes a very “magical” tool when you want to test the efficiency of your ads, copy or keywords in your online marketing initiatives. As an example: you can have 2 versions of an ad with a rate of 1.3% CTR (click-through) and 1.7%. If you just rely on the CTR, you will keep using the second version with a higher rate. However, even though more people clicked on the second ad, how many did actually register a purchase? This is answered by the conversion rate that might prove the opposite regarding the effectiveness of your ad. Perhaps the “catchy” headline in the first ad was very effective, but call-to-action copy failed to deliver. By having the conversion rate metric you can use the call-to-action copy from the second ad. And test.

You still need CTR! To calculate the profits you make from your ads. That’s where CPC (cost per click) comes in. Thus, you can see how much you spend relative to what you gain. But again, we are only using 2 metrics and can miss on the information. As an example, you might have an ad or a keyword with a lowest CTR and low CPC, but it can convert very well. Here you need to add another dimension - the amount of traffic which you can measure as well. How valuable all the traffic that this ad brings to your site? This way you need to calculate the profit each ad brings. To do so you need to calculate the total number of conversions (number of clicks multiplied by the conversion rate and divided by 100) and the value of a conversion (which you can assign (example your sale is $50 and you keep $30 after subtracting all the costs and fees, thus $30 is your conversion value). The value of a conversion helps you understand how much this action is worth for your business. The profit per ad = (conversion value X total number of conversions(profits)) - costs).

Web 2.0 Expo, Day 2 and Day 3, Experience Takeaways

Filed Under , Conference, Online Marketing, Professional Development, Web Analytics, Web Technology | 2 Comments

It took me 2 days to get into my normal routine after such a whirlpool of knowledge sharing and social networking using traditional and web technology methods. Instead, I am still catching up with all the people I met. However, I thought I would quickly put my notes in this post. So what happened within those 2 days and what and who inspired my curious mind?

I. Behavioral Targeting, a session led by Basem Nayfeh, explored the world of web analytics and database marketing that allows to target your customers based on their behavior. It is not a new technique, but I was happy to see how pronounced the topic becomes. The complexity and at the same time, the solutions it brings are worth exploring by every marketer in any given organization. It allows to make a pause and ask a question where consumer attention is and follow it. Paying attention to customer steps on your page or online allows to be an effective marketer. An interesting fact that 60 % of content is posted by someone “we know”, “you know”, exemplifies well that our social behavior does not change dramatically on the web. Behavioral segmenting is intelligent segmenting and qualifying people based on their actions: (searches made, product interests, articles they read, navigation, geography, keywords, workplace attributes). Behavior is captured and targeted message is delivered, new knowledge about your product is discovered, etc.

II. Web Analytics and Internet Marketing Solutions session by Akin Arikan touched upon similar topic. He also shared a free whitepaper that illustrates well the major points on how to optimize your online marketing campaigns. The Web Analytics Recipe Cards provides an overview on how to maximize the number of qualified leads captured online, maximize online and offline revenue and increase brand awareness. Another document that is worth reading, shared by Unica, summarizes how today’s marketers can anticipate, understand, help their companies profit from the web transformation.

III. Social media discussions were quite popular and interactive. I am “delegating” this topic to Jeremiah and Mario, as lots of coverage can be found at their prominent blogs: Marketing Nirvana and Web Strategist.

IV. The best part of the entire event for me was meeting a number of brilliant people. The social aspect of the conference attendance left the most satisfaction. People who make a difference in this industry being in either big or small companies is the biggest asset of web.2.0 revolution and evolution. I had a lot of fun meeting people at the expo, at the after event parties and during live upstreaming opportunity with Podtech. The combination of knowledge and social capital gained definitely exceeds the projected ROI. Web 2.0 expo 2007 is money and time well spend.

V. (Added on April 29, 2007)
And I also wanted to express my joy and thanks to Marcelo Paiva who volunteered to help me fix my style sheet issue when I discovered it at the event. I still cannot help but smile every time I see my new blog design! People would point me out that due to some coding my blog content would show up crookedly in Firefox. This was rather embarrassing since most of the web 2.0 crowd uses Firefox and while sharing and introducing myself I had to make a disclaimer. Not any more! Social media got another outcome of connecting people that might never be due to geographies and other restrictions. If it were not for Jeremiah’s live blogging and video casting at the event, I would never have a chance to get fast help and collaboration right away. Moreover, we used Skype to do virtual collaboration and remote desktop access tool VNC to fix the problem! This was a very empowering experience, collaboration on the user level where you get the same results as if you work in big corporations with virtual teams, but here you use basic web 2.0 tools that enable individuals!
Marcelo also created my new logo, which I find rather a perfect fit. Talking about branding on one’s feet and Skype!
Finally, we discovered similarities in professional interests (user design, marketing, CRM, segmentation) that allowed both of us developing another value-add professional connection, which we completed via registering it at LinkedIn. :)

Web 2.0 Expo Day 1, Knowledge Nuggets and More Inspiring People

Filed Under , Conference, Online Marketing, Professional Development, Web Analytics, Web Technology | Leave a Comment

Day 1 was so good: the energy of people I met and the knowledge I got kept me so invigorated and excited throughout 18 hours of stimulation.  Before the next wave of events hits my “ship”, I wanted to set in stone the nuggets for Day 1 at web 2.0 expo.

I. Web Technology

Google Analytics and all the magic you can do with this free tool was shared by Brett Crosby. Get your web metrics into the order, get your data and make your site more effective, analyze your marketing campaigns ROI.(Example: Paris Hilton Commercial, was produced normally in a ad agency, but distributed through the web (YouTube). The effect is beyond what a TV ad of the same caliber can do. Due to the viral effect, people actually went online themselves (control of content/infomation consumption) and watched it on average of 6 times. Where else do you get such coverage, reach and ROI? It was cheap to place on the web!) The package is free, delivers on the promise and can make a difference in your web communications. Spend a few minutes and learn more how you can optimize your web site. You do not need to be a statistician to get the maximum benefit. (I am going to deploy it for my blog and once I have enough experience I will share my recommendations).

  1. Google Analytics = track your traffic and ROI on marketing campaigns
  2. Google Webmaster Tools = know your audience and optimize your site
  3. Google News = free way to make images searchable
  4. Google Maps
  5. Google Earth
  6. Google Catalogs = upload your catalogs, get the content out, make it discoverable
  7. Google Website Optimizer = great tool to track PPC, does not hurt organic search (was considered during the development stage), you can even start your free multivariate testing to learn more what your audience is doing on your site and how to make them do what you want them to do!

II. More Web Analytics

Avinesh Kaushik shared his insights on how you can test the effectiveness of your site, optimize your conversion rate based on real feedback from your customers! I must confess, it was the best session so far, as much as, Avinash promised at the start. Using Multivariate Testing, marketers and web strategists can expose their customers to variations of web site design (multiple pages produced automatically by a tool) and get feedback (behavioral feedback!) on what works and what does not to arrive at the site that generates sales or delivers what you want your audience to do on this site. Most companies do not know why their customers come to the site. Avinesh’s golden rule is testing, testing, and more testing. One cannot get the same information on what works through the traditional focus groups, surveys and interviews of the customer base. “Customers yell out problems and do not provide solutions”. At the same time, our bosses think that they represent the customers and know how the site should look like to deliver the best and their decision influences the final product that might not be user-friendly at all. Even if it does, it could be not as optimal in delivering to the bottom line. Even the userbility testing is not as effective. “They way we do userbility is isolating a sample of people in a room, putting a bunch of devices on them and ask them to act normal. People do not act normal in such conditions and they would be extra cautious, biased or wierd.” You can get the basic ballpark, (maybe, maybe not) on your testing. With multivariate analysis you are measuring the entire consumer experience, even when they are shopping on your site in their pijamas. Little Ajax script is all you need to get your testing set up. It creates variations of your site for further testing. You can test all the ideas you have, not just 2-3.

Avinesh is planning to publish a book in the near future, called “Web Analytics, An Hour A Day” (which I will definetely read!). You can even pre-order it at Amazon.com. All the proceeds (100%) will go to local charities.

III. Great ideas from the Keynote

Keynote was very well put together and this video called Digital Ethnography by Michael Wesch launched the discussion. I could not help but share this video, it illustartes so well the evolution of the web and though, I am not a geek, it stimulates my mind and heart. 

There was lots of fun speeches at the keynote and Richard MacManus covers it well on his blog.

My favorites were 3 launch pad ideas:

Spock.com = allows you perform human search! You can now get the full scoop! (My KGB roots make me so excited about this one! :))

Npower.com = finally, a web 2.0 application for intraverts! and people who care a lot about personal growth, allows to measure your actions towards your goals, incorporates training and coaching knowledge with a web 2.0 capabilities of interactivity and user content generation. Unfortunately, I have no URL for it to share.

IV. Social Mingle Afterwards

It was a lot of fun to explore web 2.0 social mingle scene and parties afterwards. The best part is to meet the personalities and simply personable people to close the day. Special thanks to Jeremiah, other Podtech crew and Mario for being hospitable hosts! Anytime, you are in Portland, OR, please let me know and I will show the city at its best and I am very good at it!

    Content Disclaimer

      Everything posted on this blog is a product of my own thoughts, ideas, reflections based on the professional interests. It is based on the public information, works of the colleagues and fellow researchers that are cited respectfully and my opinions as an industry professional.